Electrolysers can support the electricity grid and falling costs mean they will supply a third of hydrogen demand by 2050, according to two recent reports.
Electrolysers used to produce hydrogen from renewable energy and water can benefit grid users overall because they provide flexibility, according to a report by the Institute of Energy Economics at the University of Cologne (EWI), produced on behalf of E.ON and the Thüga Group. The report said electrolysers “can relieve pressure on all levels of the electricity grid”.
The EWI used various criteria to investigate which locations would be suitable for the construction of electrolysers, looking at three different size classes – smaller than 10MW, 10-50MW and larger than 50MW – used in the German system.
It found the small electrolysers could have a system-supporting effect by 2030, particularly in regions that have both a high demand for hydrogen and plenty of renewable energy.
By 2040, scenarios suggest an increase in hydrogen demand and the growth of hydrogen networks. By then, many more regions will be suitable for using electrolysers for system support. However, they found that the greater the capacity of the electrolyser, the greater the requirements for connection and placement so locations were . but also “no region should be excluded”.
The report suggests that adding electrolysers into a system where there are delays in connecting new generation could help prevent bottlenecks at all levels of the electricity grid and thus reduce system costs.
However, the report says there is little evidence that planned projects will be sited to benefit the system and suggests funding streams be introduced that would allow users to realise that value.

The role of green hydrogen
In a recent Energy Transition Outlook publication, part of a series of reports, consultant DNV suggested that the main balancing role of hydrogen will not be physical (storage and re-electrification) but economic. It says the revenue from green hydrogen, produced using surplus cheap renewable energy, will be more important than hydrogen’s direct storage and back-up capability.
The report says dedicated renewables-based electrolysis is currently too expensive, averaging $ 5/kgH2 globally. However, it believes that by 2030, costs are expected to drop to $2/kgH2, driven by a 40% decrease in solar panel costs and a 27% decrease in turbine costs, as well as a 10-30% increase in annual operating hours for solar and wind. Meanwhile reduced perceived financial risk will also reduce the capital cost of electrolysers (perhaps by 25–30%).
For grid-connected electrolysers, the primary cost component is electricity, and in the long term, more renewables lead to more hours of very cheap or even free electricity. However, the group says that the amount of renewables will not be sufficient to significantly impact electricity price before 2030. Until then, cost reduction in grid-connected electrolysers will come from government support and lower capital cost.
As the renewables proportion grows, the number of hours when hydrogen from electricity and electrolysis is cheaper than blue hydrogen will increase. By 2050, the report says, renewables will produce 130 MtH2/yr, meeting more than a third of the world’s total hydrogen demand.