The smart grid concept is based on the full integration of renewable energy sources. Due to the short- and long-term volatility of these sources, new flexibility measures are necessary to ensure the smart grid operates stably and reliably. One option is to convert renewable energy into hydrogen, especially during periods of generation overcapacity. So hydrogen that is produced can be stored effectively and used “just in time” to stabilize the power system by undergoing a reverse conversion process in gas turbines or fuel cells which then supply power to the network. On the other hand and in order to achieve a sustainable general energy system (GES) it is necessary to replace other forms of fossil energy use, such as that used for heating and other industrial processes. Research indicates that a comprehensive hydrogen supply infrastructure is required. This infrastructure would include electrolysers, conversion stations, pipelines, storage facilities, and hydrogen gas turbines and/or fuel cell power stations. Some studies in Germany suggest that the existing gas infrastructure could be used for this purpose. Further, nuclear and coal power plants are not considered reserve power plants (also German case), an additional 20–30 GW of generation capacity in H2 operated gas turbines and strong H₂ transportation infrastructure will be required over the next ten years. This paper describes the systematic transformation from today's power system to one that includes a hydrogen economy. It discusses the components of this new system in depth, focusing on current challenges and applications. Some scaled current applications demonstrate the state of the art in this area, including not only technical requirements (reliability, risks) and possibilities, but also economic aspects (cost, business models, impact factors).