Work

Designing effective hydrogen Markets: Policy recommendations from electricity and gas market reform

Year: 2025

Type: article

Abstract: For low-carbon hydrogen to become a viable decarbonization solution, the creation of a robust and effective market is essential. This paper examines the applicability of market reforms from the renewable energy, natural gas, and liquefied natural gas (LNG) sectors, with a focus on pricing mechanisms, business models, and infrastructure access, to facilitate hydrogen market development. Applying the Structure-Conduct-Performance-Regulation (SCP-R) framework and informed by stakeholder insights, we identify critical enablers for advancing the hydrogen market formation. Our analysis highlights the importance of innovative pricing strategies and regulatory measures incentivizing investment and managing risks. Establishing a market reference price for low-carbon hydrogen — akin to benchmarks in the natural gas and LNG sectors—is critical for ensuring transparency, predictability, and regional adaptability in trade. Additionally, customized business models are also needed to mitigate volume risks for producers. Government interventions, such as offtake agreements and the development of hydrogen hubs, are indispensable for fostering competition and driving decarbonization.

Source: Energy Policy

DOI: 10.1016/j.enpol.2025.114816

Authors: Shahid Hasan, Rolando Fuentes

Institutions: King Abdullah Petroleum Studies and Research Center, Tecnológico de Monterrey

Language: English

Topic: Hybrid Renewable Energy Systems

Subfield: Energy Engineering and Power Technology

Field: Energy

Domain: Physical Sciences

SDGs: Affordable and clean energy, Climate action, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,940