Billions in H₂: Who Will Invest in Ukrainian Green Hydrogen, and What Are the Risks?
2 June 15:04
ANALYSIS FROM 
Europe views Ukraine as a strategic partner in the development of renewable hydrogen production. Several projects are already in the planning stages in the country, which are expected to confirm this status. Komersant investigated what these projects are and what their chances of implementation are
A few years ago, Europe set the “Green Deal” as its guiding principle. A key component of this is ensuring that European countries have access to clean, safe, and affordable energy. This means prioritizing the development of renewable energy sources and phasing out the use of coal and gas as quickly and completely as possible.
Renewable or green hydrogen, considered the fuel of the future, is precisely that clean energy. Green hydrogen is produced by electrolysis of ordinary water using electricity from renewable sources—primarily wind and solar power plants. This is the clean energy that Europe needs and that Ukraine has the potential to supply.
Recognizing the Potential
Ukraine is positioning itself as a strategic partner in green hydrogen production thanks to a combination of several factors. These include, first and foremost, natural resources, geographical location, and existing energy infrastructure. But there are also factors holding back the development of this partnership. The publication
“First and foremost, Ukraine possesses significant renewable energy potential. This includes solar, wind, and bioenergy, and in the future, offshore wind energy as well. The solar and wind resources of the country’s southern and western regions are particularly strong. Access to competitive ‘green’ electricity is one of the key conditions for producing green hydrogen through electrolysis. In addition, Ukraine has vast areas available for renewable energy facilities and electrolysers, as well as significant experience in the energy and industrial sectors.
A second important advantage is Ukraine’s geographical location. The country shares a direct border with the European Union, which has already identified hydrogen as one of the key elements of its decarbonization and energy security strategy. In Europe, future large-scale demand is emerging for renewable hydrogen, green molecules, and low-carbon industrial products. In this context, Ukraine could become not only a producer but also a strategic supplier of hydrogen and hydrogen-derived products to the European market.
The Ukrainian gas transmission system will play a special role in the development of the hydrogen economy, as it can be adapted in the future to transport hydrogen or hydrogen mixtures. This is extremely important, as using the existing pipeline infrastructure is a significantly cheaper and more efficient way to deliver hydrogen to Europe compared to alternative logistics solutions.
It is necessary to explain why the Ukrainian gas transmission system would require modernization if used to transport hydrogen. As experts note, hydrogen forms a highly explosive mixture when combined with oxygen. Another characteristic is its low atomic mass. In fact, it is so low that it can escape from the pipeline even through the tiniest cracks and joints. In other words, for example, welds that are acceptable for natural gas transportation will not be suitable for transporting hydrogen via pipeline. Therefore, to use the Ukrainian gas transmission system for hydrogen transportation, it must be adapted for this purpose. At the very least, the sections that will be used to supply hydrogen to Europe.
Hopes for Profitability
Using the Ukrainian gas transmission system to transport hydrogen could become a significant competitive advantage for Ukrainian producers, as it promises to minimize logistics costs. This is all the more important given that green hydrogen production is a costly endeavor. And this makes the issue of the economic profitability of the production process particularly relevant. Oleksandr Repkin, vice president of the Ukrainian Hydrogen Council, calls this issue “complex but promising.”
“At this stage, green hydrogen is still more expensive than traditional fossil fuel alternatives in most countries around the world. The main reasons are the high cost of electrolysers, the need for significant investments in renewable energy and infrastructure, as well as high financial risks.
Currently, the production cost of green hydrogen in Ukraine is estimated at approximately $3.5–8 per kilogram or more. Without state support, preferential financing, purchase guarantees, and mechanisms to compensate for the price difference, it is difficult to call large-scale projects fully profitable at this time. At the same time, the industry’s economics are changing very rapidly. Technology costs are gradually decreasing, electrolyzers are becoming cheaper, and the European Union is tightening climate regulations through mechanisms such as CBAM and requirements for industrial decarbonization.
Therefore, the issue of profitability should be considered not only in terms of the current price of hydrogen but also in terms of the industry’s future competitiveness. In the long term, as technology costs decrease, production scales up, and the security situation stabilizes, the cost of Ukrainian green hydrogen could drop to $2–4 per kilogram, making it competitive in the European market.”
Additionally, according to the expert, the economics of the projects could be improved by exporting not only hydrogen itself but also high-value-added products, such as green ammonia, fertilizers, or “green” steel.
