Power Grids and Renewables for Hydrogen Explained

TECHNOLOGY EXPLAINER

Power Grids and Renewables
— is an electrolyzer a load on the system, or a source of flexibility?

To a power system an electrolyzer is a large load. It responds quickly and can cut its consumption, so it is said to be able to act as flexibility that absorbs surplus renewable power. But to use up the power curtailed in Japan's Kyushu area in FY2024 (750 GWh), an electrolyzer fleet running at a low capacity factor would need hundreds to over a thousand MW, and even with free electricity the hydrogen would cost about US$18-37/kg (our calculation). This article stays on the grid and power side: characteristics, the real situation, ways of connecting, and the rules in Japan, the EU and the U.S.

Built from primary sources: IRENA, IEA, the Cabinet Secretariat of Japan (Basic Hydrogen Strategy), METI / ANRE, e-Gov statutes, EUR-Lex, the U.S. Federal Register and Public Law, and DOE material / Last updated October 2026

Conceptual hero image for Power Grids and Renewables for Hydrogen — **Fig. 1 Concept image (AI-generated).** An impression of using renewable power near a transmission grid for water electrolysis. **It does not show a real facility, device or manufacturer.**

Contents

Electrolysis, renewables and the grid (the short version)
What an electrolyzer looks like to the grid
What "surplus" renewable power is — curtailment in Japan
Our calculation: using curtailed power in electrolyzers
A materials engineer's view (1): variable operation changes how materials are used
Ways of connecting power — grid, dedicated renewables, solar, small reactors
Rules: Japan, the EU and the U.S.
A materials engineer's view (2): translating power-side demands into material tests
Limits, and what we could not confirm
Glossary / References / Claim-to-source audit

How claims are labelled in this article

Sourced = a value stated in published material (link given)
Our calculation = a figure this article derived from stated assumptions
Not yet confirmed = a plan, target or outlook, or a future application of a rule, with no confirmed outcome
Readings from a materials or grid point of view are marked separately as Commentary.
For rules (statutes and regulations) we distinguish proposal, adoption and entry into force (start of application) and give the date we checked (October 2026). A rule that is being amended, delayed or repealed may have changed since.
This article explains how the power grid and electrolysis relate. It is not advice on operating or handling equipment, or on investment or procurement decisions. Hydrogen is a flammable gas and its handling is governed by laws (such as Japan's High Pressure Gas Safety Act) and standards.

1. Electrolysis, renewables and the grid (the short version)

Seen from the grid: IRENA describes electrolyzers as loads that can change output quickly and reduce consumption to zero, with possible uses in balancing, reducing the curtailment of renewables, and easing congestion Sourced [Reference 1]. Japan's Basic Hydrogen Strategy (2023) likewise says that making hydrogen from surplus electricity could be one solution to the shortage of balancing capability and to grid congestion Sourced [Reference 3].
A sense of scale: Curtailment in the Kyushu area was 4.8% (750 GWh) in FY2024 and 8.3% (1,290 GWh) in FY2023 Sourced [Reference 4]. At midday on 4 May 2025 curtailment there reached 5.09 GW [Reference 4]. Installed water electrolysis worldwide was about 2 GW at the end of 2024 [Reference 2].
But capacity factor is low: An electrolyzer that runs only on curtailed power has a low capacity factor, and capital cost then sets the hydrogen cost Our calculation (Chapter 4). Whether it connects to the grid, to dedicated renewables or to nuclear changes both its capacity factor and its treatment under EU and U.S. rules (Chapters 6 and 7).

2. What an electrolyzer looks like to the grid

The materials and structures of the electrolyzer technologies (PEM, alkaline, AEM, SOEC) are covered in other explainers in this series. Here we organize only the characteristics seen from the power-system side. IRENA says an electrolyzer's flexibility can be judged on five points: (1) time to respond to a power set-point change, (2) time to settle, (3) rate of change of power consumption, (4) the lower operating limit (minimum load), and (5) start-up and shut-down times Sourced [Reference 1].

Response is fast. In tests of small systems of about 40 kW, power demand began to change within milliseconds of a set-point change and settled within seconds (a 2014 report by Eichman et al., cited by IRENA). Electrolyzers can reduce consumption to zero for an unlimited time [Reference 1].
The speed of a power change is set by the rectifier. Manufacturers have typically guaranteed ramping consumption up or down in under one second, which IRENA says is mainly a function of the rectification system. Alkaline electrolyzers have been tested successfully for primary control reserve in Germany and are, for practical purposes, as fast as PEM [Reference 1].
Low-load operation is possible, but efficiency falls. IRENA writes that partial load as low as 5% can be sustained for long periods, though this may cause significant efficiency losses because of the rectifier's characteristics [Reference 1].
Start-up and shut-down: IRENA's text says PEM can reach cold start-up in under 5 minutes and shut down completely within seconds. The report's table gives, for the 2020 status, cold start of under 20 minutes for PEM and AEM, under 50 minutes for alkaline and over 600 minutes for SOEC [Reference 1]. The conditions behind the difference between text and table are not stated, so we show both.

