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Glossary · Energy industry & energy transition

Electrolysis

Electrolysis hydrogen power-to-gas power-to-X electricity conversion losses long-term storage sector coupling

Electrolysis is a process in which electrical energy forces a chemical reaction that would not take place on its own, or not in that direction. In the energy system, it almost always means water electrolysis. In this process, electricity splits water into hydrogen and oxygen. The plant used for this is called an electrolyser. The hydrogen produced is then no longer electricity, but a chemical energy carrier and feedstock. It can be stored, transported, used directly in industrial processes or further processed into ammonia, methanol or synthetic fuels.

Overview of technologies

Three processes dominate the debate. Alkaline electrolysis (AEL) has been proven for decades and uses an alkaline solution as the electrolyte. PEM electrolysis uses a membrane that conducts protons. It responds quickly to load changes, but requires precious metals such as iridium and platinum. Both processes operate at low temperatures. High-temperature electrolysis (SOEC), by contrast, splits steam at several hundred degrees. It needs less electricity if part of the energy is supplied as heat, for example as steam or industrial waste heat. The IEA assumes about 40 kWh of electricity plus about 10 kWh of steam per kilogram of hydrogen here.

Key figures: capacity, electricity demand, water

The most important technical parameter of an electrolyser is its electrical connected capacity in kilowatts, megawatts or gigawatts. It indicates the maximum amount of electricity the plant can draw. The quantity of hydrogen produced is usually stated in kilograms or tonnes. Today's low-temperature plants need roughly 50 to 55 kWh of electricity in total per kilogram of hydrogen, and more under unfavourable conditions. The IEA assumes 50 kWh/kg for low-temperature electrolysis. This corresponds to an efficiency of about 67 percent, based on the lower heating value. For 2025, the IEA assumes a global average of 63 percent. This corresponds to just under 53 kWh/kg.

A worked example shows the order of magnitude. One million tonnes of hydrogen per year require around 50 terawatt-hours of electricity at 50 kWh/kg. If the plant runs about 4,800 hours a year at full load, an electrolysis capacity of about 10 gigawatts is needed. Such figures are more meaningful than a bare percentage, because they show what quantities of electricity and what capacity stand behind a hydrogen target.

For the reaction itself, stoichiometrically just under nine kilograms, i.e. about nine litres, of pure water are needed per kilogram of hydrogen. In addition, there are losses in water treatment and, depending on the cooling concept, additional cooling water. In debates, water demand is often overestimated when cooling and process water from other industries is counted. It can nevertheless become important in water-scarce regions, especially when large plants are concentrated at one site. Seawater desalination is an option with comparatively low energy consumption. For desalination and transport over 500 kilometres, the IEA cites about 0.6 kWh per kilogram of hydrogen. The oxygen produced as a by-product is often not used, but can have value, for example in wastewater treatment plants or industrial processes.

Distinction from batteries, fuel cells and Power-to-X

Electrolysis is not electricity storage in the strict sense. It is the first step on a path in which electricity is converted into chemically bound energy. A battery returns stored electricity as electricity with low losses. With hydrogen, by contrast, reconversion to electricity requires a fuel cell, a gas turbine or a gas engine. The fuel cell works in the opposite direction: hydrogen and oxygen produce electricity, heat and water. For the entire path from electricity via hydrogen back to electricity, usually well under half of the energy input remains. Depending on the technology, it is often only about one third. The strength of this path therefore does not lie in storage over hours. It lies in being able to store large amounts of energy over weeks or seasons, for example in salt caverns, and in the fact that hydrogen as a molecule is needed in industry.

Power-to-gas and Power-to-X do not denote a single plant, but utilisation pathways. Power-to-gas means the conversion of electricity into hydrogen or methane produced from it. Power-to-X additionally covers liquid fuels, ammonia, methanol and other products. Electrolysis is usually the first step of these chains. Each further synthesis step causes additional losses.

Efficiency and conversion losses

The efficiency of electrolysis indicates what share of the energy input is chemically bound in the hydrogen. What matters is which value it is related to. The lower heating value of hydrogen is about 33.3 kWh/kg, the higher heating value about 39.4 kWh/kg. A consumption of 50 kWh/kg therefore gives around 67 percent based on the lower and just under 80 percent based on the higher heating value. Based on the lower heating value, typical system values today are roughly between 60 and 70 percent. For 2030, the IEA expects only small improvements. In addition, auxiliary consumption, gas purification, compression and possible use of waste heat change the balance. Anyone comparing projects should therefore always check the reference basis and the system boundaries of the balance.

