INTERVIEW | 'China is overbuilding hydrogen electrolyser manufacturing capacity — and may have to shut some of it down': Citigroup
Neglect of R&D means that country is sacrificing technological advancement for quantity, says investment bank
Stay ahead on hydrogen with our free newsletter
Maggie Xueting Lin, a Hong Kong-based global commodities researcher at Citigroup, also raised the alarm about Chinese companies’ focus on getting as many alkaline electrolysers to market as possible, at the expense of research and development (R&D) work on more advanced proton exchange membrane (PEM) technology.
According to statistics from research house BloombergNEF (BNEF) and Citigroup, China is expected to have more than 40GW of electrolyser manufacturing capacity by the end of 2024 — well over half the projected global capacity of 71GW — which will far outstrip global demand for electrolysers in 2025, which BNEF expects to be around 10GW.
As a result, factories may be forced to close their doors, or at least reduce the number of electrolysers on the production lines, Lin said.
Commentators in China are also becoming increasingly concerned that the focus on quantity is leading to a lack of research and development on “next generation” green hydrogen technology such as proton exchange membrane (PEM) electrolysers, Lin reported.
Unpressurised alkaline models are generally cheaper than either proton exchange membrane (PEM) or solid-oxide (SOE) electrolysers, with an installed stack cost of around $270/kW, according to the International Renewable Energy Agency’s 2020 estimates, compared to $400/kW for PEM equivalents and $2,000/kW for SOEs.
But PEM models and pressurised alkaline electrolysers have the advantage of faster ramp-up and ramp-down time, making them easier to operate with variable renewable power sources, while SOEs can be used in a vast array of industrial applications where waste heat can dramatically reduce electrolyser operating costs.