Understanding Distributed Hydrogen, Its Benefits, and Efficient Hydrogen Distribution

It is no longer front-page news that most of the world’s energy supply is derived from fossil fuels that emit carbon and greenhouse gasses when used in power generation and heating.

Various methods of decarbonization are currently being leveraged, including replacing energy from natural gasses with energy from hydrogen.

Hydrogen has been used for decades in large-scale industries such as petroleum refineries. However, the technologies leveraged with hydrogen in refineries are suited to consumers who only use hydrogen at massive scale. That was until distributed hydrogen technologies were developed to benefit smaller-scale users.

What Is Distributed Hydrogen?

Distributed hydrogen refers to hydrogen produced in small quantities, usually through electrolysis and pyrolysis. This allows hydrogen to be generated and used when and where it is needed, for example, in microgrids.

This approach is contrary to the traditional centralized merchant producer model whereby only large consumers of hydrogen, such as petroleum refineries, steel production industries, and others, had access to clean hydrogen.

Distributed hydrogen production ensures that small-scale hydrogen consumers can take advantage of hydrogen energy and its benefits.

In recent years, hydrogen has been gaining popularity as an alternative fuel source. Clean hydrogen, such as green or turquoise, are considered some of least polluting forms of hydrogen because they have the lowest carbon dioxide emissions.

The upside of hydrogen as an energy carrier is that it can reduce greenhouse emissions due to its high efficiency and near-zero emissions when it is converted from fuel into energy.

How Can Hydrogen Solutions Be Produced?

Green hydrogen production can be done via thermo-catalytic, electrochemical, photochemical, photocatalytic, and photo-electrochemical processes.

Hydrogen can be produced from a number of feedstocks including fossil fuel, water, or biomass. Fossil fuel is the main source of industrial hydrogen production on a large scale.

Hydrogen can be produced from natural gas (an example of a fossil fuel ) via:

  • Steam methane reforming (SMR), where steam and methane react to form carbon monoxide with hydrogen as the by-product. This makes up 30% of the produced hydrogen today.
  • Oil partition oxidation, coal gasification, oil cracking, and coal cracking make up 18% of the produced hydrogen demand.
  • Continuous Cycle Pyrolysis (CCP) uses pipeline quality natural gas and a novel reforming technique that can reduce CO2 emissions from hydrogen generation by over 90%. This method does not use electricity to drive its process.

Hydrogen can also be produced from water by splitting H20 molecules using electrolysis.

Biogas fueled hydrogen generation is a clean option for producing pure hydrogen from biomass. It can be accomplished via a number of techniques including steam gasification, pyrolysis gasification, steam reforming of bio-oils, and the enzymatic decomposition of sugars. Not all of these approaches are economic at small scale.

Benefits of Distributed Hydrogen

Hydrogen has been signposted as a fuel that can help meet sustainability goals. As a result, hydrogen is a pathway to reducing our dependence on fossil fuels.

Fossil fuels make up 4/5th of the world’s energy supply, and consequently, they are responsible for an enormous amount of global greenhouse gas emissions.

Although most hydrogen is produced from fossil fuels, it can also be extracted from water and biomass. When hydrogen is burned, it emits heat and water.

Hydrogen can also reduce carbon dioxide emissions because when hydrogen is burned, it does not release carbon dioxide. When industries opt for hydrogen generation to store energy they are choosing a more sustainable energy source.

Short-term environmental benefits of distributed hydrogen include:

  • Unlike other sources of energy, hydrogen fuels do not produce the same amount of noise when converted into heat and power. When used in fuel cell power generators and vehicles, hydrogen is quieter than combustible engines.
  • Hydrogen decreases visual pollution. Some energy sources are eye sores. Wind energy and biofuel plants take a lot of space. Comparatively, hydrogen fuel cells require far less space.