Fig. 2 Concept diagram (vector drawing). Load range and cold start of electrolyzers, from IRENA's Table 6 (2020 status) [Reference 1]. They are not manufacturer guarantees or standard values, and do not rank the technologies.

IRENA lists four kinds of service to the system Sourced [Reference 1]: (a) raising consumption sharply at times of renewable surplus to reduce curtailment, (b) taking part in balancing markets through aggregators, (c) coordinating with off-grid renewables to smooth fluctuations, and (d) cutting consumption for congestion management. It also states the limits. An electrolyzer has an economic incentive to run as many hours as possible to spread capital cost, so a service that stops consumption needs proper remuneration; and where industrial processes using the hydrogen cannot be stopped, the size of hydrogen storage limits flexibility [Reference 1].

IRENA's "key message" is that electrolysis can provide flexibility to match the seasonality of renewable generation, rather than follow short-term fluctuations, which short-term storage such as batteries can handle. Coupled with gas infrastructure (salt caverns, pipelines), it can store renewable electricity in molecular form across seasons and decouple hydrogen demand from variable renewable supply Sourced [Reference 1]. The IEA likewise says hydrogen and ammonia are among the few options for large-scale and seasonal electricity storage in systems with high shares of variable renewables and limited other flexibility [Reference 2] (that concerns converting hydrogen back to power, a different side from electrolysis).

3. What "surplus" renewable power is — curtailment in Japan

A power system must match demand and supply at every moment. When a sunny midday coincides with a spring or autumn holiday of low demand, supply can exceed demand even after other plants cut to their minimum output. The surplus is shared among pumped-storage charging, batteries, export through interconnectors to other areas, and curtailment of renewables (Fig. 3 is a concept diagram). An electrolyzer could be one more destination for the surplus.

Fig. 3 Concept diagram (vector drawing). A day of supply and demand and where electrolysis fits. Shapes are illustrative, not data. The size and timing of surplus differ greatly by area and day.

A document of Japan's Ministry of Economy, Trade and Industry (METI) and its Agency for Natural Resources and Energy (ANRE), dated 16 March 2026, summarizes curtailment in Japan as follows Sourced [Reference 4]:

As renewable capacity grew, areas implementing curtailment spread nationwide. On Sunday 1 March 2026, between 11:00 and 16:00, curtailment of renewables was carried out in the Tokyo area for the first time, so every area has now implemented curtailment.
Partly because simultaneous curtailment in several areas reduces exports to other areas, and because demand has declined, curtailed volumes are on an upward trend.
Curtailment tends to occur in the light-load seasons of spring and autumn. Renewable capacity grows every year, but curtailed volume does not necessarily rise every year; the document says it arises from multiple factors that are hard to separate.

Area	Curtailment rate, FY2024	Energy curtailed, FY2024	For reference: FY2023 rate
Kyushu	4.8%	750 GWh	8.3% (1,290 GWh)
Tohoku	1.3%	210 GWh	0.8% (130 GWh)
Chugoku	2.3%	210 GWh	3.6% (320 GWh)
Kansai	2.1%	200 GWh	0.1% (0.0087 GWh)
Shikoku	3.2%	160 GWh	1.8% (92 GWh)
Chubu	0.3%	51 GWh	0.2% (38 GWh)
Hokuriku	0.9%	17 GWh	0.6% (10 GWh)
Hokkaido	0.04%	1.9 GWh	0.01% (0.81 GWh)
Okinawa	0.15%	0.70 GWh	0.27% (1.4 GWh)
Tokyo	None (as of June 2025)	—	—

Table 1 Renewable curtailment by area (from METI / ANRE material [Reference 4]; Sourced). Curtailment rate = curtailed variable-renewable energy ÷ (curtailed + generated variable-renewable energy). Kansai excludes the southern Awaji Island district and Shikoku includes it. Tokyo curtailed for the first time on 1 March 2026 (we did not confirm FY2025 figures). Energy values are converted by us from the source's 100-million-kWh and 10,000-kWh units.

Adding up the FY2024 volumes in Table 1 gives about 1,600 GWh nationwide excluding Tokyo Our calculation. The figures are the values in the source, based on each area's transmission operator, and we only added them up. Comparing them with global renewable hydrogen volumes or with Japan's hydrogen deployment targets is outside the scope of this article.

Fig. 4 Chart of source data (vector drawing). Supply and demand in the Kyushu area on its minimum-demand day (12:00-12:30, 4 May 2025). Against 9.68 GW of solar, demand was 6.53 GW; renewable curtailment was 5.09 GW, pumped storage 1.89 GW and interconnector export 1.34 GW [Reference 4]. One area at one time, not representative of the year or other areas.

