Alkaline electrolysers will continue to dominate the green hydrogen industry for another decade due to the maturity of the technology and the potential to make efficiency gains, according to a US- and China-based hydrogen and renewables research house.
However, overall electrolyser manufacturing capacity will be up to double that of demand by 2030, the report from Clean Energy Associates (CEA) warned.
CEA’s report, Green Hydrogen Supply, Technology and Policy Report H1 2024, published on Wednesday, estimates that installed alkaline electrolyser capacity will make up more than two thirds of green hydrogen manufacturing capacity in 2027.
This is because the technology will be in most demand from producers, due to its relative maturity and low capital costs compared to other electrolyser technologies, namely proton exchange membrane (PEM) and anion exchange membrane (AEM) machines, and solid-oxide electrolysers (SOE).
“Alkaline electrolysers will remain the most-produced technology in the next ten years due to their cost advantage and potential efficiency improvement,” said the report.
By contrast, PEM electrolysers, while mature, will be hobbled by the need to use rare metals in PEM electrodes, which CEA warned would sustain high prices for the machines.
Meanwhile, the need to operate at high temperatures for optimal operation and short stack lifetime will hinder the development of SOE technology, it said.
CEA added that AEM technology is yet to mature, with an unstable supply chain bottleneck and a short lifetime for the anion exchange membrane, leading to a high levelised cost of hydrogen.
Most of this alkaline electrolyser supply will be concentrated in Europe and China, CEA noted, with PEM factories more evenly distributed across the globe.
However, demand for electrolysers could be half the nameplate capacity of the world’s factories by the end of the decade, CEA warned, on the back of massive manufacturing capacity expansion that does not match up with the corresponding investment in green hydrogen projects.
This tracks with some of the short-term estimates given by other research houses such as BloombergNEF (BNEF), which has warned of a massive oversupply of electrolysers to 2025, which some analysts believe will see some factories in China, in particular, having to shut down.
In fact, BNEF has found that most electrolyser factories are only operating at 10% capacity at present, due to the same market pressures.
However, market conditions will be liable to change, CEA said.
“The forecasted electrolyser demand is highly uncertain, as it can be affected by policy implementation, downstream industry developments, low-cost-renewable energy availability and operation of existing projects,” the report explained.
Subsidies in the EU and the US in particular are expected to begin rolling out over the next year, with bidding on the European Hydrogen Bank (which offers a fixed price premium on green H2 produced in the EU) ending yesterday and the first winners of Germany’s H2Global renewable hydrogen import scheme expected to be announced in the coming weeks.
In the US, the publication of Treasury guidance on tax credits under the Inflation Reduction Act late last year, which is yet to be finalised, is expected to stimulate investment decisions on green hydrogen schemes, while the winners of the $7bn Hydrogen Hubs programme were also announced last year.