Member States have transposed the Renewable Energy Directive.
2025 Monitoring Report
ACER’s 2025 European hydrogen markets Monitoring Report shows progress in electrolysers build-out and in advancing the EU’s regulatory framework. However, renewable hydrogen costs in 2024 remained four times higher than those of conventional hydrogen. This cost gap, along with incomplete national transposition of EU rules, hinders market development. To overcome this, lower regulatory risks and more targeted funding are needed.
This report examines the latest sector developments and highlights the main regulatory and market challenges for the EU.
What trends did ACER monitoring find?
- Market growth remains insufficient to meet EU and national targets. Despite a 51% increase in electrolyser capacity to 308 MW in 2024, deployment remains way behind the 6 GW target for 2024 and 40 GW for 2030.
- Renewable hydrogen remains costly, with average production costs at 8 EUR/kg (four times higher than hydrogen from fossil fuels) and uncertain near to mid term cost reduction prospects.
- Delays in transposing EU rules at national level persist. Only 2 Member States have transposed the amended Renewable Energy Directive. This delay, combined with the significant cost gap between fossil-based and renewable hydrogen, highlights the need to reduce regulatory risks.
- A decarbonised electricity sector is key to renewable hydrogen. Electricity supply costs (excluding grid tariffs) may account for up to 50% of renewable hydrogen’s production costs. Accelerating the decarbonisation of the electricity sector will help lower these costs.
- Rising electricity network tariffs may add pressure on costs. ACER’s 2024 Monitoring Report on electricity infrastructure shows that electricity network costs could rise by 50-100% by 2050, also depending on how investments will align with evolving electricity grid demand. As electricity tariffs represent a significant share of renewable hydrogen’s production costs, this trend poses a substantial risk.
- Network development should align with evolving demand to reduce forecasted risks. Hydrogen networks are key to expanding the market, but infrastructure should be built gradually to match actual demand development. Adaptive network planning based on latest market trends is essential to ensure efficient investment and cost control.
- Methane-based low-carbon hydrogen could accelerate scale-up, but significant risks remain. Low-carbon hydrogen (with estimated production costs approximately half of those of renewable hydrogen) could support market development. Yet, cost and technical uncertainties should be carefully assessed.
- Availability of funding is increasing, but implementation lags. The European Commission has already allocated over €20 billion to hydrogen through various programmes, and Member States have announced numerous additional support schemes. Accelerating the allocation of funding to advanced projects is key to increasing scale-up.
Key recommendations
To overcome these challenges, ACER recommends that:
- Member States:
- Accelerate the transposition and implementation of the amended Renewable Energy Directive into national law, establishing clear demand targets for renewable hydrogen and combining them with effective incentives. Clear regulatory frameworks are needed to attract investments and speed up development.
- Implement the 2024 Hydrogen and Gas Decarbonisation legislative package, expanding national regulatory authorities’ responsibilities to the hydrogen sector and enabling a functioning market and infrastructure development.
- Facilitate renewable hydrogen production through faster permitting and grid connection both for electrolysers and renewable electricity projects.
- Accelerate the decarbonisation of the power sector to lower electricity costs and enhance electrolyser utilisation.
- Assess the risks of methane-based low-carbon hydrogen, including its underlying costs, infrastructure uncertainties and lock-in effects.
- Member States and the European Commission:
- Prioritise and target funding towards projects in hard-to-abate sectors that are ready to transition to renewable and low-carbon hydrogen, to stimulate demand.
- Member States and national regulatory authorities:
- Enable flexibility in the electricity market, rethink electricity grid tariffs and grid incentives, as they can optimise electrolyser location and performance.
- Hydrogen network operators:
- Align hydrogen network development with market realities to manage uncertainties and reduce the risk of stranded assets. Coordinated risk sharing across borders and between project developers, users and Member States is needed for efficient cross-border investments.
Highlights
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2
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+51%
increase in electrolyser capacity to 308 MW, way behind EU targets (6 GW in 2024, 40 GW in 2030).
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4 times
higher costs of renewable hydrogen compared to fossil-based hydrogen.
Report
This report:
• examines the latest sector developments;
• highlights the main regulatory and market challenges across the EU; and
• assesses the costs of renewable and low-carbon hydrogen.
Infographic
Curious about the main highlights of the report?
Webinar
ACER will hold a webinar to present the main findings and recommendations of this report and discuss the way forward.
When?
Tuesday 9 December 2025 at 11:00 CET.
Additional information
- Access the underlying datasets.