This chart shows the size of a surplus concretely. Curtailment in Kyushu at that moment, 5.09 GW, exceeds the whole installed water electrolysis of the world (about 2 GW at the end of 2024) Our calculation [Reference 2]. To turn the surplus into hydrogen, electrolyzers matched to the surplus at that moment are needed. Yet a surplus of this size is concentrated in a limited number of hours a year, so, as the next chapter shows, the capacity factor of the equipment becomes the big issue.

4. Our calculation: using curtailed power in electrolyzers

Suppose all of the 750 GWh curtailed in the Kyushu area in FY2024 were used in electrolyzers. At 52.9 kWh/kg (63% LHV efficiency, the base case of our explainer on the cost of hydrogen production), that is about 14,200 tonnes of hydrogen Our calculation. The electrolyzer capacity needed depends on how many hours the electrolyzer can run (its capacity factor).

Capacity factor	Electrolyzer capacity needed (MW)	Hydrogen cost: power at US$0/MWh	Power at US$20/MWh	Power at US$50/MWh
5%	1,712	36.6	37.7	39.2
10%	856	18.3	19.4	20.9
20%	428	9.1	10.2	11.8
30%	285	6.3	7.4	9.0

Table 2 Capacity needed to use up 750 GWh of curtailed power, and the hydrogen cost (US$/kg) (Our calculation). Assumptions: 52.9 kWh/kg, installed cost US$2,300/kW, 8% discount rate, 20-year life, 3%/yr O&M, stack life 50,000 h with replacement at 20% of capital cost (same as our explainer on the cost of hydrogen production). Capacity factors are our assumptions and do not reflect the actual time distribution of curtailment.

Fig. 5 Chart including our calculation (vector drawing). Capacity needed to use up curtailed power (Kyushu, FY2024, 750 GWh) (bars) and the resulting hydrogen cost (numbers below). A simple calculation that ignores the time distribution of curtailment; not a forecast for any real project.

What Table 2 and Fig. 5 show Our calculation:

Even with free electricity, the hydrogen cost is set by capacity factor. At a 10% capacity factor, power at US$0/MWh still gives about US$18/kg, because annualized capital cost and O&M are spread over little hydrogen (the same structure as Chapter 6 of our explainer on the cost of hydrogen production).
Using up the surplus takes large capacity. About 856 MW at a 10% capacity factor, and still about 428 MW at 20%, which is roughly 20-40% of the world's installed water electrolysis (about 2,000 MW).
The real capacity factor depends on when and how much curtailment occurs. Curtailment is concentrated at spring and autumn middays, so running an electrolyzer through the year needs power beyond the curtailed volume. The price and sourcing of that power change its treatment under the rules (Chapters 6 and 7).

Japan's Basic Hydrogen Strategy too says that, to make renewable hydrogen cheaply, it is important to procure cheap surplus renewable power in large quantities and raise the electrolyzer's capacity factor Sourced [Reference 3]. It also says that, while domestic hydrogen production is seen as costlier than imports because of expensive domestic renewable power, surplus power is cheap when renewables are curtailed and balancing capability helps further renewable deployment, so domestic production potential should be used [Reference 3].

5. A materials engineer's view (1): variable operation changes how materials are used

A materials engineer's view (1): matching the grid's demands takes an electrolyzer's materials outside the "steady operation" assumption

IRENA says an electrolyzer's lifetime is a function of both the cumulative current passed through the stack and the hours it is on, and that changing the operating strategy, for example bidding into the balancing market to add revenue, could speed membrane degradation and bring more frequent replacement of the membrane and related components Sourced [Reference 1]. Raising current density gives more output but faster degradation, it adds.

DOE's PEM electrolysis target table makes the same point in a footnote: evaluation of the degradation rate must include operation near the nominal point and also dynamic operation and, if the application requires it, on-off cycling [Reference 11].

The weak points differ by type. IRENA says SOEC lifetimes can reach 20,000 hours, but under constant power and well-defined operating conditions (not coupled to variable renewables), and that the main degradation mechanism is thermal cycling from the high operating temperature and the need to cool down in dynamic operation [Reference 1]. In alkaline electrolyzers the diaphragm is exposed to a continuous flow of electrolyte, gas permeation and local hot spots, and small pin-hole failures grow over time and lead to gas contamination; the oxygen stream is monitored and when hydrogen reaches 2% on the oxygen side the stack is sent for repair or disposal [Reference 1].

Inference: at low load less gas is generated, so for the same permeation the fraction of hydrogen on the oxygen side is likely to rise. In evaluating variable operation, checking impurity levels at the lower load limit could become a test item for materials (diaphragms, membranes). This is our reading of IRENA's statements from a materials viewpoint; we found no primary source confirming it.

6. Ways of connecting power — grid, dedicated renewables, solar, small reactors

The ways of supplying power to an electrolyzer fall into three groups (Fig. 6). Each changes the capacity factor and cost, and also the treatment under EU and U.S. rules (Chapter 7).

Fig. 6 Concept diagram (vector drawing). Ways of supplying power to an electrolyzer: 1 grid-connected, 2 dedicated renewables (off-grid), 3 dedicated nuclear (e.g. small reactors). The grouping is this article's own and does not rank the options.

