The capital cost of electrolysers could drop by 30pc by 2025 as the industry achieves greater economies of scale and technological advances, according to a survey of 30 projects conducted by research firm BloombergNEF.

However, rising labour and raw material costs—especially for metals—could offset some of those projected cost reductions, the survey showed. BNEF looked at 14 projects already commissioned or under construction and 16 in the pipeline.

Chinese alkaline electrolysis systems generally cost a quarter of the price of the same type of project in Western countries because of cheaper labour and local supply chains, BNEF says. Chinese-built proton-exchange-membrane (PEM) electrolysers cost about 15pc more than alkaline systems in Europe and the US, with most of the cost difference accounted for by the stacks.

65GW/yr – IEA estimate of global manufacturing capacity in 2030

The IEA says global PEM capital costs are now approaching parity with alkaline systems. “When adjusted for inflation, the cost reductions for the alkaline technology have generally been moderate over recent decades, while PEM technology has shown significant cost reductions, now approaching the cost of alkaline systems,” it says in an electrolyser sector tracking report released this week.

Capital costs are in the range of $500-1,400/kW for alkaline electrolysers and $1,100-1,800/kW for PEM systems, according to the IEA. It estimates solid-oxide electrolyser cell  systems are in the range of $2,800-5,600/kW.

“Traditionally, electrolysers have been built in small volumes for niche markets but the anticipated increase in production volumes and associated growth in unit size are expected to reduce investment costs for all electrolyser technologies. Optimisation of electrolyser supply chains is also expected to be an important source of cost reductions,” the IEA says.

Manufacturing capacity

Insufficient electrolyser manufacturing capacity is cited by many in the industry as a bottleneck constraining the growth of green hydrogen supply.

But the IEA’s analysis shows the increase in global manufacturing capacity is in fact outpacing the actual deployment of electrolysers. Global manufacturing capacity reached almost 8GW/yr in 2021, more than doubling the installed capacity that was available at the end of 2020.

“With the addition of more than 200MW of water electrolyser capacity in 2021, this technology’s global manufacturing capacity is currently underutilised, even when including deployments related to chlor-alkali applications,” the IEA says.

Europe and China account for 80pc of global manufacturing capacity. Based on company announcements, global manufacturing capacity could reach 65GW/yr by 2030. Europe and China would still lead, with around 20GW/yr of capacity each. In terms of technology, almost two-thirds of the capacity is for alkaline electrolyser production and a fifth for PEM electrolysers. In addition, about 40GW of manufacturing capacity has been announced with an unspecified date for the start of operations.

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Author: Stuart Penson