The development of the hydrogen sector, especially the electrification of hydrogen production, will have a significant impact on the power system in Europe, both in terms of planning and operation, according to an ENTSO-E study.

The new report, “Impact of Renewable Hydrogen on the Power System: Sector Development, Flexibility and Market Aspects,” delves deeper into the integration of hydrogen into power systems and electricity markets.

It also focuses on renewable hydrogen—specifically the role of electrolysers in the power system and their flexibility potential. The report examines electrolyser operating modes, reviews supportive regulatory and market frameworks, and explores how electrolysers could contribute to a hydrogen production landscape that is more flexible and adapted to power system needs.

Renewable hydrogen, produced by electrolysis using renewable energy, has multiple applications in hard-to-decarbonize sectors such as industry (e.g., iron and steel, chemical, petrochemical) and transport (especially long?haul aviation and shipping). The EU and its Member States are promoting hydrogen sector development through regulation, incentives, and initiatives throughout the value chain. At every stage—production, transport, storage, and end?use—hydrogen is expected to have a direct and indirect impact on the power system.

The development of hydrogen, particularly the electrification of its production, will significantly affect both the planning and operation of the power system. Previous ENTSO-E studies have identified the technical capabilities of electrolysers to provide grid services, as well as the challenges related to their integration into the system and electricity markets.

Building on these findings and considering evolving market dynamics, it is necessary to delve deeper into the integration of hydrogen within power systems and electricity markets. This study will also support ENTSO-E’s and TSOs’ planned engagement with key stakeholders—including electrolyser developers, future hydrogen network operators (HNOs), the corresponding European association (ENNOH), and EU policymakers and regulators—to develop future strategies.

Coordination between hydrogen and electricity system development

The study states that electrolysers and other hydrogen-based facilities must be planned, implemented, and operated in coordination with the power system to achieve the greatest positive impact on both systems and maximize consumer benefits.

Coordinated cross-sectoral, temporal, and technical planning by all relevant system and plant operators, along with an appropriate regulatory framework, must ensure a smooth transition with forward-looking investments, avoiding stranded assets and risks to stable operation—especially during the ramp-up phase.

To ensure the stability of the interconnected European power system, technical requirements for connecting large-scale power-to-gas (P2G) demand facilities should be developed as soon as possible at the national level, in line with ACER’s Network Code Demand Connection (NC?DC)?2.0 proposal.

Incentivising electrolyser investment and siting in line with power system needs

Location (near RES generation, hydrogen demand, or both) and connection configuration (grid?connected/off?grid) of electrolysers are highly relevant for optimizing the development and operation of the entire system infrastructure, considering the phase?out of natural gas as well.

The location, size, and technology of electrolysers directly influence the capacity and development needs of transmission and distribution networks, as well as their operational challenges (e.g., grid congestion, stability, resilience).

Regulation and market design—including rules that define what constitutes renewable hydrogen—should not only consider impacts on the hydrogen sector, but also incentivise electrolyser investments (in terms of technology, location, etc.) and operation in ways that benefit both the power system and efficient decarbonisation.

Facilitating flexibility provision by electrolysers also through hydrogen infrastructure

Depending on their configuration and operational mode, electrolysers have the potential to become promising sources of short?duration flexibility, particularly in a mature phase, via both implicit and explicit demand response. The explicit type can be extremely valuable to the power system, especially through participation in balancing and congestion management services.

Furthermore, long?duration flexibility can be provided in the future through hydrogen transport and storage infrastructure for re?electrification during prolonged periods of RES scarcity.

Such hydrogen infrastructure can support operational optimisation of the hydrogen sector (to leverage surplus cheap renewable energy and/or avoid oversizing electrolyser capacity), and also establish reserves for broader hydrogen use beyond electricity production.

Enabling renewable hydrogen’s contribution to resource adequacy

Both hydrogen-to-power (H?P) and power-to-hydrogen (P?H?) applications have the potential to contribute to resource adequacy in a carbon-neutral way:

P?H?, through explicit demand response (though in limited quantities, since electrolyser load profiles will already be implicitly influenced by spot market prices);

H?P, with thermal generation plants fuelled by decarbonised hydrogen in repurposed gas turbines acting as backup capacity, which can also participate in national capacity mechanisms.

Public support: targeted and well-designed

In the ramp-up phase, targeted public support can be beneficial if efficiently deployed. If deemed necessary, such support can not only incentivise green hydrogen production, but also stimulate its demand and the necessary investments in hydrogen transport and storage—ensuring development of the entire value chain and enabling energy system flexibility.