Configuration	Examples and statements we confirmed	Standing
Dedicated renewables (off-grid)	The IEA says that in 2025 Envision Energy commissioned 500 MW of water electrolysis using off-grid renewable electricity (the second phase of a plant of 300 ktpa of ammonia), the world's largest operating electrolysis project. The largest under construction is the NEOM Green Hydrogen Project in Saudi Arabia, expected to scale beyond 2 GW by its targeted operation in 2027 [Reference 2]	Examples are operating or under construction. With no grid, the capacity factor is set by renewable output and operation must follow variability. NEOM's 2027 operation is a plan Not yet confirmed
Coupled to solar	IRENA says an electrolyzer coupled to PV alone could typically operate fewer than 2,000 hours a year; at low capacity factors capital cost takes a large share [Reference 1]	Low capacity factor is the issue. See Chapters 6-7 of our explainer on the cost of hydrogen production and Chapter 9 of our explainer on photoelectrochemical cells
Nuclear (existing and small reactors)	DOE reports that in 2023 a low-temperature electrolysis hydrogen system began operating at the Nine Mile Point nuclear plant (New York, U.S.), using electricity generated at the plant to supply hydrogen for plant operations. It is one of four DOE-supported demonstrations of clean hydrogen production at commercial nuclear plants, in a US$14.5 million cost-shared project [Reference 10]. For Southeast Asia, the IEA says nuclear remains a relatively expensive electricity source for hydrogen production: even if capital costs reached those observed in China (US$2,500/kW, nearly 45% below the EU), electricity alone would cost US$2.8-4.5/kg (excluding the electrolyzer). It also says there are no international regulations on the governance of small modular reactors (SMRs) [Reference 2]	A demonstration at an existing reactor was confirmed. We could not confirm commercial hydrogen production with small modular reactors
Grid-connected	Japan's Basic Hydrogen Strategy says that because renewable output varies with the weather, converting surplus renewable power to hydrogen and storing it can play a balancing role [Reference 3]	Easier to raise the capacity factor, but the emissions of the power and its regulatory treatment (Chapter 7) are the issue

Table 3 Ways of connecting power and the statements we confirmed (Sourced; NEOM's operation and the small-reactor item are plans or outlooks).

7. Rules: Japan, the EU and the U.S.

This chapter keeps to the parts about sourcing power and curtailment. The amounts of subsidies and tax credits and support for hydrogen as a whole are covered in other explainers (colors of hydrogen and carbon intensity; cost of hydrogen production). The date checked is October 2026.

Japan

Basic Hydrogen Strategy (dated 6 June 2023, issued in the name of the Ministerial Council on Renewable Energy, Hydrogen and Related Issues): says that making hydrogen from surplus electricity could be one solution to the shortage of balancing capability and to grid congestion, and that it will promote system development that helps make effective use of renewables and raise electrolyzer capacity factors Sourced [Reference 3].
Hydrogen Society Promotion Act (formally the Act on Promotion of Supply and Use of Low-Carbon Hydrogen and Its Derivatives for a Smooth Transition to a Decarbonization-Driven Economic Structure, Act No. 37 of 2024): promulgated 24 May 2024, in force 23 October 2024 Sourced [Reference 5]. A business whose "plan for supply and use of low-carbon hydrogen and its derivatives" is certified can receive subsidies from JOGMEC (Japan Organization for Metals and Energy Security) for funds needed for continuous supply and the like (Articles 7 and 10). The ordinance of the Minister of Economy, Trade and Industry sets the requirement for low-carbon hydrogen as 3.4 kg or less of CO2 emitted per kg of hydrogen produced (Article 3) and, where a subsidy is received, sets the period for which supply must continue at 10 years (from the day after the project ends for supply subsidies, and from the date the facility is acquired for facility subsidies) (Article 4) [Reference 6]. The IEA says that the contract-for-difference scheme under this Act took applications from November 2024 to March 2025, with the first projects expected to start operating by 2030 [Reference 2] (Not yet confirmed).
Rules on sourcing electricity: in the provisions of the Act and ordinance that we checked, we did not find rules like those of the EU and the U.S. on the additionality, timing or location of electricity. We did not confirm detailed rules for accounting the CO2 of electricity.

