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The hydrogen economy is coming – sooner or later

Eero Vartiainen 30 April 2020, 12:16 EEST

Hydrogen is an old invention, but still increasingly discussed today. In the future energy system, hydrogen can help to offset fluctuations in energy production and consumption, and it enables the increase of solar and wind power in the energy system.

Solar, wind and energy storage

This article was posted on April 2020. Read our more recent blog post on hydrogen economy: Partnering up to drive the devel­opment of the hydrogen economy.

In my work as a solar technology expert, I have studied different kinds of energy storage methods. It is clear that energy must be available also at times when it is not possible to produce enough wind and solar power. Hydrogen is one of the solutions that can offer a seasonal storage of energy and thus advance the energy transition. But how is it done technically, and what kinds of challenges are there on the way from hype to reality?

An old energy source

Hydrogen has been a known energy source for more than two centuries, and the hydrogen economy is also one of the perceived cornerstones of the future energy system. As a flexible fuel, hydrogen can replace natural gas.

Hydrogen also plays a role in decarbonising industry, as it can enable carbon emissions-free refining and production of steel or chemicals, and a second route to carbon-free transportation.   

Fact box: Different sources of hydrogen
  • Renewable hydrogen: hydrogen produced with renewable energy sources, like solar, wind or hydropower (known as green hydrogen)
  • Clean hydrogen: hydrogen produced without CO2 emissions, i.e. with renewables or nuclear power
  • Hydrogen produced from fossil fuels with CO2 emissions abated using carbon capture and storage (known as blue hydrogen)
  • Hydrogen made by pyrolysis with carbon black as a by-product (known as turquoise hydrogen)
  • Fossil hydrogen: hydrogen produced with fossil fuels, like natural gas, and which creates CO2 emissions (known as grey hydrogen)

Solar and wind power stored in the form of hydrogen

Today, hydrogen is used mainly in the chemical industry, to produce ammonia and methanol, and in oil refining. Over 99 per cent of the hydrogen used is produced by reforming fossil fuels, which causes around 2% of the global yearly carbon dioxide emissions.

With electrolysis, however, the hydrogen production process can also be entirely emissions-free. In this process, electricity is used to break down the water molecules into oxygen and hydrogen, the latter of which is stored. Herein lies a key aspect of the future of hydrogen in power production: when the production of solar and wind power exceeds what the power grid needs, the “excess” electricity can be used to produce hydrogen. The hydrogen is stored and then taken into use when solar and wind power are not available.

Hydrogen can be used to fuel special types of gas turbines that can turn it into electricity. Another method is to use hydrogen in fuel cells; at the moment, this is an expensive alternative. No emissions are generated when combusting pure hydrogen; the only end product besides electricity is water.


Solar and wind power can be used in electrolysis to split water molecules into oxygen and hydrogen. The hydrogen can be stored and used later in fuel cells or gas turbines to produce electricity and heat. No carbon emissions are generated when combusting hydrogen. The only by-product, besides energy, is water.


Cost of electrolysis is decreasing

The cost of renewable-powered hydrogen production is decreasing all the time, as electrolysers become more common and the unit sizes grow. Currently, there is less than 200 megawatts of electrolyser capacity in use for hydrogen production globally, and the majority of electrolysers are smaller than one megawatt. However, there are plans for several 100-megawatt projects, so the production capacity will increase rapidly.

The most optimistic estimates project that, in the future, as much as one quarter of the global energy demand could be met with hydrogen-based production. This would require enormous growth in electrolysis capacity and also a significant decrease in electrolyser prices. The fact that the cost of solar and wind power has continued to decline will also lead to a lower production cost of hydrogen. Currently, the largest cost component of hydrogen produced by electrolysis is electricity.

The challenge of storage and transfer

Storage and transfer pose the biggest challenges with hydrogen due to its chemical nature. Underground salt caverns hold the most potential as hydrogen storage sites. Today only six of them are used for this purpose around the world, but thousands are used for storing natural gas. Hydrogen can also be stored in rock caverns or as ammonia, liquid hydrogen or liquid organic hydrogen carriers. Pressurised tanks are best suited for storing smaller amounts.

The best way to transfer large volumes of hydrogen, as well as natural gas, is through pipelines. The type of pipeline needed for the high-pressured transfer of large volumes of hydrogen is different than for the transfer of natural gas, but there are already thousands of kilometres of pipeline suitable for hydrogen transfer in the world. In the future, hydrogen pipelines will likely be made from composite plastics. Hydrogen can be transported also by ship or truck, but it is clearly more expensive than using pipelines.

Combined heat and power production improves efficiency

When producing hydrogen with electrolysis, the efficiency is currently 60-70 per cent, i.e. about one third of the electricity used goes to waste as heat. When hydrogen is used to produce electricity again, using a gas turbine or a fuel cell, the efficiency is 40-55 per cent. Thus the overall efficiency from electricity to hydrogen and back to electricity is 24-38 per cent.

However, the efficiency can be improved by recovering the heat generated in electrolysis. The waste heat recovered at combined heat and power plants can be used in district heating networks. In this case, the overall efficiency from electricity to hydrogen to energy can be as much as 60-80 per cent. Apart from producing power and heat, hydrogen will be used in the transport sector in the future.

Fortum believes in the hydrogen economy 

At Fortum, we believe that hydrogen will play a significant role for a utility of the future, and we have recently formed a Hydrogen Development team to take us into that space. Fortum has also joined Hydrogen Europe, the main industry & research association in Europe, which promotes the use of hydrogen in an emission-free society. Fortum’s subsidiary Uniper is also a member of the association and a pioneer among energy companies when it comes to hydrogen. Uniper has two hydrogen production plants, one in Hamburg and the other in Falkenhagen, Germany, where hydrogen produced with wind power can also be methanised or transferred directly into the natural gas network.

The hydrogen economy can help to offset fluctuations in energy production and consumption, and it enables a rapid increase of solar and wind power, and, ultimately, the transition to a completely carbon-neutral energy system in the future.

Eero Vartiainen

Senior Solar Technology Manager
PV prosumer
Eero represents Fortum and Finland in the Steering Committee of the European Technology and Innovation Platform for Photovoltaics (ETIP PV).
eero [dot] vartiainen [at] fortum [dot] com

Infobox: Hydrogen – the most common element in the universe

Hydrogen is the most common element in the universe, but the earth’s atmosphere contains very little of it; it always bonds with other elements like carbon in natural gas. Hydrogen is a good storage substance because its energy density is the highest of all the elements. It is also the lightest, but it takes a lot of space, so in practice it is usually pressurised when stored. A hydrogen atom is very small; it leaks easily and is also explosive, so hydrogen must be handled with care.

Hydrogen has been a known energy source for more than two centuries; in fact, the first combustion engine developed in the early 1800s was hydrogen-fuelled. Today hydrogen is used mainly in the chemical industry to produce ammonia and methanol, and in oil refining. At the moment, more than 99 per cent of the hydrogen used is produced by reforming fossil fuels, which causes carbon dioxide emissions.

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