Manufacturers of electrolyzers must maintain Gigafactory momentum

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According to a research document titled The Expanding Pipeline of Electrolyser Gigafactories by Rethink Energy, manufacturers around the world may produce more than 100 GW of electrolyzers annually.

A flurry of announcements over the past three years has swelled the factory pipeline to a level that will allow the sector to meet demand over the next five years. Maintaining this pace will be essential for the subsequent green hydrogen boom.

In 2020, the global electrolyzer manufacturing capacity was only 2 GW, which was significantly more than the global installed capacity of 300 MW. This occurred at a time when hydrogen discussions were dominated by skepticism. But now, circumstances have shifted.

Hydrogen has been identified as an essential technology for decarbonizing heavy-duty transportation, heating, industry, feedstocks, and long-term energy storage. The most recent report by Rethink Energy projects that by 2050, the global demand for hydrogen will have increased by a factor of ten to 735 million tons, with electrolysis producing nearly all of this amount.

Within the next five years alone, nearly 40 GW of electrolyzers will be built

To construct enough factories to accommodate such an expansion will require a herculean effort, but the market leaders are prepared. As well as a few new-entry innovators.

ITM Power completed the world’s first electrolyzer Gigafactory in the United Kingdom in January 2021, and subsequent announcements have been nonstop. Western electrolyzer manufacturers have pledged to construct factories capable of producing over 42 GW of electrolyzers annually by 2030. Nearly two-thirds of this has already been acquired in terms of locations.

Harry Morgan, hydrogen analyst at Rethink Energy and primary author of the paper, stated, “Such factories only take around two years to construct,” which means that, at the present rate of these announcements, we expect that developments will keep pace with electrolyser demand over the next ten years. Between 2026 and 2032, new plants with a combined capacity of around 12 GW per year will need to be announced and added annually, allowing electrolyser makers several years of runway for their pipeline facilities.

Approximately $6 billion will be required for the building of these new factories

There are plans for an electrolyzer Gigafactory by fourteen distinct manufacturers in twelve nations. There will be capacity for several chemistries, including PEM, AEM, and SOE, as the exact requirements for electrolysis plants vary by location.

These gigafactories will be essential to achieving the necessary economies of scale for green hydrogen. By 2024, a number of original equipment manufacturers will offer systems that can produce green hydrogen at a lower cost than ‘grey’ hydrogen produced from natural gas.

The capacity to mass-produce small-scale, modular electrolysis cells will make hydrogen available to many businesses that require it for decarbonization. Electrolyzers will beat expectations, much as solar modules have in power generation and batteries have in the electric vehicle market.

Rethink Energy forecasts that electrolyzer units will be adopted at a rate of 14% even if there are no significant technological advancements, of which there are likely certainly several. As a result, the capital cost of electrolyzer units will decrease from approximately $1,400 per kW to $340 per kW by 2030, when the global capacity will have increased to nearly 100 GW.

Additionally, incremental gains in efficiency and capacity factor will result in a decline in electricity consumption, which will lead to a price decline. With similar economies of scale, the cost of solar energy will fall to $20 per MWh by the end of the decade, accounting for 37% of the entire drop in the price of green hydrogen. The global average price of green hydrogen will decline to $1.50 per kilogram by 2030.

Nedim Husomanovic

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