EU

Delegated Regulation (EU) 2023/1184 (adopted by the Commission on 10 February 2023, published in the Official Journal on 20 June 2023, in force on the twentieth day after publication = 10 July 2023 [our calculation]): sets the conditions under which electricity can be counted as fully renewable, for the production of renewable liquid and gaseous transport fuels of non-biological origin (RFNBO) Sourced [Reference 7].
There are four routes to count grid electricity as renewable (Article 4): (1) the bidding zone's renewable share in the previous year was over 90% (with a cap on operating hours); (2) the zone's electricity emission intensity is below 18 gCO2eq/MJ, with renewable power purchase agreements (PPAs) and compliance with temporal and geographical correlation; (3) renewable plants were redispatched downwards and the electrolyzer's consumption reduced the need for redispatching by a corresponding amount; (4) otherwise, compliance with the three conditions of additionality, temporal correlation and geographical correlation [Reference 7].
Route (3) is a provision directly tied to grid curtailment. Electricity consumed during an imbalance settlement period in which renewable plants were redispatched downwards can, on evidence from the transmission system operator and if the conditions are met, count as fully renewable [Reference 7].
Additionality (Article 5): the renewable plant came into operation no earlier than 36 months before the fuel-producing installation and has received no operating or investment aid. Temporal correlation (Article 6): until 31 December 2029 the same calendar month; from 1 January 2030 the same one-hour period (Member States may apply it from 1 July 2027 after notifying the Commission). Any hour in which the day-ahead price is EUR 20/MWh or below, or below 0.36 times the price of a carbon allowance, always satisfies temporal correlation. Geographical correlation (Article 7): the same bidding zone, or an interconnected zone with an equal or higher price, or an interconnected offshore zone [Reference 7].
Transitional rule (Article 11): the two additionality conditions do not apply until 1 January 2038 to installations that come into operation before 1 January 2028. The Commission is to report, including on the impact of temporal correlation, by 1 July 2028 (Article 10) [Reference 7].
Status check: EUR-Lex shows that this act "has been changed", with the current consolidated version dated 10 June 2024 (checked October 2026) [Reference 7]. The IEA reports that some countries, including Germany, have called for the RFNBO rules to be relaxed [Reference 2]. We could not confirm whether any review or amendment had been proposed or adopted as of October 2026.

United States

Final rules for section 45V (clean hydrogen production tax credit) (Treasury and IRS, TD 10023, 90 FR 2224, published and effective 10 January 2025): a taxpayer that sources electricity from specific generators must acquire and retire energy attribute certificates (EACs) that meet three conditions, incrementality, temporal matching and deliverability Sourced [Reference 8].
Incrementality: the generator reached commercial operation no more than 36 months before the hydrogen facility was placed in service. Temporal matching: electricity generated in the same hour (with a transition rule under which electricity generated before 1 January 2030 need only match within the same calendar year); where storage is used, the electricity must be discharged in the same hour, among other conditions. Deliverability: the generator and the hydrogen facility are in the same region (decided by the balancing authority to which each is connected; regions follow DOE's National Transmission Needs Study) [Reference 8].
The credit's deadline has shortened. Section 70511 of Public Law 119-21, enacted on 4 July 2025, changed "January 1, 2033" to "January 1, 2028" in section 45V(c)(3)(C). To qualify, construction must begin before 1 January 2028 Sourced [Reference 9]. Section 70512 of the same law also provides that another credit, 45Y, does not apply to wind and solar facilities placed in service after 31 December 2027 (we read the text of the section; we did not read the exceptions or the details of its application).
Status check: we could not confirm whether the Treasury has since amended the 45V rules or changed their operation as of October 2026.

Fig. 7 Concept diagram (vector drawing). The "three pillars" of electricity sourcing rules compared. EU: Delegated Regulation 2023/1184 [Reference 7]; U.S.: Treasury 45V rules [Reference 8]; Japan: Act and ordinance [References 5, 6]. The EU and U.S. rules serve different purposes and cannot be compared one for one. The Japan column says "could not confirm"; it does not mean no rule exists.

8. A materials engineer's view (2): translating power-side demands into material tests

A materials engineer's view (2): rules and grid demands reach materials as an "operating pattern"

The effect of rules on materials arrives through operating patterns (Commentary).

The EU's temporal correlation (hourly from 2030) and the U.S. hourly matching push electrolyzers to follow renewable generation. The EU regulation itself says in its recitals that implementing temporal correlation is hampered in the short term by technological barriers to measure hourly matching, challenging implications for electrolyzer designs, and the lack of hydrogen infrastructure for storage and transport Sourced [Reference 7]. The U.S. final rule also mentions comments about the limited ability of hydrogen production facilities to ramp up and down quickly for technical and economic reasons [Reference 8].
Running at the hours of curtailment (the EU redispatch route) increases starts, stops and load changes. Materials need to be assessed in tests that include the number of start-stops, the speed of load changes and the time at low load and on standby (Chapter 5).
Dedicated renewables (off-grid) or solar-only operation has a low capacity factor concentrated in the daytime. As our explainer on the cost of hydrogen production showed, capital cost then takes a larger share, and "cheaper but faster-degrading" materials can become an option; where power is bought at a high price, efficiency comes first.

In other words, what performance is demanded of an electrolyzer's materials changes with the rules and grid conditions that decide where and when the power is sourced. In assessing materials, besides steady-operation life, degradation under the operating pattern that matches the intended power connection (Fig. 6) needs to be checked.

