A detailed analysis of the formation energies of transition metal hydrides is presented. The hydriding energies are computed for various crystal structures using Density Functional Theory. The process of hydride formation is broken down into three consecutive, hypothetical reactions in order to analyse the different energy contributions, and explain the observed trends. We find that the stability of the host metal is very significant in determining the formation energy, thereby providing a more fundamental justification for Miedema's “law of inverse stability”  (the more stable the metal, the less stable the hydride). The conversion of the host metal to the structure formed by the metal ions in the hydride (fcc in most cases) is only significant for metals with a strong bcc preference such as V and Cr - this lowers the driving force for hydride formation. The final contribution is the chemical bonding between the hydrogen and the metal. This is the only contribution that is negative, and hence favourable to hydride formation. We find that it is dominated by the position of the Fermi level in the host metal.