Raw material prices may push up the cost of producing PEM electrolysers this year, but will lead to a reduction in the cost of making alkaline machines, according to analyst Rystad Energy.

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The Norwegian company predicts that electrolyser manufacturing capacity will grow by 186% in 2023, compared to 2023, leading to increased demand for raw materials that could potentially drive up prices.

Both alkaline and PEM electrolysers — the two main types — have experienced “particularly high inflation in the past two years”, the analyst says, with the price of PEM components rising by about 30% and alkaline electrolyser parts by about 21% over the 2020-22 period.

Increases in the cost of catalyst materials — iridium and platinum in PEM membranes and nickel in alkaline (which is also used in other alkaline electrolyser components) — contributed to these price rises, it explains.

Both platinum and iridium are among the rarest metals in the world, with South Africa responsible for 83% of the global iridium supply and 70% of the platinum supply.

“Prices for these metals are likely to increase in 2023 due to South Africa’s aging, fault-prone coal-fired power stations,” Rystad writes in a press release.

By contrast, the price of nickel is expected to fall this year, leading to lower costs for alkaline electrolyser manufacturing.

“Over the past year, the global nickel price has increased by 30% on average, with a much higher spike in June. This is largely attributed to a lower than usual Chinese output associated with Covid-19 lockdowns in the country, and sanctions against Russian raw materials,” the analyst explains.

“As AWE [alkaline water electrolysis] uses Raney nickel as a catalyst, and nickel for porous transport layers, bipolar plates, and end plates, the metal contributed to significant inflationary pressures since the beginning of 2020.

“According to Rystad Energy research, the price of nickel is expected to continue its downward price trend and is estimated to fall towards $25,000/tonne (or lower) in 2023 [from a 2022 high of almost $50,000] , due to the relaxing of Chinese zero-covid policies and additional Indonesian supply hitting the market.”

It adds that nickel is also used an alloying material in stainless steel, which is a common material in electrolysis systems.

“In addition, global steel prices are expected to lower as the US ramps up steel production and starts importing more from Europe (where prices are significantly lower). These price reductions should help reduce the cost of electrolyser components containing stainless steel and nickel.”

Future PEM costs

Rystad adds, however, that the costs of platinum and iridium will have less of an impact on PEM electrolyser prices in the future, as technology advancements mean that less of these materials are required on membranes to produce the same catalytic effect.

“The International Renewable Energy Agency reported that the expected future use of iridium and platinum in catalyst coated membranes can be limited to 0.4g/kW and 0.1g/kW, respectively,” it states.

“Furthermore, researchers at the Netherlands Organization for Applied Scientific Research (TNO) have already been able to develop a method which will require 200 times less iridium in the production of PEM electrolyzers, while also improving efficiency.

“Iridium and platinum recycling could also help meet the growing demand for these precious metals coming from the hydrogen sector.”

The analyst adds: “In the longer term, Rystad Energy finds that the pace of PEM deployment will not be constrained by platinum and iridium supply if future technologies can enable the reduction in their usage by between 70-80%, and thus contribute to significant cost cuts associated with catalyst coated membranes.”