Global electrolyser manufacturing capacity is set to increase by a factor of ten from around 10GW/yr now to more than 100GW/yr by 2030, around half the level needed to be consistent with a net-zero by 2050 pathway, according to the IEA’s Energy Technology Perspectives 2023 report.

Current electrolyser manufacturing capacity is much larger than annual deployment. But expected increases in line with national strategies and announced industrial plans will require greatly increased capacity in the second half of the decade.

China has the highest share of global electrolyser manufacturing capacity, at more than 40pc, with Europe coming second on 25pc and North America, Japan and India making up the remainder. China’s market share is underpinned by its access to cheaper materials and labour compared with other regional markets and the fact that Chinese manufacturers have, on average, larger manufacturing capacities per plant than those in Europe.

One of the central arguments of the report is that such regional concentration of manufacturing capacity presents a risk to supply chains.

40pc – Share of electrolyser manufacture concentrated in China

“It is important to diversify the production of manufacturing and critical minerals, otherwise we will pay high risks for disruption,” says IEA executive director Fatih Birol. “To put all the eggs in one basket could be very costly.”

Making good the shortfall in manufacturing capacity is complicated by the fact that electrolysis has to grow from the lowest base of all the main clean energy technologies discussed in the report—current capacity is only 5pc of that required for a net-zero by 2050 scenario.

However, it should be possible to address this shortfall as electrolyser manufacturing facilities have shorter lead times than comparative technologies, according to the report.

“The market is very dynamic. It only takes 1–3 years to bring manufacturing facilities online, so the project pipeline could extend dramatically,” says Timur Guel, head of the energy technology policy division at the IEA.

And expanding existing facilities—as some manufacturers are planning to do—could take even less time, especially when the potential for future expansion is integrated into the design of a new facility—as is the case with many existing developments, especially in Europe.

Leading the pack

While China and the EU are expected to maintain a prominent role in electrolyser manufacturing, their shares are anticipated to fall to around 25pc each by 2030.

India, the US and Japan are expected to grow their market shares, while the Middle East and Australia are expected to gain market shares of 1pc and 2pc respectively. The US share will grow particularly dramatically following incentives for hydrogen production introduced in last year’s Inflation Reduction Act.

China, India and the US are expected to be making green hydrogen for under $3/kg by 2030, rendering the green version of the fuel competitive with grey. Europe is expected to be making the fuel for $2.5–3.5/kg and Japan for $3.5–5/kg.

Alternative pathways

The role of blue hydrogen in meeting demand for 2030 will be dictated by various supply chain factors. There are six blue hydrogen plants in operation today, all in North America. Such plants have well-established supply chains for components and an existing skilled labour force, and can often be located close to industrial clusters—meaning there may be a short-term spurt in development.

But there could be hold-ups at the other end of the blue hydrogen value chain. Carbon storage sites have a long lead time compared with other technologies, with projects taking an average of seven years to reach completion.

However, the report does cite a number of historical examples of average technology lead times being shortened during times of crisis—particularly the manufacture of vaccines during the Covid-19 pandemic and aircraft during the Second World War.

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Author: Tom Young