9. Limits, and what we could not confirm

(1) Curtailment figures rest on transmission operators' published values

The figures in Table 1 and Fig. 4 are values published by each area's transmission operator and reproduced in a METI / ANRE document. We could not confirm the numbers behind the charts of nationwide curtailment trends in that document (its pages 4-6). We did not confirm FY2025 actuals either.

(2) Our calculation is simplified

The calculation in Chapter 4 uses curtailed power in electrolyzers at an assumed capacity factor. It excludes the time distribution of curtailment, the electrolyzer's minimum load, constraints on hydrogen storage and demand, and grid connection costs.

(3) Rules can change

The EU's Delegated Regulation 2023/1184 is due a report by 1 July 2028, and calls for relaxation have been reported. We could not confirm the state of any review as of October 2026.
The U.S. 45V deadline was shortened by the July 2025 law. We could not confirm later changes by the Treasury.
For Japan, we did not confirm individual certified projects under the Hydrogen Society Promotion Act's price-gap support, or detailed rules for accounting electricity emissions.

(4) Small modular reactors and hydrogen

We could not confirm commercial hydrogen production with small modular reactors (SMRs). The nuclear hydrogen production DOE describes is a demonstration at an existing reactor, not a small reactor [Reference 10].

(5) Division of roles with other explainers

Materials and structures of each type of electrolyzer are covered in our explainers on PEM, alkaline, AEM and solid oxide electrolysis and on electrolyzer stacks and materials; colors of hydrogen and carbon intensity in the explainer of that name; and the cost formula in our explainer on the cost of hydrogen production.

Summary

An electrolyzer is a load that responds quickly and can cut consumption to zero, and is said to be usable for balancing and for reducing curtailment. IRENA says electrolysis suits matching seasonality better than short-term fluctuations Sourced
Curtailment in Japan was 4.8% (750 GWh) in Kyushu in FY2024. Tokyo curtailed for the first time in March 2026, so every area now has Sourced
Using up 750 GWh of curtailed power takes about 856 MW of electrolyzers at a 10% capacity factor, and even with free electricity the hydrogen costs about US$18/kg Our calculation
The EU defines a route that counts power used during renewable redispatch as fully renewable, and requires hourly correlation from 2030. The U.S. 45V also moves to hourly matching from 2030, and construction must start before 1 January 2028 Sourced
The way power is connected, and the rules, reach materials as an operating pattern. Assessing variable operation is a materials issue

10. Glossary

Curtailment: Reducing the output of renewable plants because of supply-demand constraints. Likely in light-load spring and autumn.

Minimum-demand day: The day on which variable renewables are the largest share of demand (a spring holiday, for example).

Balancing capability: The ability to change output or consumption to close the gap between demand and supply.

Pumped storage: Storage that uses surplus power to pump water to an upper reservoir and later generates with it.

Interconnector: A transmission line linking areas of a power system.

Redispatch: Adjusting the output of plants on the system operator's instruction to avoid congestion or oversupply.

Off-grid: A configuration with no connection to the grid, running on the power of dedicated generation.

Additionality: The condition that power comes from newly built renewable capacity added for hydrogen production.

EAC (energy attribute certificate): A certificate that proves the environmental attributes of generation separately from the power. Used in the U.S. 45V rules.

RFNBO: Renewable fuels of non-biological origin. The EU's term, including hydrogen made from renewable power.

PPA: Power purchase agreement. A long-term contract to buy power from a renewable generator.

Bidding zone: A geographic unit of the EU wholesale power market within which price is the same.

Low-carbon hydrogen and derivatives: In Japan's Hydrogen Society Promotion Act, hydrogen and derivatives whose production CO2 is at or below the ordinance standard (3.4 kg or less per kg of hydrogen).

JOGMEC: Japan Organization for Metals and Energy Security, which pays subsidies under the Hydrogen Society Promotion Act.

