The IEA has cut its forecast for the deployment of renewables dedicated to powering electrolysers over the next five years by 35%, implying the growth of green hydrogen production will be slower than previously expected.

The Paris-based IEA forecasts the global addition of 45GW green hydrogen–linked renewable capacity over 2023–28. Growth forecasts for all regions except China were lowered compared with projections made a year ago.

The main reasons for the revisions were the “slow pace of bringing planned green hydrogen projects to financial close due to a lack of offtakers and the impact of inflation on production costs”, the agency said in its Renewables 2023 report.

45GW – Wind and solar additions

“Project development in several markets has been affected by delays in electrolyser shipments due to backlogs in manufacturing plant orders and, in some cases, by malfunctioning equipment,” the IEA added.

General permitting and grid connection challenges faced by the wider renewables sector are also expected to hamper deployment of hydrogen-linked capacity.

The largest downward revision is for the Latin American region, due to slower-than-expected development of project pipelines in Chile and Brazil. The forecast is also less optimistic for Asia-Pacific, mostly due to uncertainty in Australia over the future of stalled green hydrogen projects.

Growth is led by China, followed by Saudi Arabia and the US, according to the IEA’s scenarios. These three markets account for more than 75% of renewable capacity for hydrogen production by 2028. Globally, this growth makes up around 1% of total renewable energy capacity deployment over 2023–28.

Solar dominates

Between 2023 and 2028, 60% of global renewable power capacity dedicated to hydrogen production is expected to be solar PV, the IEA said. Onshore wind is expected to account for almost 40%, while offshore wind is forecast to be confined to about 4%.

Renewable energy capacity expansion for hydrogen production needs to accelerate if governments wish to meet their 2030 targets for low-emission hydrogen production, the IEA warned. “In almost all markets, main case growth is insufficient to provide the minimum amount of capacity needed to achieve government targets for low-emission hydrogen production or electrolyser capacity,” it said.

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Author: Stuart Penson