A team of researchers in Germany has developed a highly efficient method to convert sunlight directly into hydrogen fuel, a breakthrough that could help solve some of the biggest challenges facing the green hydrogen industry and pave the way for cleaner industrial energy systems.

The new prototype, which relies on a type of solar cell commonly used in space applications, serves as a proof of concept that could eventually enable the large-scale production of completely carbon-free hydrogen fuel.

Scientists at the Fraunhofer Institute for Solar Energy Systems in Freiburg, Baden-Wrttemberg, developed a system that combines photovoltaic cells with proton exchange membrane (PEM) electrolysis technology, allowing them to convert sunlight into hydrogen with an efficiency of 31.3%.

Our new record demonstrates that hydrogen can be produced directly from sunlight with very high efficiency, said Dr. Frank Dimroth.

The prototype uses III-V solar cells, which are currently the most efficient commercially produced solar cells available.

According to Interesting Engineering, these cells have long been used in spacecraft because of their exceptional performance and durability.

Direct solar-to-hydrogen production could reshape clean energy

Green hydrogen has long been viewed as one of the most promising solutions for hard-to-decarbonize industries such as steelmaking and maritime shipping.

Hydrogen can generate extremely high temperatures when burned, similar to thermal coal and heavy fuel oil, but its combustion produces only water vapor rather than carbon dioxide and other greenhouse gases.

However, the environmental benefits of hydrogen depend entirely on how it is produced.

Most hydrogen currently used worldwide is gray hydrogen, which is produced using fossil fuels and therefore does little to reduce industrial carbon emissions.

Green hydrogen, produced using renewable energy, has been promoted for years as a key component of the clean energy transition. Yet real-world deployment has proven far more expensive and complex than initially expected.

A 2025 study titled *The Gap Between Green Hydrogen Ambitions and Implementation* found that fewer than 10% of green hydrogen projects announced in 2023 had actually entered operation.

The study, published in *Nature Energy* after tracking 190 projects over three years, showed that only 7% of the worlds announced production capacity was completed on schedule.

In many cases, directly using renewable electricity remains more efficient than converting that electricity into hydrogen first.

The International Renewable Energy Agency (IRENA) warned in a 2022 report against the indiscriminate use of hydrogen, arguing that large-scale hydrogen production could divert renewable energy away from applications where it delivers greater efficiency.

Put simply, green hydrogen remains expensive and involves significant energy losses during production.

A potential game changer

The Fraunhofer Institutes new approach could help address those concerns.

Instead of generating electricity through solar panels and then using that electricity to produce hydrogen, the system converts sunlight directly into hydrogen, eliminating the intermediate electricity-generation step altogether.

Because sunlight is an abundant and renewable energy source, the technology could eventually help decarbonize heavy industries without consuming clean electricity that may be needed elsewhere in the economy.

However, the technology remains at an early stage and requires further development before it can become commercially viable.

The development is still in its early stages, and it is difficult to estimate how long it will take before we can deliver commercially competitive systems, Dimroth said in a statement accompanying the study.

He added that the team is currently seeking investors to support a planned startup called ClearSun Energy, which will focus on advancing and commercializing the technology.

The breakthrough comes at a timely moment, as investor interest in green hydrogen has started to recover after several years of slowdown, supported by renewed concerns over global energy security following disruptions linked to tensions around the Strait of Hormuz.