11. References (primary sources)

IRENA "Green hydrogen cost reduction: Scaling up electrolysers to meet the 1.5°C climate goal" (2020; p. 43, pp. 49-50, Table 6 [pp. 65-66]) — irena.org
IEA "Global Hydrogen Review 2025" (printed pages: pp. 16 and 49 = off-grid 500 MW; p. 74 = grid flexibility of hydrogen and ammonia; p. 99 = installed capacity of about 2 GW; p. 215 = Japan's scheme; p. 218 = U.S. 45V; p. 250 = nuclear power cost) — iea.org
Ministerial Council on Renewable Energy, Hydrogen and Related Issues (published on the Cabinet Secretariat website) "Basic Hydrogen Strategy" (in Japanese), 6 June 2023 (PDF) — cas.go.jp
Ministry of Economy, Trade and Industry / Agency for Natural Resources and Energy "Long-term outlook for curtailment of renewable energy" (in Japanese), Next-Generation Power System Working Group, Material 1, 16 March 2026 (PDF) — meti.go.jp
e-Gov Law Search Act on Promotion of Supply and Use of Low-Carbon Hydrogen and Its Derivatives for a Smooth Transition to a Decarbonization-Driven Economic Structure (in Japanese), Act No. 37 of 2024 (promulgated 24 May 2024, in force 23 October 2024) — laws.e-gov.go.jp
e-Gov Law Search Ordinance for Enforcement of the same Act (in Japanese), METI Ordinance No. 69 of 2024 (23 October 2024) — laws.e-gov.go.jp
European Commission (EUR-Lex) Commission Delegated Regulation (EU) 2023/1184 of 10 February 2023 supplementing Directive (EU) 2018/2001 (OJ L 157, 20 June 2023) — eur-lex.europa.eu
U.S. Department of the Treasury and Internal Revenue Service (Federal Register) "Credit for Production of Clean Hydrogen and Energy Credit", Final Rule, TD 10023, 90 FR 2224 (10 January 2025) — federalregister.gov
U.S. Congress (GovInfo) Public Law 119-21 (H.R. 1, 4 July 2025), sections 70511 and 70512 — govinfo.gov
U.S. Department of Energy (DOE), Office of Nuclear Energy "Nine Mile Point Begins Clean Hydrogen Production" (7 March 2023) — energy.gov
U.S. Department of Energy (DOE) "Technical Targets for Proton Exchange Membrane Electrolysis" — energy.gov

