Hydrogen electrolyser factories are only operating at 10% capacity on average: BNEF
Idling production lines come despite a threefold increase in renewable H2 investment in 2023
Electrolyser factories built to supply machines for green hydrogen projects are on average operating at 10% of their nameplate capacity — with the lowest utilisation in mainland China, analysis from research house BloombergNEF (BNEF) has revealed.
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Investment by green hydrogen project developers in electrolysers alone — not counting the capital manufacturers have spent building out capacity — has ballooned from $2.6bn to $8.7bn, on the back of 7GW of positive investment decisions and project construction in 2023, BNEF said.
These include the 2.2GW Neom project in Saudi Arabia, the 700MW H2 Green Steel scheme in Sweden and 1.7GW of projects in China more generally, alongside larger projects the research house tracked in the US, France and Germany.
Spending on electrolyser manufacturing capacity also tripled, to $1.6bn.
And, overall, spending on clean hydrogen projects — including blue hydrogen made with fossil gas and carbon capture and storage — tripled to $10.4bn in 2023, most of it in the Middle East and Europe.
Nevertheless, underutilisation of electrolyser factories is “universal” across all manufacturers globally, BNEF said.
However, the ultra-low figure of 10% is a result of the global average being “weighed down” by idling plants in China, where the supply of electrolysers is far higher than the capacity of forthcoming green hydrogen projects.
However, BNEF expects investment in electrolyser manufacturing capacity to peak in 2025 at $2.4bn — most of it in Europe and the US — before dropping off dramatically in 2026, shortly before subsidy-backed projects are expected to begin rolling out in earnest in major markets such as the US, Australia and Europe.
But there is unlikely to be a significant supply squeeze, however, as BNEF predicts that manufacturers should be able to ramp up capacity fairly quickly in response to demand — usually in around two years, and in less time than that in China.
“Much depends on whether developers outside mainland China choose to buy Chinese kit,” the report states. “The operational pool of Western factories remains limited”.