The industrial sector is the world’s second largest emitter of greenhouse gases, hence a methodology for decarbonizing factory systems is crucial for achieving global climate goals. Hydrogen is an important medium for the transition towards carbon neutral factories due to its broad applicability within the factory, including its use in electricity and heat generation and as a process gas or fuel. One of the main challenges is the identification of economically and environmentally suitable design scenarios, such as for the entire value chain for hydrogen generation and application. For example, the infrastructure for renewable electricity, hydrogen generation, hydrogen conversion (e.g. into synthetic fuels), storage and transport systems as well as application in the factory. Due to the high volatility of energy generation and the related dynamic interdependencies within a factory system, a valid technical, economic and environmental evaluation of benefits induced by hydrogen technologies can only be achieved using digital factory models. In this paper, we present a framework to integrate hydrogen technologies into factory systems. This enables decision makers to identify promising measures according to their expected impact and collect data for appropriate factory modelling. Furthermore, a concept for factory modelling and simulation is presented and demonstrated in a case study from the electronics industry, assessing the use of hydrogen for decentralized power and heat generation.