Europe has set itself an ambitious goal: by 2030, it aims to have at least 40 GW of renewable-powered electrolysers on European soil, plus an additional 60 GW worth of green-hydrogen imports, sufficient to replace ten million tonnes of fossil-based hydrogen every year [1].
The vision is clear. Vast ranks of wind turbines and solar panels will power water electrolysers that split H₂O into storable, carbon-free hydrogen. This fuel can decarbonise steelworks, fertiliser plants and heavy transport, or be reconverted into electricity when the grid most needs it.
Making that vision work in the messy reality of Europe’s ageing, congested electricity networks is another story altogether. The continent is now discovering that connecting multi-megawatt electrolysers to the grid is not a simple matter of bolting on a new substation. It raises thorny questions about capacity, flexibility, location, cost and carbon integrity.
Yet, if these challenges are met, electrolysis could become a Swiss Army knife for the energy transition: soaking up excess renewables, steadying the grid, and providing a domestic source of clean molecules for industry.
Below, we explore the main technical, economic, and policy hurdles – and the solutions that are emerging from pioneering projects across Europe.
Why Electrolysers Matter for the Grid
Unlike data centres or heat pumps, electrolysers can be highly flexible. Modern electrolysers can ramp up from zero to full power in seconds, making them ideal ‘controllable demand’ devices.
When a storm sends wind generation soaring and wholesale prices turn negative, an electrolyser can switch on instantly and convert what would otherwise be wasted electricity into valuable hydrogen [2].
Conversely, it can power down during tight system conditions, reducing stress on the grid and saving money on electricity. This dual role – as both an industrial feedstock producer and a grid-balancing asset – explains why policymakers are so keen on the technology.
Realising that potential, however, hinges on overcoming five interlinked challenges.
1. Grid Capacity and Congestion
Across Europe, transmission and distribution networks were built for one-way traffic, with large power stations located in remote areas and demand concentrated in cities. The sudden appearance of gigawatt-scale offshore wind parks at one end of the line and equally chunky electrolysers at the other is stretching that architecture to breaking point.
In the Netherlands, more than 12,000 companies are waiting for new or larger connections because local substations are already at capacity [5]. Spain, basking in some of Europe’s best solar resources, sometimes has to curtail renewable farms because the lines out of Aragón or Extremadura are complete [6].
If electrolysers are located in these “hot spots” without grid reinforcement, they risk exacerbating the bottlenecks they are intended to alleviate. Transmission system operators (TSOs) warn that thousands of kilometres of new high-voltage lines and dozens of upgraded substations are needed before the decade is out.
The catch is timing: building new cables often takes longer than building a hydrogen plant, so developers and regulators must synchronise their construction schedules or explore alternative approaches such as local micro-grids or direct-wire connections to renewables.
2. Renewable Intermittency and Flexible Operation
Electrolysers only deliver genuinely green hydrogen if they run on zero-carbon electricity. EU rules now stipulate that plants must be paired with newly built renewables and, by 2028, match production and renewable generation on an hourly basis [2].
That means operators will have to live with variable utilisation – perhaps just 3,000 to 4,000 full-load hours a year in a wind-rich system. Running less often increases the cost of each kilogram of hydrogen, while running when the sun is down risks drawing power from the grid that is generated by fossil fuels.
The solution is a highly flexible operating regime. Studies show that electrolysers co-located with wind farms or on proposed North Sea “energy islands” could spend a third of their lives ramping up or down to provide balancing services, while still achieving respectable capacity factors [15]. To seize that opportunity, operators need price signals – such as half-hourly tariffs, dynamic grid fees, and access to ancillary service markets – that reward them for their agility.
3. Stability and Power Quality
Flicking a 100 MW electrolyser on or off can swing local demand faster than many conventional generators can respond, nudging frequency and voltage out of their safe bands.
Power-electronics interfaces, harmonic filters and – crucially – real-time coordination with the TSO are therefore essential. Pilot schemes in Germany and the UK have already demonstrated that electrolysers can deliver primary-frequency response even faster than a gas turbine [4]. The next step is to integrate these capabilities into standard grid-code requirements so every large electrolyser helps, rather than hinders, stability.
