The EU must increase the speed with which it deploys hydrogen electrolysers if it is to avoid losing investment and expertise to China, according to experts that spoke at the Hydrogen Online Conference.

The EU — which in 2023 finalised its definition framework for green hydrogen and is piloting a subsidy mechanism for production in November — has often been criticised for moving slower than the USA, where the passing of incentives under the Inflation Reduction Act in 2022 has led to a flurry of investment activity.

But China also represents a threat to European developers, according to Christopher Hebling, director of Hydrogen Technologies at the Fraunhofer Institute for Solar Energy Systems.

“Germany used to be the leading country in terms of solar PV production 10–15 years ago, but all this production eventually moved to China,” he said, speaking at the Hydrogen Online Conference organised by knowledge-sharing platform Mission Hydrogen. “I would like to see Europe acting smarter this time. Now is the time to move fast.”

“The lion’s share of our projects are in China because that is where more than 90% of the fuel cell commercial vehicles are located,” Ma, Refire

The IEA annual Global Hydrogen Review, published in September, shows that by the end of 2023 installed electrolyser capacity in China is likely to reach 1.1GW, representing 50% of global capacity.

And expected installed electrolyser capacity in China is set to triple to 3.3GW by 2024, and reach 5.4GW by 2025. Furthermore, the size of electrolysers being installed — which is key to reducing costs and gaining efficiencies — is due to grow.

By 2025 almost 20%of the capacity that has reached FID in China will be projects that are greater than 1GW, according to the IEA, by which time the nation is projected to be home to 64% of total global electrolyser capacity. The report noted Peric Hydrogen Energy Technologies and Longi Hydrogen as two electrolyser manufacturers that have developed particularly efficient electrolysers at scale.

China’s first trans-regional hydrogen pipeline was included in the nation’s plans for updating its national oil and gas network, issued earlier in 2023. The pipeline would run more than 400km from Ulanqab in North China to Beijing.

Part of the reason for this concerted action on the supply side is that China has already made significant advancements on the demand side.

The bulk of fuel cell manufacturer Refire’s projects to date have taken place in China, according to Audrey Ma, vice-president of international markets at Refire.

“That is because more than 90% of fuel cell commercial vehicles are located in China — more than 14,000 of them,” she said.

Going slow

The EU hydrogen strategy aims to produce 10mt/yr and import 10mt/yr of low-carbon hydrogen by 2030. By 2030, the European Commission is aiming for electrolyser capacity in the EU of at least 40GW.

The European Hydrogen Bank will hold a pilot auction on a fixed premium for renewable hydrogen production in Noovember, with a budget of €800m ($843m) and with contracts to be awarded by mid-2024. The maximum grant amount for any one project will be limited to €266.7m.

But industry bodies have previously told Hydrogen Economist the bank is significantly under-capitalised if it wants to match deployment levels being targeted in the US or China.

Earlier in 2023 Germany updated its National Hydrogen Strategy, aiming for 10GW of electrolysis capacity by 2030.

But, as in the wider EU, achieving deployment require well-capitalised market mechanisms rather than just headline targets, according to Birte Sonnichsen, senior analyst at the German Hydrogen and Fuel Cell Association, speaking at the same online conference.

“The stakeholders willingness to invest is there. The ambition levels are there. But we need rapid measures now to provide concrete market design for green hydrogen production to really get the market to ramp up,” she said.

---

Author: Tom Young