Hydrogen for homes, is it a good idea? – Dr. Julio C. Garcia-Navarro.
We all have seen the hype around hydrogen that has been building up since 2019: ever since we saw the Australians allying with the Japanese and the South Koreans about their plans to engage in large-scale trading of green hydrogen (which I call “monetizing the desert” see Why hydrogen has the potential to unlock the solar resources from the Sahara Desert), several other countries have joined in to shift the market dynamics of energy trade (for example look at Chile).
Where it is clear that the world is looking for hydrogen to accelerate the decarbonization of the economy, there are still divided opinions when it comes to which sector will be the first and the most prominent user of hydrogen.
The uses of hydrogen
Hydrogen is a versatile molecule; it is indispensable in some applications (i.e., when it is used as a chemical feedstock), and it is useful in others (for example to provide heat). We can divide the hydrogen applications in the following categories:
- Hydrogen as a chemical reagent (feedstock)
- Hydrogen as an energy carrier
Hydrogen as a chemical reagent (feedstock)
Hydrogen as a chemical reagent means that hydrogen is used because it participates in a chemical reaction that takes place in the production of commodities and other consumer and specialized chemicals. Current uses of current hydrogen as chemical reagent include:
- Hydrodesulfurization (HDS) – hydrogen is used to remove the sulfur in gasoline and other petroleum derivatives in refineries.
- Hydrogenation – hydrogen is used to break the weaker chemical bonds of some chemicals e.g.:
- Petroleum. Here, hydrogen is uses to promote the separation of petroleum in different fractions; this process is called cracking.
- Unsaturated fats to produce margarine. Here, hydrogen is used in the same way as with petroleum, with the only difference being that hydrogen in several margarine production processes already comes from electrolysis. Since most of the electrolyzers operating in the production of margarine are grid-connected, the hydrogen used in the production of margarine is not exactly green in most cases.
- Chemical synthesis – hydrogen is used to produce chemicals, for example ammonia and methanol.
In such applications hydrogen is already demanded, so the switch from gray hydrogen to green hydrogen is merely a matter of making green hydrogen more attractive.
Hydrogen as an energy carrier
Hydrogen as an energy carrier means that hydrogen is not part of a chemical process, but it is used as an energy source (technically speaking, hydrogen participates in a combustion reaction, which makes it a chemical reagent). We can divide the applications of hydrogen as an energy carrier as follows:
- Electrochemical applications – hydrogen is used in fuel cells and other electrochemical devices (e.g., nickel-hydrogen batteries) to produce energy without a flame.
- In these applications, hydrogen does not really have a substitute because most of these technologies are hydrogen specific.
- High temperature heating applications – since the flame temperature of hydrogen one is the highest among all the fuels we use (it can burn at 2660oC), it can be used in applications that demand high-temperature heat, for example in the production of steel and cement and in the operation of gas turbines i.e., in power plants and airplanes.
- Here, the current alternatives are fuels that burn at similar temperatures e.g., natural gas (although the flame temperature of natural gas depends heavily on the natural gas composition, which varies per country and per oil field), kerosene, or acetylene.
- Low-temperature heating applications – in such applications, hydrogen would burn to produce heat for low-temperature applications, such as in the production of steam, warm water, and space heating (where the operating temperature is close to or below 100oC).
- The alternatives for hydrogen in these applications are pretty much any available combustible substance regardless of flame temperature: natural gas, propane, wood, coal, etc.
Where will green hydrogen be used in the future?
The main driver for introducing hydrogen in a particular application is cost. There are two types of cost factors that will determine the economic feasibility of introducing hydrogen in different end-uses: opportunity cost and cost of entry.
The opportunity cost of hydrogen
The opportunity cost of hydrogen is related to the cost of hydrogen i.e., levelized cost of hydrogen (LCOH) and final consumer price. The comparison of green hydrogen with the second-best alternative (i.e., the fuel that is used now) is the criterion that is mostly used to discuss the best strategies for introducing hydrogen and discussing the phase-out of natural gas and diesel.
Comparing the opportunity cost of green hydrogen makes sense in the long run, when the market has become more mature and the most cost-effective practices for adopting hydrogen have been adopted. Which applications have the best opportunity cost of hydrogen adoption? To answer this question, we can analyze the images below:

Using hydrogen in homes can help pave the way towards introducing green hydrogen at a large scale because, despite the worse business case with respect to other applications, it provides a low cost-of-entry point for substituting fossil fuels in the short term.
Dr. Julio C. Garcia-Navarro