4. Choosing the Right Location
Should an electrolyser sit next to a windy harbour, drawing electrons at source and piping hydrogen inland, or at the gates of a steel mill, pulling power from the grid but delivering hydrogen over the fence? Both models are emerging.
The Netherlands has tendered a 500 MW offshore electrolyser that would eliminate the need for another onshore cable [7].
In contrast, France favours placing units inside industrial zones, relying on its robust, low-carbon nuclear and renewable mix to supply them via the grid [13].
The “right” answer depends on local circumstances: where the grid is strongest, where land and water are available, whether pipelines already exist and how willing communities are to host new infrastructure.
What is clear is that hydrogen and electricity networks must be planned together. Building one without the other risks stranding assets – an electrolyser with no cheap power, or a power line serving no customers.
5. Costs, Levies and Market Design
Electricity typically makes up 60–70 per cent of the cost of green hydrogen. Any surcharge – renewable levies, capacity charges, grid fees – can tip a business case from black to red.
Germany has scrapped its renewable-energy levy for certified green hydrogen [8]; Italy and France are working on similar industrial tariffs; the Netherlands is piloting off-peak capacity contracts that let large loads connect cheaply if they promise to switch off during peak hours [5].
At the same time, electrolysers could earn money by supplying reserve power. For the moment, minimum bid sizes and complex qualification rules keep most plants out of ancillary-service markets; however, reforms are underway at the national level and in the EU’s electricity-market-design package to put flexible demand on a level footing with traditional generators [3].
The goal is to create an ecosystem in which electrolysers purchase power when it is cheap and clean, provide grid support when it is scarce, and pass the resulting savings on to hydrogen customers.
Policy and Country Snapshots
Germany has doubled its 2030 electrolysis target to 10 GW and will auction 3 GW of “system-serving” capacity that must absorb surplus renewable energy and provide balancing services [11]. Exemptions from grid levies and a forthcoming Hydrogen Acceleration Act aim to fast-track projects.
The Netherlands aims to become Europe’s hydrogen hub, but it faces acute congestion. A national action plan is accelerating grid upgrades, while the first 500 MW offshore hydrogen station, slated for 2031, will test the production of H₂ at sea to bypass onshore constraints [9].
Spain aims to install 11 GW of electrolysers by 2030. It is investing heavily in new north–south transmission lines to bridge the gap between sunny central regions and industrial demand in the Basque Country and Catalonia, while projects such as HyDeal España bundle 7 GW of electrolysis with dedicated solar farms and new hydrogen pipelines [12].
France has moderated its goal to 4.5 GW by 2030, yet retains a €9 billion support scheme. Thanks to its nuclear fleet, electrolysers connected almost anywhere in the country can deliver low-carbon hydrogen around the clock; the challenge is scaling a domestic supply chain and building 500 km of dedicated H₂ pipelines linking industrial clusters [13].
Denmark is betting on “energy islands” in the North and Baltic Seas. By combining cables and on-site electrolysers, it aims to convert variable offshore wind into both electricity and hydrogen, alleviating grid bottlenecks while creating a new export commodity. Its 4–6 GW Power-to-X target is backed by streamlined permitting and a DKK 1.25 billion subsidy pot [14].
Innovation on the Horizon
Europe’s TSOs are collaborating on Ten-Year Network Development Plans that now place hydrogen pipelines alongside power lines [3]. The premise is simple: sometimes it is cheaper to move molecules than electrons. Early studies suggest positioning electrolysers in wind-rich northern Germany and sending hydrogen south could shave billions off grid-reinforcement costs.
At the plant level, manufacturers of alkaline electrolysers have introduced modules of up to 20 MW, which significantly reduce balance-of-plant costs and improve ramp rates. Pilot projects in Denmark and Scotland are exploring electrolyser-battery hybrids to smooth out second-by-second fluctuations in stored electricity while the electrolyser provides longer-duration flexibility [15].
Finally, heat and oxygen by-products are being captured for district heating networks and wastewater treatment, nudging overall system efficiency upward and winning community support.
