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Published Date - March 2024 Number of Pages - 96
Hydrogen electrolyzers are advanced devices that divide water into valuable Hydrogen and Oxygen. Like fuel cells, electrolyzers consist of an anode and a cathode separated by an electrolyte. Different electrolyzers function in different ways, mainly due to the different type of electrolyte material involved and the ionic species it conducts
Electrolyzers can range in size from small, appliance-size equipment that is well-suited for small-scale distributed hydrogen production to large-scale, central production facilities that could be tied directly to renewable or other non-greenhouse-gas-emitting forms of electricity production.
There are three main types of hydrogen electrolyzers—alkaline, polymer electrolyte membrane (PEM), and solid oxide. PEM electrolyzers are valued because of their greater energy efficiency, wider operating temperature, and easier maintenance relative to other kinds of hydrogen electrolyzer. The alkaline electrolyzer uses a liquid alkaline electrolyte. The water in this electrolyte is split into hydrogen and hydroxide ions at the cathode pole. These ions are then brought into contact with a membrane, after which they are oxidized to water and oxygen at the anode pole
A Solid Oxide Electrolysis Cell (SOEC ) is basically the corresponding fuel cell (Solid Oxide Fuel Cell – SOFC) run in ‘reverse’. Such a cell operates at relatively high temperatures (700-1000 °C), which makes the efficiency very high. Therefore, High-temperature solid oxide electrolyzer cell (SOEC) has great potential for efficient and economical production of hydrogen fuel.
The largest Hydrogen electrolyzers market is China, which has installed more renewable power than any other country. With lower capital expenditure costs, China produces 40% of the world’s electrolyzers. Additionally, state-owned firms have pledged to build an extensive 6,000-kilometer network of pipelines for green hydrogen transportation by 2050
Europe’s cumulative deployments are accelerating, and deployment plans are growing year after year. The EU is strong on regulatory framework with funding and financing support schemes and European companies have a strong presence as international patent holders. When it comes to high value inventions, EU is still leading with (31% of total share) alongside Japan. Europe is active in R&D actions spanning the whole continent and has a leading global scientific publication record together with China and the US.Several companies have announced new hydrogen deals in Europe, as Germany moves forward on hydrogen collaboration with Australia and the United Arab Emirates
In the United States, in October 2023, the Biden administration announced $7 billion for the country’s first clean hydrogen hubs, and the U.S. Department of Energy further allocated $750 million for 52 projects across 24 states to dramatically reduce the cost of clean hydrogen and establish American leadership in the industry. U.S. also has the H2NEW which is a consortium of nine U.S. Department of Energy (DOE) national laboratories focused on making large-scale electrolyzers, which produce hydrogen from electricity and water, more durable, efficient, and affordable
Electrolysis is a leading hydrogen production pathway to achieve the Hydrogen Energy Earthshot goal of reducing the cost of clean hydrogen by 80% to $1 per 1 kilogram in 1 decade. Meeting the Hydrogen Shot clean hydrogen cost target of $1/kg H2 by 2030 (and interim target of $2/kg H2 by 2025) through improved understanding of performance, cost, and durability trade-offs of electrolyzer systems under predicted future dynamic operating modes using CO2-free electricity.
In 2023, the hydrogen industry announced over 1,000 large-scale projects requiring electrolyzer capacities of more than 1 MW. Among these projects, 795 aim to be fully or partially commissioned by 2030. Alkaline and PEM (proton exchange membrane) electrolyzers are already commercially available. Alkaline electrolyzers are a more mature technology with a long history of deployment in the chlor-alkali industry.
Solid Oxide Electrolysis (SOEC) is quickly approaching commercialization. In April 2023, a 2.6 MW SOEC electrolyzer was installed in a Neste refinery in the Netherlands, becoming the biggest at that time. A few weeks later, the record was broken with a 4 MW SOEC system installed in a NASA research center in California. Bloom Energy increased its SOEC manufacturing capacity in 2022 with a new high-volume line in Newark, moving towards GW-scale operations in the United States. Topsoe is advancing the construction of an industrial-scale 500 MW/yr manufacturing facility in Denmark, expected to be online in 2025.
This commitment is also underscored by the significant funding and grants that many governments have announced, including the EU 1 billion funding by the European Commission under the Horizon Europe program for green hydrogen projects.
