China has plenty of renewable energy like wind power and solar energy especially in the northwest part of the country. Due to the volatile and intermittent characters of the green powers, high penetration level of renewable resources could arise grid stabilization problem. Therefore electricity storage is considered as a solution and hydrogen energy storage is proposed. Instead of storing the electricity directly, it converts electricity into hydrogen and the energy in hydrogen will be released as needed from gas to electricity and heat. The transformed green power can be fed to the power grid and heat supply network. State Grid Corporation of China carried out its first hydrogen demonstration project. In the demonstration project, an alkaline electrolyzer and a PEM hydrogen fuel cell stack are decided as the hydrogen producer and consumer, respectively. Hydrogen safety issue is always of significant importance to secure the property. In order to develop a dedicated safety analysis method for hydrogen energy storage system in power industry, the risk analysis for the power-to-gas-topower&heat facility was made. The hazard and operability (HAZOP) study and the failure mode and effects analysis (FMEA) are performed sequentially to the installation, to identify the most problematic parts of the system in view of hydrogen safety and possible failure modes and consequences. At the third step, the typical hydrogen leak accident scenarios are simulated by using computational fluid dynamics (CFD) computer code. The resulted pressure loads of the possibly ignited hydrogen-air mixture in the facility container are estimated conservatively. Important safeguards and mitigation measures are proposed based on the three-stage risk and safety studies.