ITM Power, the Sheffield based firm which makes systems to store energy in the form of hydrogen says one of its products can easily beat EU cost targets.
The news has seen ITM's share price rocket 8.3%.
The product is called HFuel and works by taking renewable energy, for instance wind or solar power, and electrolising water to separate the hydrogen from the oxygen.
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The hydrogen can then be saved and distributed for things that need power, like boilers or cars.
ITM claims the total cost of saving hydrogen this way, including capital investments could come in as low as £3.88 per kilogram of hydrogen. The EU target is £8.49 per kilogram.
ITM's chief executive Graham Cooley said of the cost announcement:
"Hydrogen from HFuel costs less than EU targets and is competitive with fuel on the high street today. What could be more compelling than an economic fuel made from renewable power that has zero emissions?"
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