Blending trials and offtake-led developments now draw the money.
Hydrogen is moving from an envisioned mainstream electricity fuel to a targeted asset for long-duration grid balancing, as round-trip efficiency losses and competition from battery storage limit its use in routine generation, according to GlobalData.
Rehaan Shiledar, Power Analyst at GlobalData, said investment is shifting from large standalone hydrogen-to-power projects towards blending trials, limited peaking applications, and industrial offtake-led developments supported by firm demand.
“Hydrogen is not losing relevance, but its role in the power sector is becoming more selective and commercially disciplined,” Shiledar said.
GlobalData’s Strategic Intelligence: Hydrogen in Power (2026) report said the fuel is now aimed at covering extended renewable shortfalls, securing critical backup infrastructure, and extending the life of gas-fired generation through blending and regional industrial hubs.
Higher electricity and project development costs, slower-than-expected electrolyser cost reductions, complex subsidy rules, and limited bankable offtake agreements have delayed or reduced many large-scale clean hydrogen projects, the report said.
Recent project cancellations, pauses, and target reductions across several markets reflect the sector’s reassessment, as utilities weigh hydrogen against lower-cost alternatives.
Adoption is shifting towards projects with clear economics, contracted demand, and reliable policy support.
Shiledar said hydrogen remains relevant where industrial demand provides an anchor, renewable power is inexpensive, storage is available, and policy frameworks are stable.
“The long-term global capacity is still projected to scale significantly, driven by targeted industrial mandates, heavy transport needs, and specific power grid balancing requirements,” he said.
He added that utilities and independent power producers are increasingly deploying hydrogen-ready gas turbines and engines to secure flexible, fast-ramping generation to balance intermittent renewables.
He pointed to recent project commitments by operators including Singapore’s YTL PowerSeraya.
Original equipment manufacturers and developers are tackling higher flame speeds, materials embrittlement, and stringent nitrogen oxide emissions through combustor upgrades and specialised plant retrofits.
Global low-carbon hydrogen production capacity remained nascent in 2025, with substantial growth expected by the end of 2026, driven primarily by blue and green hydrogen, according to GlobalData estimates.
Blue hydrogen is expected to lead low-carbon capacity in the near term before green hydrogen overtakes it by 2030.
Green hydrogen capacity is projected to be about 5.5 times that of blue hydrogen by 2030, driven by expanding wind and solar generation.
Australia and China are amongst the primary contributors to green hydrogen expansion between 2026 and 2030.
Governments across major hydrogen markets are adjusting policy and funding frameworks to address high costs, infrastructure constraints, and slow project development.
China’s 2026–30 strategy strengthens hydrogen’s role in heavy transport, chemicals, and industrial decarbonisation, whilst India’s Bihar state has approved a draft policy supporting green hydrogen and ammonia production, manufacturing, and demand aggregation.
Shiledar said the strongest near-term opportunities lie in regions with stable policy frameworks, low-cost renewable electricity, and large-scale storage, including salt caverns.
