Islands make the hydrogen argument concrete. No inter-connector to send a surplus down, no neighbouring grid to borrow stability from, and every megawatt-hour of solar or wind that can’t be used is thrown away. So when a study turns up with hour-by-hour numbers on what an electrolyser actually does to an isolated network, it’s worth reading closely.
The island as a test bench
A team at the University of Palermo has published that study in Energies. Their subject is Favignana, a small Italian island whose grid runs on its own. They sized two power-to-hydrogen configurations with a mixed-integer linear model, then ran time-series load flow calculations on a 20 kV network model.
One pairs an electrolyser and hydrogen storage with a fuel cell. The other swaps the fuel cell for lithium-ion batteries and allows hydrogen to be blended into gas turbines alongside biomethane, up to 30% by volume.
Capital cost favoured the fuel cell version by around 24%. Its electrolyser was sized at 423 kW and ran 86.8% of the time. The battery version needed 500 kW and ran 66% of the time.
Both did the same useful thing. Across the 288 hours modelled, 44 hours of overgeneration disappeared, and the island’s load factor climbed from 0.37 to 0.41 or 0.42 depending on the configuration. Voltages held close to the nominal 20 kV throughout.
Where you put it matters
Geography produced the more interesting result. The researchers tested the electrolyser at an urban node and at a non-urban node. Sited in town, grid losses rose from 0.21% to 0.26%. Out near the generation, they fell to 0.19%. Small percentages, but they point in opposite directions.
Their conclusion is blunt: “centralized production near renewable energy plants is preferable to on-site production near hydrogen users”. Hydrogen price and transport costs, they add, shape the optimal design more than almost anything else does.
The price that decides everything
Hydrogen is assumed to sell at 7.95 EUR/kg, with a sensitivity analysis reaching down to 2.53 EUR/kg. Turning hydrogen back into electricity only pays its way at about 3.00 EUR/kg in the cheaper configuration, and below 3.40 EUR/kg in the other.
Worth holding on to. The curtailment benefit shows up straight away, because any flexible load can soak up a surplus. Round-trip economics arrive much later, and only if production costs fall a long way. That gap is one reason storage and end use have to be designed together.
Why this matters for Gran Canaria
H2Heat is building something at a comparable scale on a comparable system. A 0.5 MW advanced alkaline electrolyser from Stargate Hydrogen, which uses nanoceramic electrode materials rather than precious metals, is paired with a 100% hydrogen combined heat and power unit from 2G Solutions and an integrated heat pump. Heat and power go to a hospital run by the Canary Islands Health Service. The rest of the configuration sits on our technology page.
That design answers the siting question differently, because the hospital is the anchor consumer and heat has to be delivered where it is used. The Palermo numbers are not a verdict on it. They’re an outside yardstick, and they sharpen the question every island project has to answer. Which losses are you willing to accept, and in exchange for what?
Brussels is taking submissions on a new EU hydrogen strategy until 23 November 2026. We argued last week that heat is missing from that brief. Island evidence of this kind belongs in it too.