Most people when they think about electrolysers think about one, or at a push maybe two types of technology — alkaline electrolysers most likely, or proton exchange membrane (PEM) technology. But in many cases, there is a third option that might actually be the cheapest.
This overlooked alternative is solid-oxide electrolysis (SOE), which uses a solid ceramic material as an electrolyte and operates at temperatures upwards of 700°C.
It is easy to see why solid-oxide electrolysers have been underestimated — and why they might be considered niche. A relatively immature technology, it is the most expensive on the market to buy, and has the highest maintenance costs and most specialist use case.
But according to Poul George Moses, chief technology officer of Danish SOE specialist Topsoe’s Power-to-X division, this misses the point.
Why? Because solid-oxide’s specialist use case — operating very cheaply in industrial applications with waste heat, such as steel or ammonia production — accounts for a massive slice of potential future electrolyser demand, he tells Hydrogen Insight.
“Where SOE is a good solution — and it's definitely a good solution — is the hard-to-abate sectors, and a relatively large part of the hard-to-abate sectors,” he says, pointing to the 25% share of global carbon emissions these sectors are responsible for.
“Just based on that, SOE will not be niche.”
Taking this thesis further, the biggest electrolyser factories in the world — both right now and in the future — are making solid-oxide electrolysers, not alkaline or PEM.
The biggest electrolyser factories in the world are making solid-oxide electrolysers, not alkaline or PEM
To put that into hard numbers, US solid-oxide fuel cell specialist Bloom Energy, which claims it has big enough production lines to make 2GW of solid-oxide electrolyser cells (SOECs) per year (see fact box), on its own possesses more than half the capacity of all PEM manufacturers put together in 2022, according to BNEF calculations published in November.
And Topsoe is catching up fast, making a series of big-ticket financial commitments in the past year, including final investment decision (FID) on the first 500MW of a planned 5GW factory in central Denmark, a decision taken shortly after the company bagged a 5GW order from start-up NH3 producer First Ammonia.
High temperature efficiency
SOE won’t be used to make hydrogen for refuelling stations, or for small-scale electrolysis applications. It will be too expensive, too cumbersome and too difficult.
But solid-oxide’s specialist use case — heavy industry such as steel, ammonia or chemicals production, or refining, which are the sectors Moses means when he says “hard-to-abate” — comes with one critical factor: waste heat.
Integrating thermal energy into the operation of a solid-oxide electrolyser to supplement the power supply upgrades the equipment’s electrical efficiency and slashes operating costs.
According to Moses’ calculations, a typical heat-integrated solid-oxide electrolyser can produce a normal (ie, uncompressed) cubic metre of hydrogen (Nm3) using just 3.5kWh of electricity, a saving of 25% compared to Moses’ estimation of the 4.7kWh/Nm3 efficiency of a PEM or alkaline electrolyser — with the caveat that many PEM and alkaline manufacturers come up with a different efficiency number.
Even without heat integration, a SOE can deliver hydrogen at a rate of 4kWh/Nm3, still a saving of 15% against Moses’ hypothetical PEM or alkaline equivalent.
Norwegian electrolyser manufacturer Nel claims significantly higher efficiency than 4.7 kWh/Nm3 for both its PEM and alkaline products, at 3.8-4.4kWh/Nm3 and 4.5 kWh/Nm3 respectively.
Bloom Energy, meanwhile, claims that its SOE technology is 45% more efficient than either PEM or alkaline, while Sunfire, which recently installed the world’s largest solid-oxide electrolyser in Rotterdam says it can achieve efficiencies of 20% versus lower-temperature alternatives.
However, the International Renewable Energy Agency’s (Irena) calculations — measured in kWh per kg of hydrogen produced — back up Moses’ analysis, estimating that solid-oxide electrolysers are 10-26% more efficient than either alkaline or PEM.
But this headline-grabbing efficiency comes with an enormous price tag. According to Irena’s 2020 calculations, capital costs for solid oxide electrolysers come in at around $2,000/kW, over seven times that of alkaline electrolysers and five times that of PEM.
Moreover, the technology commands higher maintenance costs than either alkaline or PEM, mostly on account of the need to replace the stack, the part of the electrolyser in which the electrochemical reaction takes place.
“The SOE stack lifetime is shorter today than it is on alkaline,” Moses says. “So you need to change stacks throughout the lifetime of the plant, which incurs some maintenance cost on the application.”
Despite this, Moses stresses that SOE technology still beats both PEM and alkaline on operational expenditure (opex) overall, due to its lower consumption of power — the single biggest cost of operating an electrolyser.
Moreover, he says that Topsoe does not “necessarily recognise” the Irena capex figures. He is reluctant to speculate on Irena’s suggested target of reducing SOEC costs to $200/kW by 2050, noting only that the ongoing manufacturing scale-up will drive down costs.
“Alkaline and PEM have between 50 and 100 years of technology and product development,” he says. “In that time period, manufacturers have been able to take out cost as the technologies developed. SOEC is only now being commercialised, which means that the cost-out journey only starts now.”
