Using hydrogen to get extra value from clean energy

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Not all hydrogen is created equal. Companies need to make sure hydrogen projects are sustainable to capture their full value.


  • The environmental impact of hydrogen production varies greatly depending on how it is created.
  • Hydrogen can utilize existing natural gas infrastructure (including turbines) to create electricity and heating fuel blends.
  • Organizations can use hydrogen production to capture excess renewable energy and help balance grid demand.

Hydrogen’s immense energy potential has spurred big investment in the hydrogen economy. Companies that understand the nuances of the production spectrum use hydrogen to get extra value from sustainable electricity generation.

Hydrogen, hydrogen everywhere; but not a drop to use (at least not immediately). Hydrogen is the most abundant element in the universe, but it rarely exists on its own on Earth, appearing most commonly in water (H₂0) instead.

We’ve been using electricity to create hydrogen from water since the 19th century, but not all hydrogen is created equal.

Hydrogen has massive applications in the clean energy space, like capturing excess renewable energy, supporting grid stability, and reducing heating emissions. But the vast majority of hydrogen production is fueled by fossil fuels. In 2021, just 0.1 percent of overall production was powered by clean energy.

As such, there is a spectrum of hydrogen types, with each color denoting how the gas was produced.

From gray to green hydrogen, the emissions intensity and sustainability of each production method varies greatly. Companies purchasing hydrogen systems need to ensure access to ample renewable energy. If hydrogen is to become a viable, widely used energy source for the 21st century, it needs to be sustainable.

The colorful (and confusing) hydrogen rainbow

Black and brown hydrogen exist at the low end of the sustainability scale. This is because it is produced with fossil fuels (black for bituminous coal, brown for lignite coal).

The most common color of hydrogen is gray, which uses natural gas or methane. While not clean, gray hydrogen is less emissions-intensive than using coal. Gray hydrogen currently accounts for 78 percent of global production.

Source: Cheng, Wenting & Lee, Sora. (2022). How Green Are the National Hydrogen Strategies?. Sustainability. 14. 1930.

Blue hydrogen takes things a step further, and is technically carbon-neutral. This method builds on gray hydrogen but includes carbon capture and storage to deal with emissions.

Hydrogen that is produced with nuclear power has a whole palette of colors associated with it. Alternatively called pink, red, or purple, this type of hydrogen production is distinguished from ‘green’ or clean hydrogen, despite being zero-emission.

Applying green hydrogen in energy production

Green hydrogen is created by renewable energy sources (notably solar and wind). Green hydrogen capacity expanded from 1–90 megawatts (MW) from 2010–2020, and is forecasted to grow 22-fold 2030. For instance, Germany plans five gigawatts (GW) of hydrogen electrolysis capacity by 2030.

Advocates highlight that hydrogen offers a way to capture excess renewable energy and help mitigate renewable intermittency.

For example, wind and solar generators in Ontario are often forced to curtail production during periods of excess generation. Overall, 2,581 gigawatt hours (GWh) of Ontario’s wind and solar power (18 percent) and 604 GWh worth of nuclear power had to be curtailed in 2019. This lost energy could have been used to produce hydrogen.

As a potential bridging technology, hydrogen can incorporate legacy infrastructure and tap excess clean energy.

Improving energy storage and preventing energy waste is vital for accelerating the clean energy transition. Hydrogen production can convert excess energy into fuel for later use.

For example, Markham, Ontario is home to the first multi-megawatt power-to-gas (P2G) facility in North America. Since 2018, the 2.5 MW facility provides regulation services for the province’s system operator (IESO), producing hydrogen from excess power.

Hydrogen can use existing gas infrastructure and be mixed with natural gas to reduce emissions, provided its production is clean. In January 2022, Enbridge began blending green hydrogen into Markham’s natural gas supply, reducing the carbon footprint of roughly 3,600 customers.

Green hydrogen can also be combusted in a gas turbine to produce electricity, thereby leveraging existing generators.

As a potential bridging technology, hydrogen can incorporate legacy infrastructure and tap excess clean energy. Producing hydrogen is also a potential revenue source for organizations with excess on-site renewable generation, either as fuel or providing flexible loads to support grid stability.

Getting more value from behind-the-meter assets

Combining renewable energy generation with hydrogen production can also minimize energy risks. For instance, substituting (fully or partially) heating fuel for green hydrogen produced on-site by behind-the-meter generation could reduce exposure to natural gas shortages and price spikes.

A case study of a port facility in Chile shows how this approach would work. The study considers an on-site solar array (annual average generation of 1,584 MWh), combined with hydrogen production and storage equipment. The solar array powers port operations as well as the 3.1 MWh hydrogen electrolyser. Hydrogen is produced on-site for heating fuel and transportation, as well as a means of storing excess solar energy for later use.

In terms of pricing, one kilogram (kg) of hydrogen can be over four times more expensive than a liter of diesel and still be competitive. This is because only 60 kg of hydrogen is needed to generate the equivalent of one MWh, compared to 245 liters of diesel.

Combining behind-the-meter assets that can respond to market signals with ways to capture excess generation—such as hydrogen production—gives companies more control over their usage and costs.

In addition, given a power purchase agreement (PPA) above $19 per MWh it is also more profitable for the facility to incorporate solar assets on-site as opposed to buying energy from a third party.

Similarly, the Natural Energy Laboratory of Hawaii Authority (NEHLA) found itself with excess behind-the-meter solar capacity. To capture this excess generation, NEHLA built a hydrogen electrolyser in 2020 to produce fuel for fuel-cell buses on the island. The facility’s excess solar fulfills part of the 250 kW demand for hydrogen production at the site.

NEHLA also found that supporting the grid by tailoring “response times to perform fast applications such as frequency response […] could be a revenue stream that electrolysis facilities could access in the future.”

Combining behind-the-meter assets that can respond to market signals with ways to capture excess generation—such as hydrogen production—gives companies more control over their usage and costs.

No one solution can solve all energy and emissions needs, so companies need access to the right solutions—whether hydrogen or other options—for them. To do so, companies need access to flexible on-bill funding options that minimize risk and simplify the purchasing process.

EnPowered helps companies adopt the clean energy solutions they want

Green hydrogen is still in its infancy. Proactive companies looking to move away from gray hydrogen and reduce emissions are turning to emerging clean energy technologies to get the job done.

But being a clean energy leader isn’t easy, and trying to secure enough funding is one of the biggest hurdles standing in the way.

Better funding is vital to accelerating the clean energy transition and adoption of clean technology like green hydrogen. Businesses can leverage secure, on-bill payments platforms to realize their clean energy goals in a quick and budget-friendly way.

EnPowered Payments helps clean energy solution providers unlock more stalled deals and sell more, while also helping their customers save. Payments empowers customers to buy assets with no upfront costs and while remaining cash flow positive. Businesses can use a portion of their energy savings to pay for projects through their electricity bill.

Ready to learn more? Reach out today to discover how EnPowered helps energy users adopt clean energy solutions like hydrogen systems to do their part to fight emissions and cut energy costs.

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Mike Kirkup


Mike is responsible for the entire product organization including design, development, data science, and product management. Mike is a huge supporter of the Waterloo region and startups which is seen through his prior position as the director of Velocity, the University of Waterloo’s world-renowned startup program. He has also participated in a number of boards including the Waterloo Region Economic Development Corporation, Golden Triangle Angel Network, and Intrideo. Mike received a Bachelor of Mathematics and Masters of Management Science from the University of Waterloo.