The intermittent nature of renewable power generation has long been a potential barrier to a low-carbon future.

Electricity only generated when the wind blows or the sun shines isn't always needed at that exact time. As more intermittent power comes online, the grid has to turn down more energy. Between October 2011 and March 2013, 224GW hours of potential energy were turned down from UK wind farms alone (receiving £7.6m of the total £170m curtailment and balancing payments in 2013 – effectively being paid for energy that could have been generated, but isn't).

Surges of renewable energy are rejected in favour of the low and steady hum of nuclear, coal and gas. This problem can only be solved by effective energy storage. Batteries can only keep small amounts. Electric vehicles could potentially, en masse, add up to one big storage capacity, but it is unlikely any time soon. Pumped hydro is the current front-runner, using excess energy to pump water up a slope and release it back down again when needed, but it requires very specific topography (ie hills and space for large lakes).

There's another solution, which avoids all those issues – turning the excess electricity, through electrolysis of water, into renewable hydrogen gas.

Hydrogen has long been produced through energy-intensive electrolysis (the other equally unsustainable method being to extract it from natural gas). However UK firm ITM Power has pioneered a new system of electrolysis which can connect to the grid and work instantaneously with surges in power supply that would otherwise be wasted, creating high-pressure hydrogen as a fuel or injecting it directly from the electricity to the gas grid.

"Power-to-gas energy offers an enormous tank that we can store renewable power in, and it's called the gas grid", says Graham Cooley, CEO of ITM Power. His "electolyzer" has been up and running since 2013 in Frankfurt as part of the government-backed Thüga Group. Other companies are beginning to move into this field too. The Energiepark Mainz in the German city of Mainz also houses a power-to-gas electrolysis scheme backed by the federal government, gas firm Linde and Siemens, able to produce up to 200 tonnes of hydrogen per year.

"It is both a storage medium and a highly versatile product in its own right", states Christoph Stiller, head of energy production and storage, in the Linde Group annual report. Yet, in the UK, while ITM has contracts to build hydrogen re-fuelling stations in the Isle of Wight and London, the specific concept of power-to-gas energy storage is yet to catch on.

The reason why has very little to do with engineering, and a lot to do with policy and economics. Renewable electricity is subsidised in the form of feed-in tariffs (FITs); hydrogen, however, is not. Even if the electricity is not used, the grid still pays providers for producing it. "Also the price of gas per unit of energy is much lower than the price of electricity for the same unit of energy", informs John Loughhead, executive director of the UK Energy Research Centre. "There are benefits to this from an overall system and efficiency level, but you are essentially competing with the price of natural gas in a pipeline coming over from Russia."

Cooley argues that he just wants a level playing field. He has asked the Department of Energy and Climate Change for the same FITs offered for biogas to be attached to renewable hydrogen. "Today, you can do power-to-gas energy storage in the UK and all over Europe", says Cooley. "All you need is an equivalent tariff structure as bio-methane." This is already the case, he says, in some other EU countries. The response from DECC? "Well, the response was the Renewable Heat Incentive is not going to be reviewed until 2017," he says. "We would expect hydrogen to be included in that review. But there doesn't seem to be the level of urgency that we would have expected."

Loughhead agrees that power-to-gas offers exciting possibilities. "It means that you can use everything that comes out of your wind turbine, for example, even if there is no demand for electricity at the time, and what you turn it into is displacing the use of fossil fuels. This gives you an additional level of operational flexibility. Because you can offer hydrogen to go into the natural gas grid – which you can do typically up to 10% before your burners need to be altered – this offers the operator of a wind turbine a second market."

He believes that a change in tariff structure "could give an incentive" but suggests the simple reason it hasn't happened is "there's just not enough demand to give any attention to it at the moment. It's such an early stage and the volumes are so small."

Whether power-to-gas will form a big part of future energy storage lies less in the gas grid and more in other outlets for hydrogen, argues Loughead. "As we de-carbonise our energy system, are we going to find there is a role for hydrogen-fuelled cars? If so, that will mean an increasing demand for hydrogen." Generating it from surplus electricity could solve several problems at once.

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