The losses make hydrogen expensive where electricity could also be used directly. Heat pumps, electric motors or electric arc furnaces usually use electricity much more efficiently. Nevertheless, efficiency alone is not an exclusion criterion. Hydrogen makes sense where an application can hardly be electrified, where it is needed as a chemical feedstock or where energy has to be stored for a long time. For the power system, too, timing, location and use matter, not just efficiency.

Mode of operation, utilisation and electricity price

Whether an electrolyser pays off depends strongly on its full-load hours. With high utilisation, the investment costs are spread over many kilograms of hydrogen. However, the plant then needs cheap and, if possible, renewable electricity over many hours. A plant that runs only in a few hours with very cheap electricity saves electricity costs, but makes poor use of its capital. This trade-off is shaped by electricity prices, grid charges, support rules, offtake agreements and the technical flexibility of the plant. Many industrial customers also need a steady supply. Storage or a grid for balancing is then necessary.

Technically, electrolysers can adjust their load within certain limits. This applies particularly to PEM plants. However, this flexibility has value only if market rules and grid operators call on it or pay for it. The residual load is important here. If electrolysis runs in hours with low or negative residual load, it can reduce curtailment of wind and solar power. If it runs in hours with high residual load, it increases the need for power plant capacity or imports. How electrolysis affects the system therefore depends on its load profile.

Green is not a property of the plant alone

An electrolyser does not automatically produce green hydrogen. The climate impact depends on the electricity used. If the plant is operated with electricity from a fossil-dominated electricity mix, the hydrogen can have higher emissions than grey hydrogen from natural gas. The rules on additionality and on temporal and geographical correlation are therefore intended to prevent electrolysers from displacing existing renewable electricity from other uses.

In the EU, Delegated Regulation (EU) 2023/1184 governs when electricity from the grid counts as fully renewable for renewable fuels of non-biological origin (RFNBO). It was extended to all sectors by Regulation (EU) 2024/1408. As of November 2026, the following core rules apply:

  • Additionality: The installations supplying the renewable electricity may in principle have entered into operation no more than 36 months before the electrolyser. For electrolysers that enter into operation before 1 January 2028, this requirement applies only from 1 January 2038.

  • Temporal correlation: Until the end of 2029, it is sufficient if hydrogen and renewable electricity are produced in the same calendar month. From 1 January 2030, the requirement is deemed met only within the same hour.

  • Exceptions: Temporal correlation is deemed fulfilled, among other cases, in hours in which the day-ahead price in the bidding zone is no more than 20 euros per megawatt-hour. It is also deemed fulfilled if the price is below 0.36 times the CO2 allowance price. Further exceptions exist for bidding zones with a renewable energy share above 90 percent or with a very low emission intensity of electricity.

These rules are currently under review. In 2026, the European Commission announced a targeted review. Member States and industry associations are calling for the transitional periods to be extended. In September 2026, according to associations, this review had not yet been completed. Anyone planning projects should therefore check the currently applicable status. Outside the EU, different rules apply, for example in the USA or in national support programmes.

Location, infrastructure and role in the energy system

Several infrastructures come together at the location of an electrolyser: power grid, water supply, hydrogen transport, offtakers and storage. A location near large wind or solar parks can reduce grid congestion. A location near industry saves transport routes. Ports can connect import chains with industrial clusters. None of these location logics is fundamentally superior. For seasonal storage, large underground storage facilities are particularly important, not small pressure tanks at individual plants.

The benefit of electrolysis is greatest where hydrogen is needed as a material feedstock or has to replace fossil molecules. This includes ammonia and methanol production, refineries, the direct reduction of iron ore in steelmaking and certain high-temperature processes. There, electrolysis hydrogen competes mainly with grey hydrogen from natural gas, not with direct electrification. For the power system, electrolysis can support the expansion of renewable energy, but can also create new load peaks. Because production requires a lot of electricity, capital and infrastructure, hydrogen from electrolysis is likely to remain scarce and expensive for some time. A priority order therefore makes sense: it should first be used where direct electrification is technically or materially insufficient.

Sources

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Edited by eCMS on 11.11.2026 19:44

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