As the global energy transition gains momentum, many nations are ramping up efforts to stake a claim in the burgeoning green hydrogen sector. Yet, in a surprising move that has sent shockwaves through the industry, Statkraft—Europe’s largest producer of renewable energy—has officially announced that it will halt all new green hydrogen project development in every market. The reason cited: a significant increase in market uncertainty. Despite this, Statkraft will continue to advance existing projects in the UK, where development is further along and enjoys stronger institutional support. The company is also actively seeking investors to push these projects into the construction and operational phases.
This decision does not come lightly, especially considering Statkraft’s early and expansive entry into the green hydrogen space. Over the past few years, the company has established a presence in multiple European markets, including Norway, Sweden, the UK, Germany, the Netherlands, and Italy. It has invested substantial resources into hydrogen initiatives, capitalizing on its deep experience in renewable power and its strategic foresight.
For example, in Norway, Statkraft had envisioned a large-scale green hydrogen production hub, utilizing the country’s vast hydropower reserves. The plan included installing high-capacity water electrolysis equipment capable of producing several tons of green hydrogen daily. The hydrogen was intended to serve hard-to-abate sectors such as chemicals and steel, playing a pivotal role in Norway’s industrial decarbonization efforts. The project carried a price tag of several billion NOK and was seen as a potential benchmark for integrating renewable energy with hydrogen fuel infrastructure.
In Germany, Statkraft had partnered with a leading industrial company to explore applications of hydrogen in manufacturing, such as providing clean hydrogen for hydrogenation reactions in chemical production. The two parties co-invested in joint laboratories and R&D programs aimed at unlocking green hydrogen’s potential in complex, high-demand industrial processes. These projects, once considered at the forefront of Europe’s clean energy transition, have now been paused indefinitely.
Nonetheless, not all of Statkraft’s hydrogen efforts are being shelved. In the United Kingdom, where some projects are already in advanced stages, the company remains committed. Several of these projects enjoy favorable policy environments and have secured financial support. One standout example is a Scottish project that integrates offshore wind and green hydrogen production. By using surplus electricity from offshore wind farms to electrolyze water into hydrogen, the project has successfully attracted tens of millions of pounds in private investment from energy-focused funds. Statkraft has also been shortlisted for potential inclusion in UK government programs that offer further policy incentives and funding support.
Kevin O’Donovan, Statkraft’s UK Managing Director, emphasized the company’s ongoing commitment in a public statement:
“Statkraft has decided to stop developing new green hydrogen projects in our portfolio. We will continue to progress our existing UK hydrogen initiatives, which benefit from strong support from both the UK and Scottish governments. We are now seeking investors to bring these projects into the construction and operational phases. At the same time, we remain focused on developing our core areas of expertise, including our market operations and energy optimization services.”
This announcement signals not only a shift in strategy but also a clear recalibration of the company’s business priorities.
The retreat from new green hydrogen development has been months in the making. Statkraft had already revised its hydrogen development targets downward last year. Commenting on the current decision, President and CEO Birgitte Ringstad Vartdal stated:
“After reducing our hydrogen development ambitions in 2024, we have continued to see increasing uncertainty in the market. As a result, Statkraft has made the strategic decision to halt new hydrogen development and prioritize growth opportunities in other technologies and markets where we have stronger predictability and competitive advantage.”
Several key factors underpin this shift. The first is macroeconomic. The global economic recovery has been slower than expected, and energy demand is increasingly volatile. In such an environment, long-term infrastructure projects like green hydrogen carry significant risk. Industrial sectors such as chemicals and steel, which are among the main potential consumers of green hydrogen, are also facing constraints in capacity expansion, leading to slower-than-anticipated demand growth.
Second, the economics of green hydrogen production remain challenging. While the efficiency of electrolysis has improved, the cost of equipment and the electricity needed to run it remain high. These elevated costs prevent green hydrogen from reaching price parity with fossil fuels or other clean alternatives, thereby limiting its competitiveness in the open market. Until these cost barriers are addressed, large-scale commercialization of green hydrogen will remain elusive.
Third, inconsistent regulatory environments are compounding the problem. Across different countries, hydrogen policies vary greatly in terms of standards, subsidies, and long-term policy commitment. Some countries are already scaling back subsidies or lack unified standards for hydrogen quality and production methods. For companies like Statkraft that operate across multiple regions, navigating this fragmented regulatory landscape significantly increases risk and adds complexity to implementation.
Nevertheless, Statkraft’s exit from new green hydrogen project development should not be mistaken for a full withdrawal from the hydrogen sector. The company continues to believe in hydrogen’s long-term potential to decarbonize energy-intensive industries and contribute to achieving global climate targets. Statkraft will likely remain engaged in the hydrogen market through partnerships, technology collaborations, and hydrogen trading activities. The strategy, as we advance, appears to be one of risk management and selective participation.
This development is bound to cause reverberations throughout the green hydrogen ecosystem. Statkraft’s decision serves as a sobering reminder of the risks involved for other companies, especially those eyeing rapid expansion into hydrogen. Some may now reassess their investment strategies, taking a more measured approach to development and commercialization. For firms already deep into green hydrogen projects, this may be a moment to revisit assumptions, reevaluate operating costs, and strengthen project fundamentals to weather future uncertainty.
For policymakers, the implications are equally important. If governments want to attract and retain private sector investment in green hydrogen, they must ensure a stable, transparent, and supportive policy framework. Streamlining regulations, ensuring long-term subsidy commitments, and aligning production standards across regions will be critical to maintaining industry momentum.
In summary, Statkraft’s decision to stop all new green hydrogen development reflects a broader recalibration of strategy in the face of economic volatility, technological uncertainty, and regulatory inconsistency. Yet it also leaves the door open for future re-entry—albeit with greater caution and sharper focus. For the industry at large, it is a timely signal to reassess expectations, strengthen policy coordination, and ensure that the promise of green hydrogen can be realized on firmer ground.
