Gas pipeline company Firstgas is closely watching an Australian project which is supplying a blend of 10 percent green hydrogen and 90 percent fossil fuel gas to 4000 households.

Firstgas says it may be able to start delivering a green hydrogen blend into New Zealanders' homes this year, subject to WorkSafe approval.

Green hydrogen is made using renewable electricity, distinguishing it from "grey" hydrogen made using fossil fuels.

Marcos Pelenur of the Energy Efficiency and Conservation Authority (EECA) says green hydrogen has good potential in New Zealand, but using electricity directly is likely to be a more efficient way of running household appliances.

The Adelaide facility also supplies a 100 percent hydrogen bus and an industrial facility with pure hydrogen.

Hydrogen produced by Australian Gas Infrastructure Group's (AGIG) showcase South Australian facility is deemed 'green' because it is made using renewable electricity, which is taken from the grid during times when there's plentiful hydro, wind or solar-power.

The plant takes only a few seconds to get running, so can fire up quickly when there is surplus, low-cost electricity to be used.

The electricity is used to split water into oxygen and hydrogen, which is put in tanks or blended with fossil fuel gas and piped to homes.

Household appliances designed for fossil gas can only cope with a hydrogen mix of up to 20 per cent, according to Australian research.

"The research done out of the Australian Hydrogen Centre indicates the networks we've got in the ground, the pipes are compatible with 100 percent hydrogen... but the appliances are designed to run with natural gas and hydrogen does burn a little bit different," says Krissy Raman, the gas company's head of sustainability.

Running on 100 percent hydrogen wold require households to replace their appliances, though blending green hydrogen with biomethane - instead of fossil fuel gas - is another possibility if sufficient biomethane is available.

Two more Australian plants either under construction or about to be started will supply a green hydrogen/fossil gas mix to more than 40,000 households, said AGIG.

In New Zealand, Firstgas' Ben Gerritsen said the gas network operator was watching Adelaide's project with interest.

"We're also in the advanced stages of planning our own hydrogen blending pilot, we have submitted our application to WorkSafe, the regulatory authority. We're not exactly sure when they'll get back to us but we're hoping it will be in the next couple of months in which case we'd be in a position to run the pilot project later this year," he said.

Gerritsen said Firstgas would not announce the location until they had approval.

He said Firstgas' focus as a gas pipeline owner was how to using its existing pipes in a lower carbon future.

"All of the expert reports suggest a growing role for hydrogen [however] exactly for how far that extends... that is up for debate and that is unknown," he said.

"Currently our network connects industrial high heat users as well as residential users so there's multiple options for our network."

Creating a supply of green hydrogen relied on having plentiful renewable electricity.

One option previously talked about was using electricity from hydro dams in the lower South Island to make hydrogen, but that relied on Tiwai point aluminium smelter closing and freeing up supply.

Tiwai's owner has now extended its electricity supply contract for another 20 years.

Gerritsen said there were other options.

Offshore wind in Taranaki was one possibility for growing the sector, he said.

"You've got two options for exporting the power out of a massive offshore wind development, firstly by power line and secondly by hydrogen, by molecule, and as I understand it both those options are being considered by the developers."

While gas networks want to explore using hydrogen in households, expert reports prepared in New Zealand suggest it will be more likely to be cost-effective in sectors that do not have other, good low-carbon alternatives.

Pelenur said the first and most obvious use for green hydrogen was replacing existing "grey" hydrogen made using fossil fuels that was already being used in factories.

Next could be heavy transport.

His agency was helping trial hydrogen fuel cells for trucks, as well as the alternative of electric batteries.

Medium-to-long haul aviation was another possibility, he said, as well as heavy industry.

When it comes to powering people's homes, however, Pelenur said electric appliances were a more straightforward option.

"If you have to use to use electricity to make hydrogen and then use the hydrogen for heating and cooking in your home, you're adding an extra step in there, whereas with electric appliances you can generate the electricity and just use the electricity.

"By not having that additional step, you're saving yourself a whole bunch of energy losses which then makes it cheaper."

Pelenur said using a heat pump for heating saves more energy again, because heat pumps generated three times as much heating or cooling per unit of energy used, compared with standard electric or gas appliances.