Low demand and current overcapacity means under $400m of cumulative investments are needed to ramp up electrolyser manufacturing to meet 2050 hydrogen production volumes, the International Energy Agency (IEA) has said.
The Energy Technology Perspectives 2024 report expects electrolyser manufacturing investments to peak “well before” 2035 in all three of its scenarios.
In the Announced Pledges Scenario (APS), the report expects 60GW of cumulative manufacturing capacity to be built over 2024-2030 – 55% of all new capacity built up to 2050.
The 110GW of cumulative capacity added globally by 2050 is expected to be hosted in regions that currently hold the majority of capacity, with North America adding 30%, China 18.5% and Europe 18%, while India is expected to attract around 10%.
In its Stated Policies Scenario (STEPS), less than $400m needs to be invested cumulatively in new facilities up to 2050, “given the relatively low demand and current over-capacity, all of it before 2030.”
However, electrolyser overcapacity has given rise to concerns. In its Global Hydrogen Review 2024 report, the IEA warned that low electrolyser factory utilisation rates could increase the cost of the technology fourfold.
Read more:Underutilised electrolyser factories threaten hydrogen cost reductions, says IEA
Based on high utilisation rates, the IEA said alkaline stacks – which represent up to 60% of uninstalled electrolyser costs – could be as low as $45/kW. However, today’s current 10% utilisation rates could increase costs to as high as $250/kW.
Despite electrolyser manufacturing doubling in 2023 to reach 25GW/year – 60% of which is in China – the IEA warned this capacity is heavily underutilised, with just 2.5GW of output in 2023.
China’s current 15GW of manufacturing capacity is already sufficient to meet its needs in 2030, and with planned additions, around half of global needs in 2035 under the APS, theEnergy Technology Perspectives report said.
“This would allow for a significant volume of exports, though Chinese manufacturers would need to modify their current designs to comply with the standards required in other regions and to respond to doubts about equipment reliability,” the report reads.
However, China’s 60% of global manufacturing capacity is expected to decline to around 45% by 2035, under the APS, with several Emerging Markets and Developing Economies (EMDEs) entering the market to cover domestic demand.
Nonetheless, the People’s Republic will retain the far largest share. The IEA expects Europe and the Middle East to contribute 15% each in 2035, the US 11% and India 7%.
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