Iceland has all the energy they need from geothermal and natural gas. That makes it a lot easier to afford inefficient energy transport/storage technology like H2.
Diatomic hydrogen is about the worst way to store energy there is. Much better to hang it off the sides of a carbon chain.... oh wait that's gasoline.
Anyway quick reasons why h2 stinks:
Embrittlement - hard to make the storage, piping and valves last
Low energy density - big volumes, few BTUs / kWh
Low energy density - big mass, few BTUs / kWh
Pressurized h2 is dangerous
Cryo h2 is less dangerous but even more expensive
Hydrides - heavy, expensive, short lived
And the biggy - if you aren't going to start with fossil fuels you need to electrolize water with high quality electricity - generated somehow.