Across Europe hydrogen has become one of the most frequently invoked concepts in industrial decarbonisation strategies. Policy papers describe it as the future backbone of low-carbon heavy industry, while governments announce hydrogen valleys, electrolyser clusters and export corridors. Yet behind the rhetoric lies a simple physical constraint: hydrogen is not an energy source but a method of storing electricity in chemical form. The scale of electricity required to produce it remains one of the least discussed elements of the transition debate.
For Serbia, where the electricity system is still dominated by lignite and hydropower, this question is particularly important. The country has begun exploring hydrogen opportunities linked to steel, chemicals and potential export corridors toward the European Union. But once the electricity arithmetic is examined, hydrogen policy becomes less about electrolysers and more about power generation, grid capacity and industrial electricity pricing.
The basic chemistry of hydrogen production is straightforward. Water electrolysis splits water molecules into hydrogen and oxygen using electricity. In theory, the process requires around 39 kWh of electricity per kilogram of hydrogen, but real industrial systems operate with significant efficiency losses. Modern alkaline and PEM electrolysers typically consume 50–55 kWh per kilogram of hydrogen produced, depending on operating conditions and compression requirements.
This means that producing one tonne of hydrogen requires roughly 50–55 megawatt-hours of electricity. In energy system terms the implication is dramatic. One million tonnes of hydrogen per year would require roughly 50–55 terawatt-hours of electricity, a figure equivalent to the annual electricity generation of a medium-sized European country.
For Serbia, where total electricity generation fluctuates around 35–38 TWh annually, even modest hydrogen ambitions quickly reach system-scale magnitudes. Producing 200,000 tonnes of green hydrogen annually, often cited as a plausible industrial decarbonisation target for a country of Serbia’s size, would require approximately 10–11 TWh of electricity. That volume alone represents nearly 30 per cent of Serbia’s current power generation.
Such figures explain why hydrogen discussions frequently drift into abstraction. Electrolysers are technologically elegant and politically attractive. Their power supply is less glamorous. Hydrogen production effectively converts electricity demand from industrial sectors into a new form, requiring enormous amounts of renewable or low-carbon generation.
The implications for Serbia’s power system are far from trivial. The country’s generation fleet remains heavily dependent on lignite, with thermal plants providing the majority of baseload electricity. Hydropower contributes a significant share in favourable hydrological years, but output fluctuates with river flows and seasonal precipitation. Wind capacity has expanded during the past decade, while solar deployment has only recently begun accelerating.
Against this backdrop, hydrogen production cannot simply draw power from the existing grid without fundamentally altering the country’s electricity balance. If hydrogen were produced using Serbia’s current electricity mix, its carbon footprint would remain high and it would fail to meet European decarbonisation standards, including the regulatory framework emerging under the Carbon Border Adjustment Mechanism.
Therefore hydrogen production intended for European industrial markets must rely on low-carbon electricity. In practice this means either new renewable generation capacity or imported low-carbon electricity from neighbouring markets. Both options involve significant infrastructure investment.
The scale becomes clearer when translated into renewable capacity requirements. If electrolysers operate approximately 4,000 to 4,500 hours per year, a common planning assumption for large hydrogen projects, then one gigawatt of electrolyser capacity consumes roughly 8–9 TWh of electricity annually.
To supply that electricity using solar power in Serbia would require roughly 4–5 gigawatts of photovoltaic capacity, depending on capacity factors. Using wind generation would still require approximately 2.5–3 gigawatts of wind capacity.
These figures far exceed the capacity of most individual renewable projects currently under development in the country. Even large wind projects rarely exceed 300 MW, while solar parks are typically smaller. Hydrogen production at industrial scale would therefore require entire clusters of renewable projects rather than isolated installations.
Electricity cost also determines hydrogen economics far more than electrolyser technology itself. Electricity typically represents 60–75 per cent of the total cost of green hydrogen production. If electricity costs €30 per MWh, hydrogen production might reach around €1.5 per kilogram. If electricity rises to €60 per MWh, production costs roughly double. At €100 per MWh, hydrogen becomes economically difficult to justify for most industrial uses.
This cost structure explains why hydrogen projects are increasingly being located in regions with abundant renewable resources rather than near existing industrial demand centres. Countries with high solar irradiation or strong wind resources can produce hydrogen at far lower electricity costs than markets where power prices remain structurally higher.
Serbia’s strategic advantage lies less in natural renewable resources than in its geographic position between Central Europe and the Balkans. The country already functions as an electricity transit corridor and trading hub through its regional interconnections. In the long term hydrogen could become another traded commodity linked to the regional energy system, particularly if large renewable clusters emerge in the Western Balkans.
However, this vision requires a sequence of steps that are often omitted from political narratives. First, renewable generation capacity must expand dramatically. Second, the electricity grid must be strengthened to integrate large volumes of variable generation. Third, industrial consumers must secure stable electricity supply contracts at competitive prices.
Without these foundations hydrogen production risks becoming a symbolic project rather than a structural transformation of the energy system.
This reality does not mean hydrogen lacks a role in Serbia’s energy transition. Certain industrial sectors cannot easily electrify their processes directly. Steel production, ammonia synthesis and some chemical industries require hydrogen as a feedstock rather than as a fuel. In these sectors hydrogen could replace fossil-based inputs and reduce emissions.
Yet even in these cases the electricity requirement remains central. Decarbonising a single large steel plant through hydrogen-based direct reduction could require several terawatt-hours of electricity annually. Such demand is comparable to the output of multiple large renewable parks or a mid-sized power station.
For Serbia the strategic question therefore becomes not whether hydrogen is desirable, but whether the electricity system can expand rapidly enough to support it. Hydrogen initiatives should be viewed primarily as electricity expansion projects disguised as industrial fuel strategies.
Once the electricity arithmetic is acknowledged, hydrogen policy becomes clearer. Electrolysers are not the starting point of the transition. Power generation capacity is.
Until Serbia’s renewable electricity system grows far beyond its current scale, hydrogen ambitions will remain constrained by the same fundamental reality that governs every energy transition: the availability of affordable electricity.
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