In both analyses by Liebreich and AFRY the message is the same: green hydrogen as feedstock seems to be the no-brainer choice for substituting the current alternative (mainly natural gas) in chemical processes, while low-temperature heat (e.g., home heating) and light-duty mobility are the most controvertible ideas because the alternative (mostly natural gas in Europe and North America) is very cheap compared with hydrogen.
I think that the arguments presented by the consulting agencies about the end uses of hydrogen make sense from an opportunity cost perspective. However, there is another dimension to this problem namely, looking at the cost of entry of adopting hydrogen.
The cost of entry of hydrogen and the unexpected role of hydrogen in homes
In the long run, the market will mature due to learning by doing and economies of scale, both being the primary motors for technology development and market evolution. Nevertheless, let us not forget that someone has to be the first to adopt green hydrogen before the process of learning by doing and the economies of scale set off.
In particular, I would like to discuss hydrogen in homes. Low temperature heating (such as is needed to provide heat in homes) has been dismissed by some strategy consultants and policy makers due to the low price of natural gas compared to the best estimates of hydrogen production costs. Even if the LCOH can fall under EUR 2/kg-H2 (0.05 EUR/kWh) in areas with cheap green electricity (as I discuss in How to make the electrolyzers cheap), natural gas still costs between 0.02 and 0.03 EUR/kWh in the Netherlands, making it difficult for hydrogen to be adopted by home users without seeing a substantial raise in their gas bills.
However, we need to look at the cost of entry of different technologies. Let us compare the cost of entry of two technologies at both ends of the feasibility spectrum in the figures above: steel and low-temperature heating:
- Adopting green hydrogen in steel manufacture. To adopt hydrogen in steel production, there is a massive cost of entry due to the fact that steel manufacturers have to switch over the way they manufacture steel. Right now, (carbon) steel is produced in a blast furnace by heating iron ore, limestone, and natural gas. If steelmakers want to adopt green hydrogen, they need to replace the blast furnace with a DRI (Direct Reduction of Iron) reactor, that converts iron ore into metallic iron using hydrogen as chemical reagent. It’s difficult to find the CAPEX of DRI reactors, although I did find a reference quoting the CAPEX of a DRI plant to be USD 500 million to produce 2000 tons of steel per year and I have heard via experts that DRI reactor CAPEX (excluding the balance of plant) runs in the tens of millions of USD.
- Adopting hydrogen at homes. Conventional home boilers that use natural gas have straightforward designs: the gas is burned, and the heat is transferred via a heat exchanger to water that either flows to radiators (for space heating) or to taps and showers (for warmwater). High-efficiency boilers manage to extract more heat from the natural gas by condensing the water vapor formed to gain efficiencies upwards of 80%. Hydrogen can in principle be used in the same boilers; some adjustments need to be made to account for the differences in physical properties, but this is not a difficult task. Some boiler manufacturers like Worcester-Bosch (that operate in the UK and is part of the project Hy4Heat) have estimated that converting a conventional boiler to operate with hydrogen would cost a few hundred Sterling pounds, much less than buying a DRI to produce steel and certainly a small dent in the pockets of consumers with respect of buying a Toyota Mirai, for example.
Hydrogen applications with low cost of entry can help accelerate the market adoption of hydrogen to eventually entice other end-users (including steelmakers) to make the switch to green hydrogen. The IEA, in their Net Zero by 2050 report, has compiled the prognoses made by different industries to decarbonize their operations, and they have noted that heating and cooling is the sector that has the most ambitious decarbonization target so far.

It is clear that the pledges and ambitions of decarbonizing go beyond the adoption of green hydrogen; it can be argued that energy efficiency will be the most important measure in the way to decarbonizing our economy by 2050. Nonetheless, several industry players (such as natural gas transmission & distribution system operators, TSOs & DSOs) as well as several pan-European organizations like Hydrogen Europe, recognize that adopting green hydrogen in homes (and other low-temperature applications) in the short-term would help bring down the barrier of adoption for other applications with a higher cost of entry but a better opportunity cost for using hydrogen instead of fossil fuels.
I am a full supporter of hydrogen at homes because, even if this is not the most optimal way of substituting fossil fuels with renewable energies, it can pave the way for the road to net zero by 2050. Apparently I’m not alone; hydrogen homes are sprouting in the Netherlands, the UK and even in the US.
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About the author
Dr. Julio C. Garcia-Navarro is a Hydrogen Project Coordinator at New Energy Coalition. He has worked in the hydrogen industry for nearly a decade, on topics such as hydrogen electrolysis, compression, and transportation. Besides hydrogen, he is passionate about Renewable Energy Systems and the Internet of Things.
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