Conclusion: A Delicate Balancing Act
Plugging large-scale electrolysers into Europe’s grid is a balancing act between speed and stability, cheap hydrogen and secure power, national ambition and continental co-ordination.
None of the hurdles is insurmountable, but each requires joined-up thinking. Builders need clearer grid-connection queues, investors need predictable tariffs and carbon rules, and TSOs need assurance that new loads will help rather than hinder system security.
If those pieces fall into place, the prize is considerable: a cleaner chemical feedstock, an insurance policy against volatile gas markets and a powerful ally for wind and solar farms struggling with curtailment.
Europe has taken the first steps with levy exemptions, flexible-load tenders and offshore pilot projects. The task now is to scale these pockets of innovation into a continent-wide hydrogen economy that strengthens, rather than strains, the electricity grid.
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References
- European Commission, A Hydrogen Strategy for a Climate-Neutral Europe (July 2020). Available at: https://energy.ec.europa.eu/system/files/2020-07/hydrogen_strategy_0.pdf
- European Commission, Commission Delegated Regulation (EU) 2023/1184 on Renewable Fuels of Non-Biological Origin (May 2023). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R1184
- Hydrogen Europe, Hydrogen Infrastructure Report (October 2024). Available at: https://hydrogeneurope.eu/wp-content/uploads/2024/10/2024.10_HE_Hydrogen-Infrastructure-Report.pdf
- A. Lüth et al., “A review of electrolyzer-based systems providing grid ancillary services,” Frontiers in Energy Research (February 2024). Available at: https://www.frontiersin.org/articles/10.3389/fenrg.2024.1358333/full
- Taylor Wessing, “Grid Capacity in the Dutch Energy Sector” (May 2025). Available at: https://www.taylorwessing.com/en/insights-and-events/insights/2025/05/grid-capacity-in-the-dutch-energy-sector
- Aurora Energy Research, “The New Spanish Grid Curtailment Forecast” (March 2025). Available at: https://auroraer.com/insight-type/public/spanish-grid-curtailment-forecast/
- Recharge, “Dutch plan tender for 500 MW wind-powered offshore green hydrogen electrolyser station” (October 2023). Available at: https://www.rechargenews.com/energy-transition/dutch-plan-tender-for-500mw-wind-powered-offshore-green-hydrogen-electrolyser-station/2-1-1422646
- Noerr, “Green hydrogen fully exempt from Renewable Energies Act levy” (January 2021). Available at: https://www.noerr.com/en/insights/green-hydrogen-fully-exempt-from-renewable-energies-act-levy
- Argus Media, “Netherlands to mandate renewable H₂ use by 2025-26” (September 2023). Available at: https://www.argusmedia.com/es/news-and-insights/latest-market-news/2463053-netherlands-to-mandate-renewable-h2-use-by-2025-26
- Clean Energy Wire, “Germany must increase flexibility, efficiency for 100 % renewables power system” (November 2024). Available at: https://www.cleanenergywire.org/news/germany-must-increase-flexibility-efficiency-100-renewables-power-system-researchers
- Argus Media, “Germany to auction 3 GW of system-serving electrolysers” (January 2024). Available at: https://view.argusmedia.com/rs/584-BUW-606/images/Argus%20Hydrogen%20and%20Future%20Fuels%20%282024-01-23%29.pdf
- McKinsey & Company, The Iberian Green Industrial Opportunity – Green Hydrogen (2023). Available at: https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/the-iberian-green-industrial-opportunity-green-hydrogen
- Strategic Energy Europe, “France adjusts its green hydrogen strategy” (April 2025). Available at: https://strategicenergy.eu/france-hydrogen/
- REGlobal, “Denmark’s Green Transition: Energinet releases long-term grid development plan” (June 2024). Available at: https://reglobal.org/denmarks-green-transition-energinet-releases-long-term-grid-development-plan/
- Copenhagen Business School, “Electrolysis as a flexibility resource on energy islands” (2023). Available at: https://research-api.cbs.dk/ws/portalfiles/portal/99643656/luth_alexandra_et_al_electrolysis_as_a_flexibility_resource_on_energy_islands_publishersversion.pdf