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Glossary · Energy industry & energy transition

Electrolyser utilisation

Electrolyser Utilisation Electrolysis hydrogen LCOH electricity price Investments flexibility

Electrolyser utilisation describes how intensively an electrolyser is operated during a given period, usually within one year. It is therefore not about the size of the plant, but about the ratio between the possible and the actually used capacity. An example: A plant with 100 megawatts of electrical rated capacity that runs at full capacity for a whole year without interruption would reach 8,760 full-load hours, or 8,784 in a leap year. If it takes up only half of the theoretically possible amount of electricity in the year, its utilisation is about 50 percent, or around 4,380 full-load hours. It makes no difference whether the plant ran at full capacity for half of the time or at half capacity for the whole year.

Two indicators are used most often. The full-load hours convert the energy actually consumed in a year into operation at rated capacity: annual electricity consumption divided by rated capacity. The capacity factor divides these full-load hours by the hours of the year. Both figures make plants of different sizes comparable. It is important to know what a figure refers to. Usually the electrical consumption is meant, but sometimes it is hydrogen production relative to nominal production. The two values can differ, because the specific electricity consumption per kilogram of hydrogen varies with partial load and the age of the stacks. In addition, the indicators say nothing about the electricity prices at which production took place, how flexibly the plant was operated, or whether hydrogen had to be stored temporarily.

Distinction from capacity, availability and efficiency

The installed capacity indicates the maximum electrical power an electrolyser can draw. Utilisation shows how intensively this capacity is used over time. The difference matters, because hydrogen debates often cite installed electrolysis capacity, even though this alone does not yield a quantity of hydrogen. A rough estimate illustrates this: Ten gigawatts at 2,000 full-load hours consume about 20 terawatt-hours of electricity. At 5,000 full-load hours it is about 50 terawatt-hours. At a system requirement of roughly 50 to 55 kilowatt-hours per kilogram, this corresponds to approximately 0.4 and 1 million tonnes of hydrogen respectively.

Availability is also something different from utilisation. A technically available plant could run, but does not have to. Maintenance, faults, grid restrictions or a lack of hydrogen offtake reduce the usable time. Market prices, support conditions, power purchase agreements or rules on the origin of the electricity can lead to an available plant deliberately standing idle. Availability therefore only sets the upper limit. Actual utilisation results from technology, market environment, regulation and offtake conditions.

Utilisation must likewise be separated from efficiency. Efficiency determines how much electricity is needed for one kilogram of hydrogen. Utilisation determines over how many kilograms the fixed costs of the plant are spread. A very efficient plant can therefore deliver expensive hydrogen if its capital and operating costs fall on a small annual production. Conversely, high utilisation becomes expensive if the additional operation takes place in hours with high electricity prices.

Why utilisation shapes hydrogen costs

The cost of hydrogen from electrolysis is often stated as LCOH, that is, Levelized Cost of Hydrogen. This figure includes investment and financing costs, fixed and variable operating costs, electricity costs, efficiency, stack lifetime and utilisation. Utilisation acts directly on the share of fixed costs. The more hydrogen a plant produces per year, the more widely investment, grid connection, planning and fixed operating costs are spread. With high capital costs, that is, a high WACC, this effect is particularly strong.

A trade-off follows from this. An electrolyser that runs only a few hundred hours per year can use very cheap electricity, for example in hours with negative electricity prices. Its investment costs then fall on a small quantity of hydrogen, however. An electrolyser that runs almost continuously produces a lot of hydrogen, but must also buy electricity in hours when the electricity price is high. In many projects, electricity is the largest cost block. Even one cent more per kilowatt-hour makes each kilogram of hydrogen about 50 cents more expensive. The economically best utilisation is therefore usually neither continuous operation nor a few extreme hours. It lies where the saving in fixed costs from additional hours just still offsets the higher variable costs of those hours.

An annual average electricity price is hardly sufficient for this calculation. What matters is the price profile: How many cheap hours are there? How strongly do prices rise when additional demand is added? Which grid charges, levies and procurement costs apply? What revenues can be achieved through flexible operation, for example on the balancing energy market? Utilisation is therefore not a purely technical indicator. It is part of an operating model.

Technology, grids and flexible operation

Electrolysers are often regarded as flexible consumers. This is only true, however, if the plant can actually respond to prices, grid signals or generation profiles. The designs differ in how quickly they can change their output, what minimum load they require and how well they tolerate frequent load changes. PEM electrolysis is considered particularly dynamic and usually allows low partial loads. Plants using alkaline electrolysis can also be operated flexibly, but depending on the design often have higher minimum loads. One reason is gas purity at low load. Specific limit values depend strongly on the manufacturer. Ancillary systems such as water treatment, compression, cooling and gas purification also need stable conditions. Frequent cold and warm starts can moreover accelerate ageing.

