Electricity and green hydrogen have emerged as key vectors for the European Union’s energy transition, according to a recent report from the Oxford Institute for Energy Studies (OIES). Both play a crucial role in reducing greenhouse gas emissions, especially in hard-to-decarbonize sectors such as transportation, heavy industry, and power generation. However, the relationship between these technologies is both complementary and competitive.

Complementarity and Intermittency Challenges

Renewable electricity, primarily generated from wind and solar sources, forms the basis of clean energy supply in Europe. However, its intermittency presents significant challenges. “At many times, the excess renewable generation is lost due to the lack of adequate storage capacity,” the report emphasizes. OIES argues that this is where green hydrogen comes into play, acting as a means to store energy in chemical form, which can be converted back into electricity or used in other sectors.

The report also asserts that green hydrogen, produced through electrolysis with renewable sources, can absorb electricity surpluses during low demand periods, helping to stabilize the power grid. This complementarity is particularly relevant in countries like Germany and the UK, where extended periods of low wind and solar generation require long-term storage solutions.

Competition for Renewable Resources

Despite their complementarity, green hydrogen production directly competes with electrification for renewable resources. According to projections from the International Energy Agency (IEA), producing one ton of green hydrogen requires between 50 and 55 MWh of electricity, which is equivalent to the annual consumption of thousands of European households. Therefore, current energy priorities in the EU favor direct electrification in sectors like mobility and heating, where efficiency is greater than in hydrogen use.

“Green hydrogen will be key in applications where electrification is not feasible, such as steel production and synthetic fuels,” the report points out. However, achieving the target of 10 million tons of locally produced green hydrogen by 2030 will require tripling the installed renewable generation capacity in the region.

Economic and Political Challenges of Green Hydrogen

One of the major obstacles to the widespread adoption of green hydrogen is its high cost compared to alternatives like grey or blue hydrogen. Currently, the average production cost of green hydrogen in Europe ranges between €4.13 and €9.30 per kg, while grey hydrogen costs around €3.80 per kg. This price differential creates the need for subsidies and clear policies to foster the competitiveness of clean hydrogen.

“European regulation plays a crucial role in ensuring that green hydrogen uses additional renewable energy and does not compete with other priority electrical uses,” the report emphasizes. Additionally, the temporal and geographical correlation targets imposed by the EU on green hydrogen projects could hinder their development, according to an analysis from the Estrategia Energética portal.

Towards an Integrated Energy System

As the European Union moves toward its goal of net-zero emissions by 2050, the integration of renewable electricity and green hydrogen is essential for ensuring a reliable and sustainable energy supply. “Long-term energy storage through green hydrogen could be a viable solution to address prolonged energy droughts,” concludes the report.

However, planning must include multiple solutions, ranging from high-capacity batteries to emerging technologies such as modular nuclear reactors and storage in salt caverns. A combination of economic incentives, technological innovation, and international collaboration will be key to overcoming current challenges and building a resilient energy system in Europe.