Long-term environmental benefits include:

  • Reduction in carbon dioxide released – Since hydrogen only emits heat and water when burned, hydrogen fuel does not release greenhouse gasses, thus no carbon footprint.
  • Provision of energy supply in remote areas- The availability of hydrogen through local production and storage could prove to be a substitute for diesel-based electricity and transportation fuel in remote places

Challenges With Distributed Hydrogen systems

With traditional production techniques distributed hydrogen was not an option. With new technologies like Modern Hydrogen, distributed hydrogen is much easier to implement.

Traditional challenges with hydrogen systems include:

Hydrogen fuel can be very expensive.

This is largely due to the methods employed in extracting hydrogen, i.e., SMR, electrolysis, and oil extraction. These are all relatively expensive procedures because of the scale and capital required.

According to a frequently cited study by Transport & Environment, the process of electrolyzing hydrogen consumes approximately 30% of the net energy benefit of the hydrogen generated. An additional 26% is lost when transporting the hydrogen to the point of use.

Combined, this results in a significant amount of energy lost during production and transportation.

These losses can be reduced by making hydrogen on-site. However, centralized power plants can cost hundreds of millions of dollars. So again, the option of distributed on-site hydrogen generation makes a lot of economic sense.

COcapture is very expensive.

While not mandatory today, carbon dioxide emissions regulations will undoubtedly become more common over time. These regulations will likely include requirements for emissions reductions. These emissions reductions will be achieved via equipment changes, process changes, fuel changes, installing CO2 capture, or by purchasing carbon offsets/credits.

COcapture and sequestration is one of the most costly options. As such, it will likely be more cost effective to switch to a lower emissions fuel (like hydrogen) than it will be to implement onsite CO2 capture.

Hydrogen is highly flammable.

It’s important to recognize that gasoline is combustible at a lower concentration limit of 1.4 percent as compared to hydrogen’s 4 percent. Natural gas is also highly flammable, but not as flammable as hydrogen. In its natural state, hydrogen has no smell, so leaks are more likely to go unnoticed, resulting in a higher risk potential. Due to hydrogen’s mass, leaked hydrogen gas dissipates more quickly than natural gas, so that minimizes some of the risk.

The energy transition is difficult

To efficiently transport hydrogen from centralized locations, new pipelines will need to be constructed. Existing gas pipelines are not specified for high pressure hydrogen and cannot transport hydrogen fuel. Hydrogen has high energy density by mass, but low energy density by volume. As a result, hydrogen must be transported at high pressure to hold enough energy to be effective for regular use.

Switching to a hydrogen economy alone does not guarantee that greenhouse gas emissions will be completely eliminated. Today fossil fuels are the largest source of hydrogen supply, so system inefficiencies and environmental leaks from upstream oil and gas will have an impact.

Applications for distributed hydrogen production

In transportation

Vehicles powered by hydrogen can use hydrogen fuel cells or internal combustion engines. Fuel cells are more efficient at converting energy into electricity. Internal combustion engines can be outperformed by a fuel cell that converts the chemical energy of the fuel into electrical energy at two to three times the efficiency.

In Microgrids

Microgrids can integrate renewable energy sources such as wind, solar, hydroelectric, biomass, and hydrogen fuel cells into a single entity that functions as a local utility grid.

Hydrogen fuel cells can efficiently convert chemical energy from a hydrogen fuel into electricity through a chemical reaction without internal combustion. In this case the only by-products are heat & water. Fuel cells are promising for microgrids as they can provide efficient, clean, reliable, and quiet energy.

Industrial Applications

Hydrocracking which produces petroleum products like gasoline and diesel, frequently uses hydrogen as an input. This same process is also utilized to produce methanol and helps eliminate impurities like sulfur (CH3OH).


Distributed hydrogen is a pathway to reducing our dependence on fuels with high carbon intensity emissions. As well as several other critical benefits, hydrogen reduces the carbon dioxide released during heating and power generation.

There are some drawbacks to hydrogen. In many areas, it is not an affordable solution yet. Similarly, because it is highly flammable and does not have any smell, it can add some risk.

There are significant applications for hydrogen in industrial process heat, transportation, and microgrids, but we are only scratching the surface. With future investment, distributed hydrogen could be a driver in the global target to reach carbon net zero.