Developers of large-scale green hydrogen projects are exploring ways to use combinations of different electrolyser technologies at the same facility as they seek to optimise performance, according to Norwegian electrolyser manufacturer Nel.

The largest projects could potentially save “hundreds of millions of dollars” over the lifetime of a facility by deploying both alkaline and proton-exchange-membrane (PEM) technologies instead of opting for one or the other, CEO Hakon Volldal told analysts on the company’s second-quarter earnings call.

Alkaline is the most established and cheapest technology. PEM is at an earlier stage of development and, as a result, more expensive, but it is gaining popularity because of its ability to ramp up and down rapidly in response to fluctuating wind and solar power generation. Nel offers both technologies.

202% – Electrolyser revenue increase

Large-scale projects with hundreds of megawatts or gigawatts of electrolyser capacity could use alkaline for hydrogen production from baseload power and PEM for peak production periods of high wind and solar generation, Volldal said.

“That definitely helps your business case. You are looking at a few percentage point improvements here and there that could turn into hundreds of millions of dollars or euros over the lifetime of the equipment. Of course [project developers] are looking into it now,” he said.

PEM is not yet proven at scale, with the largest plant in operation having a capacity of 20MW, Volldal said. “PEM is expensive both in terms of capex and opex, but it requires less footprint and is responsive. It means you can run production up and down really fast and it fits well with renewable energy generation coming from wind and solar, where you have big  sudden shifts in the production loads and curves.”

Alkaline is more expensive on capex and opex, but it requires more space and is not easy to ramp up and down “by the second or the minute”, he added.

Revenue rise

Nel reported a 202% increase in revenue from electrolyser sales for the second quarter, compared with the same quarter in 2022. Revenues from sales of alkaline electrolysers increased by 383% compared with the same quarter in 2022, and sales of PEM electrolysers increased by 78% from Q2 2022.

However, intake of new electrolyser orders slowed during the quarter, with the value of the order backlog dropping by NOK80mn ($12mn) compared with the previous quarter to stand at NOK2.472mn. Nel attributed the decline to the timing of orders rather than weakness in underlying demand.

“Multiple gigawatts” of electrolyser projects are expected to reach FID before 2025, according to Nel’s internal analysis and other projections by external analysts, the company said. Industrial applications represent the most promising near-term

opportunities. “Projects are expected to commence first in mature markets, before large greenfield installations integrated with renewable energy sources gradually are expected to become another important market segment,” Nel said.

Beef up the bank

Volldal called on the EU to “beef up” support for the hydrogen sector through its Hydrogen Bank, which is expected to allocate its first funds from an €800mn pot through auctions towards the end of 2023.

“The Hydrogen Bank could be a good instrument, but it needs to be beefed up with €10–15b,” he said. “You would able to fund a lot of the projects that are waiting to happen. And if we can get these projects approved then you get over that initial speed bump [and] you get the learning effects [and] the scaling back. Then we get the costs down, we can move faster, and then we do not rely on subsidies anymore.” Support should also be frontloaded for the next 2–3 years rather than spread over many years. “Make it big, but do it fast. It is over the next 2–3 years where we need it,” he said.

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Author: Stuart Penson