For the electricity grid, what matters is where the electrolyser is connected and by which signal it is operated. Operation in hours with low exchange prices is not automatically beneficial to the grid. The uniform wholesale price of a bidding zone reflects grid congestion and local connection capacities only incompletely. A well-placed electrolyser can absorb wind and solar power that would otherwise be curtailed. A poorly placed one, by contrast, can trigger new congestion or additional grid expansion.

The hydrogen side also limits utilisation. Many industrial customers need steady quantities of reliable quality. If the electrolyser runs strongly according to the electricity price, hydrogen storage, other supply sources or flexible processes must balance out the fluctuations. Storage costs money and requires infrastructure. Without it, demand forces high, steady utilisation, even in expensive hours. Optimisation therefore covers the electricity profile, electrolyser operation, storage and delivery obligations together.

EU rules for renewable hydrogen

In the EU, Delegated Regulation (EU) 2023/1184 specifies when electricity used to produce renewable liquid and gaseous transport fuels of non-biological origin (RFNBO) counts as fully renewable. It thereby directly determines how many hours a grid-connected electrolyser can produce hydrogen that is recognised as green hydrogen under EU law. Under the version currently in force, a monthly temporal correlation is sufficient until 31 December 2029: renewable electricity from a purchase agreement and hydrogen production must fall within the same calendar month. From 1 January 2030, they must fall within the same hour. Electricity from a new storage unit behind the same grid connection point can be counted.

One exception is important for utilisation. An hour always counts as temporally correlated if the day-ahead price in the bidding zone is at most 20 euros per megawatt-hour or below 0.36 times the price of a CO2 allowance. In addition there are requirements on geographical proximity and on the additionality of the electricity generation. For plants that start operation before 1 January 2028, the additionality requirement applies only from 1 January 2038. Under strict hourly correlation, the number of eligible hours often falls, unless this is compensated by oversized power purchase agreements or storage.

These rules are intended to prevent hydrogen from being green only on paper while additional fossil generation becomes necessary in the power system. At the same time, they restrict procurement and thus affect profitability. The rules are politically contested. The European Commission has announced a targeted, early review. Industry associations demand, among other things, that hourly correlation be postponed at least until 2035. As of September 2026, this review had not yet been completed. Anyone planning utilisation today should therefore check the version currently in force.

In Germany, grid charges also influence optimal utilisation. Under § 118 paragraph 6 EnWG, electrolysers that start operation by 4 August 2029 are exempt for 20 years from grid charges on the electricity they draw. The exemption covers only grid charges in the narrower sense. The Federal Network Agency (Bundesnetzagentur) is working on a reorganisation of grid charges (AgNes). According to the draft determination, the exemption for projects in planning is to apply only if the investment decision was taken before the determination was announced. For later plants, charges that also depend on capacity are to be expected. This would change both fixed costs and the benefits of flexible operation.

Typical misinterpretations

  • “Green hydrogen is produced mainly from surplus electricity”: This notion underestimates investment costs and overestimates how many permanently very cheap surplus hours there are. If an expensive plant runs only a few hours, the share of fixed costs rises sharply. Large industrial quantities require more cheap hours, low capital costs, support or customers who pay for expensive hydrogen.

  • “High utilisation means good profitability”: Many full-load hours do spread the fixed costs better. But if they are bought by drawing electricity in expensive hours, variable costs rise markedly, because around 50 to 55 kilowatt-hours of electricity are needed per kilogram of hydrogen.

  • “Utilisation says something about climate impact”: A highly utilised electrolyser can be climate-friendly if additional renewable electricity is available at the same time. With unfavourable procurement, however, it can trigger fossil generation in the electricity mix. A little-utilised electrolyser, by contrast, can absorb renewable generation well if it runs specifically in hours of high feed-in.

Role in investment decisions

For investors, utilisation is a central planning variable, because it links revenues, costs and risks. A plant with low utilisation needs very low investment costs, particularly cheap electricity hours, high hydrogen prices or additional revenues from flexibility. A plant with high utilisation needs secured electricity procurement, robust offtake contracts and often infrastructure for transport or storage. Capital providers therefore examine not only the technology, but whether the entire operating model is reliable, including regulatory assumptions such as electricity sourcing criteria and grid charges.

For energy planning, utilisation shows what role electrolysers actually play in the power system. They can supply hydrogen continuously or provide flexible demand. Maximum utilisation, minimum electricity costs, complete alignment with the grid and steady delivery at the same time are, however, hardly achievable without storage, backup sources or changed market rules. A precise utilisation figure therefore does not yet answer whether a project is economical or beneficial to the system. But it leads to the decisive questions: Which hours are used, what does electricity cost in those hours, and what infrastructure is needed so that installed capacity becomes reliably usable hydrogen?

Sources

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Edited by eCMS on 11.11.2026 19:44

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