The next major hurdle in achieving low-cost green hydrogen is to reduce the investment cost of the electrolyzer. Researchers are aiming for a reduction of up to 80% in the investment cost of the electrolyzer. They could produce green hydrogen at less than USD 2.5/kgH2 in the coming five to ten years, and at less than USD 1/kgH2 before 2040 in a scenario with an ambitious electrolyzer deployment
The market is exposed to several risks that may impact its expansion. One of the major risks is the concern of Severe overcapacity, Electrolyser manufacturers have invested too quickly into new factories, with “severe overcapacity” compared to actual demand from green hydrogen project developers in the coming year
The high initial capital expenditure required for setting up Hydrogen electrolyzer systems is another concern. Even with the reductions in cost, dependence on rare materials for catalysts, such as Titanium And Nickel, is a risk because these materials are very easily subjected to price fluctuation and supply chain disruption. Moreover, the continuous technological improvements required by industry to ensure efficiency and lower costs underline the fact that further research development investment is required and integral to market viability in the long term.
A producer of hydrogen electrolyzers named EH2 has declared plans to construct a new production facility in Massachusetts that may nearly triple the existing global capacity for producing hydrogen electrolyzers.
Proton exchange membrane electrolyzers with a capacity of 100MW will be produced at the facility, which is significantly larger than the more prevalent 1MW and 5MW units currently on the market. EH2 thinks that by using greater machinery, it will be able to better serve the needs of sectors including chemical manufacture, steel manufacturing, and cement manufacturing.
A second plant is also being planned by the corporation, though no deadline has been set. The first plant is anticipated to start producing equipment for demonstration purposes, and the following year, full production will be achieved. Before the Biden administration unveiled the Inflation Reduction Act, EH2 was already developing a future for the production of hydrogen electrolyzers.
Now, it wants to exploit economies of scale to produce larger proton exchange membrane electrolyzers, which will lower the cost of H2 synthesis. Instead of the 1MW and 5MW units that are more prevalent on the market today, they want to develop 100 MW units. In addition, the company plans to create electrolyzers that will enable and accelerate the synthesis of H2 based on the accessibility of sporadic renewable electricity sources. In terms of what is required in the sector, in terms of what is necessary if one is genuinely going to address steel, cement, and chemical manufacture, electrolyzers are currently accessible on a scale that makes it very difficult to bring them to what is needed.
The electrolyzer needs to be substantially larger in size. Dean added that despite this, the company started receiving more orders from clients looking for the equipment they require for planned green H2 production facilities as a result of the new production tax credits for low-carbon H2 and the Inflation Reduction Act.
Due to this increase in demand, EH2 sped up the completion of its first factory and began organising the building of a second. In Germany, Shell introduced a hydrogen electrolyzer. According to Shell, the project, which is supported by a European consortium and is located at the company’s energy and chemicals park in Rheinland, would “accelerate hydrogen production and contribute to Europe’s goal to achieve climate neutrality.”
According to a statement from Shell, the fully operating facility is the first to employ this technology on such a massive scale in a refinery. It is a member of the Refine European consortium and is funded by the European Commission under the fuel cells and hydrogen joint project. At the Rhineland location, where Shell also wants to eventually generate sustainable aviation fuel using renewable energy and biomass, plans are also underway to increase the polymer electrolyte membrane (PEM) electrolyzer’s capacity from 10 megawatts to 100 megawatts.
The competitive landscape in the market has shaped up due to the activities of key players, together with their product launches, mergers and acquisitions, and pricing strategies. Companies like NEL, Plug Power, Linde Engineering, and Siemens Energy are increasingly focusing on innovation and differentiation, with strategic product launches aimed at meeting evolving consumer demands.
Mergers and acquisitions are being employed to enhance market share and expand capabilities, reflecting a trend toward consolidation in the industry. For instance, ITM is partnering with Mott Corporation to cement ITM’s market leadership in electrolyzer stack technology.
Variations in Product Pricing often come from differences in technology, brand positioning, and production costs, which influence consumer choices and competitive dynamics. This mixed approach highlights that the market is both dynamic and competitive, with companies continually adapting their strategies to maintain a competitive edge.