“We would encourage the industry and society in general to focus on the levelised cost of hydrogen (LCOH),” he adds. “Looking at stack cost only ignores essential aspects such as safety, total plant cost, efficiency of electrolyser and maintenance costs.”
The high capital costs mean that SOECs are best suited to regions where electricity prices are high — meaning that operational efficiency is critical — or power is constrained or both.
The benefit is higher if your electricity cost is higher
“There will be some parts of the market where you would choose a PEM or alkaline solution and some where you would choose an SOE solution,” Moses says. “In the end it boils down to: the benefit is higher if your electricity cost is higher.”
Power supply problems
SOE’s specialism in integrating with industrial processes — some of which exist already and were not built with access to renewable power in mind — does raise the question of finding a reliable power supply.
Whereas a developer with an alkaline electrolyser that is not reliant on heat for efficient operation can simply move operations closer to the best sites for renewable energy, it could be much harder to do this for an existing industrial operation. Where can a project developer with a solid-oxide electrolyser find additional wind supply that complies with strict EU additionality regulations in, for example, Germany’s industrial heartlands?
But Moses believes that this is simply a configuration issue faced by any electrolysis project.
“That's a generic problem,” he tells Hydrogen Insight. “Because then, the question is how would you move the hydrogen? If you move the hydrogen as ammonia or methanol, you [would] have heat integration.”
So in other words, you’d just move the electrolyser project further downstream to where waste heat was being produced.
“It’s part of the package of configuring a power-to-X solution,” Moses says.
But despite hitting the headlines in recent months, SOE technology has been overlooked until now. The market dominance of PEM and alkaline electrolyser is so complete that until recently, analysts at consulting behemoth BNEF did not even include SOE in its November 2022 “state of the market” report on electrolyser manufacturing capability (published before Topsoe’s factory announcement), despite Bloom Energy’s 2GW factory claim.
“Recent reports and analysis that exclude SOEC, are not the result in of SOEC only having niche applications, but simply the result of the misbelief that the technology is immature,” Sundus Cordelia Ramli, chief operating officer of Topsoe’s power-to-X division tells Hydrogen Insight.
“For me it has something to do with the uncertainty,” Moses adds, when asked why SOE has slipped under the radar. “When you look at it from the outside and you just see technical uncertainty and see none of the actors actually establishing industrial manufacturing capacity then you do not have very clear signals.”
“Part of it is the available manufacturing capacity,” he adds. “We were the first to take FID to produce this at industrial scale, and you need it at industrial scale otherwise the cost will not be competitive.”
He continues: “The signals from the SOE actors have been that there are very few taking the steps to industrialise. Whereas for instance alkaline has a more mature supply chain, so they could scale. It also costs less money to scale their manufacturing capacity, and over the last year, you've seen the same happening in PEM, so I think it has to do with that.”
But he thinks that the market has underestimated how fast SOE manufacturers can scale — a perception Topsoe hopes to change with its $270m gamble on its 500MW factory.
“If you look at it from our customers’ point of view: you're developing projects now and whatever technology choice you take, it will have long-term implications because you have to live with it for at least a decade,” he says. “Now you have the option of actually doing large-scale SOE installations, which you did not have three years ago. Then, your only choice was basically alkaline, maybe sometimes PEM.
“If you're in the hard-to-abate sectors you now have the option of getting something that fits better with your application.”
And, there is comfort to be found in competition between SOE manufacturers, he adds. “There is more than one actor that is doing something here so project developers have some trust that this will actually succeed.”
This could be bolstered by new solid-oxide products from China, although all European electrolyser makers are wary of being undercut by Chinese competitors.
“On the technical side we do what we always do, which is to make sure that we have the right solutions protected by patents and know-how,” Moses says. “That is possible within high temperature electrolysis because, even though the core of technology is old there's still room for innovation, so you can protect it.”
Topsoe (Denmark) took final investment decision on the first 500MW of a planned 5GW plant in October, after signing a deal for 5GW of electrolysers from First Ammonia.
Bloom Energy (US) announced it had scaled up its solid-oxide electrolyser manufacturing capability to 2GW in November 2022 — but the solid-oxide fuel cell specialist has not revealed anything close to that figure in sales. In May 2023, the company said it had installed a 4MW SOEC in a Nasa research facility in California, by far the biggest solid-oxide installation in the world.
Sunfire (Germany) makes both pressurised alkaline and SOE machines, but recently installed a massive solid-oxide electrolyser (2.6MW) at a biofuels refinery in Rotterdam, claiming 20% higher efficiency than low-temperature equivalents
Ceres Power (UK) signed a deal with Linde and Bosch in March 2023 to collaborate on a 1MW two-year demonstration of Ceres’ SOEC electrolyser technology in Stuttgart.
Toshiba (Japan) has been carrying out research and development work on its own SOEC technology, and has said it plans to bring their electrolysers to market in 2025.