Project Scale
European directives, in particular the European Commission’s “Energy System Integration. Hydrogen” and “Green Hydrogen for the European Green Deal: The 2×40 GW Initiative,” not only identify Ukraine as a strategic partner in the development of renewable hydrogen production but also call for the construction of up to 10 GW of electrolysis capacity in Ukraine by 2030, intended for the production of renewable hydrogen.
And several large-scale projects are already being implemented in Ukraine, currently at various stages of development. For example, the Ukrainian company UDP Renewables, which is implementing a green hydrogen production project in Ukraine worth approximately €2 billion, is already in negotiations with a European investor. The company’s owner, Serhiy Yevtushenko, recently spoke about this in an interview with Delo.ua. According to him, the parties are close to signing an agreement.
“This will be an agreement with a company that will purchase hydrogen. It is set to become an investor in this plant, produce in Ukraine, and supply itself,” explains the owner of UDPR.
The project is designed to produce about 50,000 tons of hydrogen per year and involves creating a full cycle—from electricity generation to hydrogen production and its delivery to the EU.
As noted by Oleksandr Repkin, vice president of the Ukrainian Hydrogen Council, a portfolio of several large-scale green hydrogen projects is already taking shape in Ukraine.
“One of the most advanced is the project by the company ‘Hydrogen of Ukraine’ in the Odesa region. It involves the construction of a green hydrogen production plant with an initial electrolysis capacity of 100 MW. In addition to direct hydrogen production, the concept includes the possibility of producing green ammonia and methanol for export to the EU. The project has already moved to the investment-ready development stage—meaning that a significant portion of the key technical and economic studies has already been completed. Specifically, these include studies on the integration of renewable energy sources into Ukraine’s power grid, the potential for underground hydrogen storage, and a technical and economic feasibility study for the construction of a hydrogen pipeline between the Ukrainian city of Reni and Romania. The project has received support from the InnovateUkraine program and has been recognized by Mission Innovation and the Clean Hydrogen Partnership.
The second key focus of “Hydrogen Ukraine” is the Transcarpathian Hydrogen Project. It also involves the construction of a green hydrogen production plant with a capacity of 100 MW in the first phase. The project is part of the European EastGateH2V initiative under Horizon Europe. A feasibility study is currently being prepared for a future hydrogen pipeline between Ukraine and Slovakia.
Also worth noting is the H2EU Store project in the Lviv region, being developed by Eco-Optima in partnership with RAG Austria. Its concept involves producing green hydrogen via electrolysis, followed by mixing the hydrogen with natural gas and transporting the mixture to the EU via the existing Ukrainian gas transmission system. The first phase involves 112 MW of electrolysis capacity and the transportation of a gas mixture containing approximately 5% hydrogen. In the long term, the project envisages the conversion of a separate branch of the gas pipeline for the transportation of 100% hydrogen.”
Oleksandr Repkin acknowledges that most Ukrainian hydrogen projects are currently in the early stages of development. According to him, this is due to the industry’s high capital intensity, the need for international financing, and security risks stemming from the war.
Benefits for the Ukrainian Economy
For Ukraine, hydrogen is not just about exports. And of the 10 GW of electrolysis capacity intended for renewable hydrogen production—which, according to European strategic plans, is scheduled to be built in Ukraine by 2030—about 1.8 GW will serve the domestic market, primarily for the production of green ammonia, a critical commodity for the agro-industrial complex. As emphasized by Oleksandr Repkin, Vice President of the Ukrainian Hydrogen Council, green hydrogen is, in general, an important tool for decarbonizing Ukrainian industry and enhancing the country’s energy resilience.
“The primary potential consumers of green hydrogen in Ukraine could be the metallurgy sector, the chemical industry, ammonia and fertilizer production, oil refining, the energy sector, and heavy transport. For many of these sectors, hydrogen is one of the few realistic paths to decarbonization. In particular, in metallurgy, it can be used to produce ‘green’ steel, and in the chemical industry, it can replace so-called ‘gray’ hydrogen, which is currently produced from natural gas.
Hydrogen also plays a crucial role in the energy sector as a tool for system balancing and long-term storage of excess renewable energy. In the future, this could become critical for the stable operation of power grids with a high share of solar and wind generation.”
As Oleksandr Repkin notes, it is already clear today that Ukraine is focusing not only on the production of green hydrogen itself, but also on creating complete value chains—from renewable generation and electrolysis to the production of green ammonia, methanol, and steel, and subsequent integration into the future European hydrogen infrastructure.
