Rystad Energy: Increased raw material costs could raise PEM electrolyzer manufacturing costs

According to analyst Rystad Energy, rising raw material costs could increase the cost of manufacturing PEM electrolyzers this year while decreasing the cost of manufacturing alkaline machines.

According to the Norwegian corporation, the capacity for producing electrolysers would expand by 186% in 2023 compared to 2023, which will increase demand for raw materials and perhaps raise costs.

According to the analyst, prices for the two main types of electrolysers—alkaline and PEM—have both seen “especially substantial inflation in the past two years,” with PEM component prices rising by approximately 30% and alkaline electrolyser parts prices rising by about 21% over the 2020–22 period.

These price increases were caused by an increase in the cost of catalyst materials, including nickel in alkaline and iridium and platinum in PEM membranes (which are also used in other alkaline electrolyser components).

Iridium and platinum are two of the rarest metals in existence, with South Africa producing 70% of the world’s platinum and 83% of its iridium. In contrast, it is anticipated that nickel prices would decline this year, which will result in lower manufacturing costs for alkaline electrolysers.

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

It also says that stainless steel, a typical component of electrolysis systems, uses nickel as an alloying ingredient.

However, according to Rystad, as technology develops, the price of platinum and iridium will have less of an impact on PEM electrolyser costs in the future since fewer of these materials are needed on membranes to provide the same catalytic effect.

The predicted future use of iridium and platinum in catalyst coated membranes can be limited to 0.4g/kW and 0.1g/kW, respectively.

In addition, researchers at the Netherlands Organization for Applied Scientific Research (TNO) have already created a technology that will use 200 times less iridium while also increasing efficiency in the manufacture of PEM electrolyzers.

Recycling of iridium and platinum could also assist in supplying the rising demand for these precious metals coming from the hydrogen industry.

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