IEA: $400m enough for 2050 electrolyser manufacturing amid low demand and overcapacity

Lowdemand and current overcapacity means under $400m of cumulative investments areneeded to ramp up electrolyser manufacturing to meet 2050 hydrogen productionvolumes, the International Energy Agency (IEA) has said.

The EnergyTechnology Perspectives 2024 report expects electrolyser manufacturinginvestments to peak “well before” 2035 in all three of its scenarios.

Inthe Announced Pledges Scenario (APS), the report expects 60GW of cumulativemanufacturing capacity to be built over 2024-2030 – 55% of all new capacitybuilt up to 2050.

The110GW of cumulative capacity added globally by 2050 is expected to be hosted inregions that currently hold the majority of capacity, with North America adding30%, China 18.5% and Europe 18%, while India is expected to attract around 10%.

Inits Stated Policies Scenario (STEPS), less than $400m needs to be investedcumulatively in new facilities up to 2050, “given the relatively low demand andcurrent over-capacity, all of it before 2030.”

However,electrolyser overcapacity has given rise to concerns. In its GlobalHydrogen Review 2024 report, the IEA warned that low electrolyserfactory utilisation rates could increase the cost of the technology fourfold.

Basedon high utilisation rates, the IEA said alkaline stacks – which represent up to60% of uninstalled electrolyser costs – could be as low as $45/kW. However,today’s current 10% utilisation rates could increase costs to as high as$250/kW.

Despiteelectrolyser manufacturing doubling in 2023 to reach 25GW/year – 60% of whichis in China – the IEA warned this capacity is heavily underutilised, with just2.5GW of output in 2023.

China’scurrent 15GW of manufacturing capacity is already sufficient to meet its needsin 2030, and with planned additions, around half of global needs in 2035 underthe APS, theEnergy Technology Perspectives report said.

“Thiswould allow for a significant volume of exports, though Chinese manufacturerswould need to modify their current designs to comply with the standardsrequired in other regions and to respond to doubts about equipmentreliability,” the report reads.

However,China’s 60% of global manufacturing capacity is expected to decline to around45% by 2035, under the APS, with several Emerging Markets and DevelopingEconomies (EMDEs) entering the market to cover domestic demand.

Nonetheless,the People’s Republic will retain the far largest share. The IEA expects Europeand the Middle East to contribute 15% each in 2035, the US 11% and India 7%.

Source:H2-view