Investment in the hydrogen sector remained strong in 2020 despite the effects of the pandemic, according to the IEA World Energy Investment report.

Spending in the four areas of project planning, project completion, equipment manufacturing and equity purchases were all at record levels in 2020, the IEA report says. And spending on low-carbon fuels is expected to rise from $8bn globally to $14bn in 2021, the IEA says.

Electrolysers coming online in 2020 alone represent nearly $70mn. And in 2021 the expected capacity of electrolyses to be commissioned will be 275MW, up from 60 MW in 2020.

$80bn – Mature investment flows to hydrogen sector expected before 2030

“Project completions in the area of water electrolyser installations for energy purposes reached an estimated 65 MW globally in 2020,” the report says. “While this was far below the 140MW that project developers at the start of 2020 were aiming to commission, it was nonetheless more than double 2019 levels.”

The focus of the investment has been in Europe, Japan and China.

Technology and manufacturing

In addition to electrolyser installations, investment activity in electrolyser manufacturing and equity investments in electrolyser technology companies reached new highs. A number of early-stage hydrogen technology companies—H2Pro, Hystar, Syzygy Plasmonics and Utility Global—all had successful fundraising rounds in recent months.

Private sector investment in the sector is likely to come in the form of equity investments over the next two-or-three years, according to investment bank Natixis, as large players look to take stakes in firms with an early-mover advantage in developing technologies.

After 2023, investments will likely move to financing debt for larger capacity projects, once technologies have been proved at demonstration scale.

A report released by industry association the Hydrogen Council earlier this year found that 228 large-scale projects have been announced along the value chain.

If all announced projects come to fruition, total investments will reach more than $300bn in spending through 2030. Of these investments $80bn are in planned projects that have passed FID, are under construction or operational.

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Author: Tom Young