12. Claim-to-source audit

Claim in the text	Basis	Label
IRENA: five criteria for electrolyzer flexibility; about 40 kW systems responding in milliseconds and settling in seconds (Eichman et al., cited); consumption can be held at zero for unlimited time; ramps under one second set by the rectifier; 5% partial load with efficiency loss; PEM cold start under 5 minutes (text); Table 6 load ranges (PEM 5-120%, alkaline 15-100%, AEM 5-100%, SOEC 30-125%) and cold starts (PEM and AEM under 20 minutes, alkaline under 50, SOEC over 600); four grid services and their limits; flexibility for seasonality; alkaline pinholes and the 2% hydrogen-in-oxygen criterion; SOEC about 20,000 hours (constant power) and thermal cycling; balancing-market participation may speed membrane degradation; PV-coupled operation under 2,000 hours a year	IRENA Green hydrogen cost reduction (2020) Reference 1 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Dec/IRENA_Green_hydrogen_cost_2020.pdf	Sourced
IEA: in 2025 a 500 MW off-grid electrolysis plant (second phase of a 300 ktpa ammonia plant) began operating, the world's largest; NEOM above 2 GW by 2027; installed electrolysis of about 2 GW at the end of 2024; grid flexibility of hydrogen and ammonia; nuclear electricity at US$2,500/kW still giving US$2.8-4.5/kg for electricity alone in Southeast Asia; no international SMR governance rules; the contract-for-difference scheme under Japan's Act (applications November 2024 to March 2025, operation by 2030); some countries asking to relax the RFNBO rules; outline of 45V	IEA Global Hydrogen Review 2025 Reference 2 https://www.iea.org/reports/global-hydrogen-review-2025	Sourced Not yet confirmed
Japan's Basic Hydrogen Strategy: the balancing role of converting and storing surplus renewable power; surplus power as one solution to balancing shortage and grid congestion; importance of procuring cheap surplus renewable power and raising capacity factor; cheap surplus power when renewables are curtailed; the view that domestic production is costlier than imports	Basic Hydrogen Strategy (6 June 2023) Reference 3 https://www.cas.go.jp/jp/seisaku/saisei_energy/pdf/hydrogen_basic_strategy_kaitei.pdf	Sourced
METI / ANRE document: curtailment areas spread nationwide; first curtailment in the Tokyo area on 1 March 2026; tendency in spring and autumn; capacity growth without a yearly rise in curtailment; curtailment rate and volume by area (FY2022-2024), Kyushu FY2018-2024, FY2025 estimates; supply and demand in Kyushu on the minimum-demand day (12:00-12:30, 4 May 2025: solar 968, demand 653, curtailment 509, pumped storage 189, interconnector 134, in 10,000 kW)	METI / ANRE, Next-Generation Power System WG Material 1 (16 March 2026) Reference 4 https://www.meti.go.jp/shingikai/enecho/denryoku_gas/saisei_kano/smart_power_grid_wg/pdf/008_01_00.pdf	Sourced
Hydrogen Society Promotion Act: Act No. 37 of 2024, promulgated 24 May 2024, in force 23 October 2024; certification of plans (Article 7); JOGMEC subsidies (Article 10)	Hydrogen Society Promotion Act (e-Gov Law Search) Reference 5 https://laws.e-gov.go.jp/law/506AC0000000037	Sourced
Enforcement ordinance: low-carbon hydrogen requirement of 3.4 kg-CO2 or less per kg of hydrogen (Article 3); a 10-year continued-supply period where a subsidy is received (Article 4)	Enforcement ordinance (e-Gov Law Search) Reference 6 https://laws.e-gov.go.jp/law/506M60000400069	Sourced
EU Delegated Regulation 2023/1184: adopted 10 February 2023, published 20 June 2023, in force on the twentieth day after publication; direct connection conditions (Article 3); four routes for grid electricity (Article 4: renewable share over 90%, emission intensity under 18 gCO2eq/MJ with PPAs, redispatch, additionality, temporal and geographical correlation); additionality of 36 months (Article 5); temporal correlation (Article 6: calendar month to end-2029, hourly from 1 January 2030, exceptions at EUR 20/MWh or below and below 0.36 times the allowance price); geographical correlation (Article 7); report by 1 July 2028 (Article 10); transitional rule (Article 11); the EUR-Lex notice "changed; consolidated version 10 June 2024"; the recital on temporal correlation and electrolyzer design	EU Delegated Regulation 2023/1184 (EUR-Lex) Reference 7 https://eur-lex.europa.eu/eli/reg_del/2023/1184/oj/eng	Sourced
45V final rules (TD 10023, 90 FR 2224, published and effective 10 January 2025): three EAC conditions (36-month incrementality, same hour with a transition to same calendar year before 2030, same-region deliverability), treatment of storage, and mention of comments on the limited ability of hydrogen facilities to ramp up and down quickly	45V final rules (Federal Register) Reference 8 https://www.federalregister.gov/documents/2025/01/10/2024-31513/credit-for-production-of-clean-hydrogen-and-energy-credit	Sourced
Public Law 119-21 section 70511: "January 1, 2033" replaced by "January 1, 2028" in 45V(c)(3)(C). Section 70512: 45Y does not apply to wind and solar facilities placed in service after 31 December 2027 (text only)	Public Law 119-21 (GovInfo) Reference 9 https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm	Sourced
DOE: a low-temperature electrolysis hydrogen system began operating at the Nine Mile Point nuclear plant in 2023, in a US$14.5 million cost-shared project, supplying hydrogen for plant operations, one of four DOE-supported demonstrations at commercial nuclear plants	DOE Nine Mile Point Begins Clean Hydrogen Production Reference 10 https://www.energy.gov/ne/articles/nine-mile-point-begins-clean-hydrogen-production	Sourced
DOE's PEM target table: a note that degradation-rate evaluation must include dynamic operation and, if the application requires it, on-off cycling	DOE Technical Targets for PEM Electrolysis Reference 11 https://www.energy.gov/eere/fuelcells/technical-targets-proton-exchange-membrane-electrolysis	Sourced
The sum of FY2024 curtailment in Table 1 (about 1,600 GWh excluding Tokyo), 750 GWh giving about 14,200 tonnes of hydrogen, Table 2 and Fig. 5 (capacity needed and hydrogen cost at capacity factors of 5-30%), the comparison of 5.09 GW with the world's installed 2 GW, about 856 MW at a 10% capacity factor, and the EU entry-into-force date (10 July 2023)	Our calculation. 52.9 kWh/kg, US$2,300/kW, 8% discount rate, 20-year life, 3%/yr O&M and stack life of 50,000 h with replacement at 20% are the base case of our explainer on the cost of hydrogen production. Capacity factors are our assumptions	Our calculation
The grouping of destinations for surplus (Fig. 3); how electrolysis fits as balancing and seasonal flexibility; the three ways of connecting power (Fig. 6); the reading that rules reach materials as operating patterns; the inference about impurity levels at low load; leaving the Japan column as "could not confirm"	Our own arrangement and commentary based on the published material; not the views of any of the bodies	Commentary
Numbers behind the nationwide curtailment trend charts; FY2025 actuals; commercial hydrogen production with small modular reactors; the state of amendment or review of the EU rules and U.S. 45V as of October 2026; detailed rules for accounting electricity emissions in Japan; individual certified projects under the price-gap support	Could not be confirmed in published primary sources within the scope of this article (or not covered), so not stated	Commentary
That Figs. 3 and 6 are explanatory concept diagrams, that Figs. 2, 4, 5 and 7 are charts based respectively on a source's values, our calculation and statutory text, and that Fig. 1 is an AI-generated image	A note by this article	Commentary

Last updated October 2026. Sources are limited to primary material (IRENA and IEA reports, the Basic Hydrogen Strategy posted by the Cabinet Secretariat of Japan, METI / ANRE material, e-Gov statutes, EUR-Lex, the U.S. Federal Register and public law, and DOE material). Estimates from market research firms are not used. The date on which rules were checked is October 2026. Readings from a materials or grid point of view are marked as Commentary and kept separate from sourced fact. The numbers behind the nationwide curtailment trend charts, FY2025 actuals, commercial hydrogen production with small modular reactors, whether the EU rules and U.S. 45V have been amended since, and detailed rules for accounting electricity emissions in Japan are not stated here because no published primary source could be confirmed. The calculations in this article are derived from formulas and stated assumptions; they are not forecasts for any particular project or equipment. All figures are explanatory concept graphics, charts of a source's values, or charts of our calculations. Fig. 1 is an AI-generated image, and it does not show a real facility or device.