Green or blue hydrogen: Does it matter for the power market?

The pace at which green hydrogen can be produced may be limited by the availability of renewable power. Blue hydrogen – using natural gas with CCS – could therefore be important means to accelerate the development of a hydrogen economy. The eventual mix of blue vs green will affect prices and flexibility in the power market.


Most hydrogen is currently produced in an emission-intensive process based on natural gas. The transition to green hydrogen, produced using electrolysis powered by renewable energy, is key to securing deep emission cuts. However, producing green hydrogen demands a lot of renewable electricity and is therefore constrained by the extent to which sufficient renewable electricity sources are available. This renewable generation will need to come in addition to the volumes needed to replace existing fossil-fueled power generation and to directly electrify transport, heating, and industry.

Blue hydrogen, which uses natural gas combined with carbon capture and storage (CCS), can therefore act as an important bridging technology, accelerating the development of a hydrogen economy in the next couple of decades.

We have analyzed the role that blue hydrogen can play in a study within the REMAP research project.

Although the underpinning analysis is highly simplified, it demonstrates that Europe will need major additions in renewable electricity capacity to decarbonise its economy even if blue hydrogen is used. This is a daunting challenge given the difficulty involved in incorporating these renewable volumes into the existing electricity system.

Green hydrogen requires substantial additional RES generation

The relative share of green and blue hydrogen production is likely to have a significant impact on the European power market. In the Green Future case, using green hydrogen exclusively, total renewable generation capacity is estimated to increase by between 665 and 1046 GW, depending on scenario assumptions, since renewable generation capacity is also required to decarbonise sectors not using hydrogen.

Blue hydrogen significantly reduces the pressure on RES generation

In the Blue Majority case, the necessary growth in renewable generation is still substantial, but the required growth is reduced by between 25 and 40 percentage points. Meeting 75% of European hydrogen demand with blue hydrogen in 2035 reduces the need for investments in renewable generation capacity by around 16% compared to the Green Future case.

Our modelling of these two cases suggests, for example, that German wind generation potential is already fully exploited in a blue hydrogen case.

Green hydrogen provides more flexibility to the power system

Our analysis shows that the mix of green and blue hydrogen impacts both the structure of prices and flexibility in the power system, thereby impacting the value of Norwegian power exports and the flexibility of Norwegian hydropower. Green hydrogen increases the power system’s ability to absorb excess wind generation, thereby increasing flexibility and the value of wind generation. In Germany, the number of zero-price periods is reduced relative to the blue hydrogen case.

While an increased share of green hydrogen increases the value of wind power, it has the opposite effect on the value of Norwegian hydropower, since it competes as an alternative flexibility provider in Continental markets.

Analysis based on four different cases

Our analysis of the impacts of different total hydrogen volumes and shares looked out to 2035. We explored four different cases based on the development of European climate policies, power sector developments and hydrogen demand.

The study cases reflect two scenarios for hydrogen consumption:

  1. Best Guess Scenario: Hydrogen consumption is 200 TWh
  2. Emissions Eliminated Scenario: Hydrogen consumption is 500 TWh

For each scenario, we have analysed the impact of different relative shares of green and blue hydrogen:

  1. Green Future: We assume that all hydrogen is green
  2. Blue Majority: Blue hydrogen covers 75% of hydrogen consumption

The REMAP project is carried out in cooperation with the Fridtjof Nansen Institute and funded by the Norwegian Research Council and industry partners the Norwegian Water Resources and Energy Directorate (NVE), Statnett, Agder Energi, Energy Norway, the Norwegian Oil and Gas Association, and NorthConnect. More information and results can be found at the project website.

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