Hydrogen has emerged as a pivotal element in the industrial decarbonization strategies across Europe, with numerous policy frameworks outlining its potential as a cornerstone for low-carbon heavy industries. However, the practical realities of hydrogen production highlight significant challenges, particularly in regions like Serbia, where the electricity generation landscape is still heavily reliant on lignite and hydropower.
Serbia is currently assessing hydrogen production opportunities that align with its industrial sectors, including steel and chemicals, while also exploring potential export corridors to the European Union. However, a closer examination of the electricity requirements for hydrogen production reveals that discussions often overlook crucial factors such as power generation capacity and electricity pricing.
The process of producing hydrogen through water electrolysis is relatively straightforward: it involves splitting water into hydrogen and oxygen using electricity. The theoretical energy requirement is around 39 kWh per kilogram of hydrogen, but practical applications typically see modern electrolysers consuming between 50–55 kWh. This translates to approximately 50–55 megawatt-hours of electricity needed to produce one tonne of hydrogen, leading to a staggering requirement of 50–55 terawatt-hours for one million tonnes annually—comparable to the total annual output of a medium-sized European nation.
Given Serbia’s annual electricity generation, which hovers around 35–38 TWh, even modest targets for hydrogen production can quickly escalate to system-wide implications. For instance, producing 200,000 tonnes of green hydrogen per year would necessitate about 10–11 TWh, representing nearly 30 percent of the country’s current output.
These figures underscore why discussions surrounding hydrogen often become abstract. While electrolysers may be technologically sophisticated, their reliance on substantial amounts of renewable or low-carbon electricity is less glamorous. The current Serbian energy mix—dominated by lignite and subject to fluctuations in hydropower—poses significant hurdles for hydrogen production without fundamentally altering the existing electricity balance.
If hydrogen were produced using Serbia’s current energy mix, it would not meet European decarbonization standards, including those outlined in the Carbon Border Adjustment Mechanism. Therefore, any hydrogen intended for European markets must utilize low-carbon electricity sources, necessitating either new renewable generation or imported low-carbon power from neighboring regions—both options requiring considerable infrastructure investment.
The scale of renewable capacity needed becomes apparent when considering that one gigawatt of electrolyser capacity consumes approximately 8–9 TWh annually if operated for about 4,000 to 4,500 hours per year. To meet this demand solely through solar power would require an estimated 4–5 gigawatts of photovoltaic capacity in Serbia; wind generation would necessitate around 2.5–3 gigawatts.
The current development landscape in Serbia reveals that most renewable projects are significantly smaller than these requirements; even large wind initiatives rarely exceed 300 MW. Thus, achieving industrial-scale hydrogen production will likely require clusters of renewable energy projects rather than isolated installations.
The cost structure associated with electricity plays a critical role in determining the economics of hydrogen production. Electricity typically constitutes 60–75 percent of the total cost of green hydrogen. For example, at an electricity price of €30 per MWh, production costs could be around €1.5 per kilogram. However, if prices rise to €60 per MWh, costs double; at €100 per MWh, economic viability diminishes significantly.
This economic framework elucidates why many hydrogen projects are emerging in regions rich in renewable resources rather than near existing industrial centers. Countries with favorable solar or wind conditions can produce hydrogen at lower costs compared to areas where power prices are structurally higher.
Serbia’s strategic position between Central Europe and the Balkans offers potential advantages as an electricity transit corridor and trading hub. In the long term, hydrogen could evolve into another traded commodity within the regional energy system, contingent upon the development of substantial renewable clusters in the Western Balkans.
This vision hinges on several critical steps often overlooked in political discourse: first, a dramatic expansion of renewable generation capacity is essential; second, the electricity grid must be fortified to accommodate large volumes of variable energy generation; third, industrial consumers need access to stable electricity supply contracts at competitive prices.
The absence of these foundational elements risks relegating hydrogen initiatives to mere symbolic projects rather than catalysts for a genuine transformation within Serbia’s energy system. Nevertheless, certain sectors like steel production and ammonia synthesis may still find value in utilizing hydrogen as a feedstock to reduce emissions from fossil fuels.
A single large steel plant’s decarbonization through hydrogen could demand several terawatt-hours annually—comparable to multiple large renewable parks or a mid-sized power station’s output. Ultimately, Serbia faces a strategic question: can its electricity system expand swiftly enough to support burgeoning hydrogen ambitions? Viewing these initiatives primarily as efforts to expand electrical capacity disguised as fuel strategies may provide clarity moving forward.
Acknowledging these dynamics highlights that electrolysers are not the starting point for transition; instead, enhancing power generation capacity is paramount. Until Serbia’s renewable electricity infrastructure significantly scales up beyond its current capabilities, ambitions for hydrogen production will remain constrained by fundamental realities regarding affordable electricity availability.
