Global electrolyser capacity to make green hydrogen and its derivatives is likely to be between 230 and 520 GW by 2030 based on the projects announced, from an installed capacity of 1.4 GW in 2023, says the International Energy Agency (IEA).
IEA states that global electrolyser capacity has grown by nine times, from 0.6 GW in 2021 to 0.7 GW in 2022, 1.4 GW in 2023 and an estimated 5.2 GW in 2024. The announced electrolyser project capacity was 90 GW in 2021, 235 GW in 2022, 420 GW in 2023 and an estimated 516 GW in 2024. Nevertheless, as of September 2024, only 205 MW of new capacity has started operations. In addition, the installed capacity in 2023 represents only one-sixth of the capacity that was expected based on the announcements for projects in 2021, signalling that progress is slower than what was expected three years ago.
Announced electrolyser capacity that has reached Final Investment Decision (FID) now stands at 20 GW globally, of which 6.5 GW reached FID over the last 12 months alone. China—home to 60% of global electrolyser manufacturing capacity—accounts for more than 40% of global FIDs in capacity terms over the same period. In Europe, FIDs for electrolysis projects quadrupled over the last year, to reach more than 2 GW, while India has emerged as one of the key players thanks to a single FID for 1.3 GW, according to IEA's Global Hydrogen Review 2024 report.
China accounted for 80% of the capacity that entered into operation in 2023, including the largest electrolyser project in the world, the 260 MW Kuqa plant by Sinopec. About 12% of the nearly 700 MW that came online in 2023 was in Europe. China accounts for three-quarters of the new capacity additions that could become operational in 2024, increasing its share of global capacity from 55% in 2023 to almost 70%. Europe and the United States could reach shares of 15% and 6%, respectively, of global installed capacity by the end of the year, if all projects are realised on time. In the European Union, if all projects meet their planned timelines, total installed capacity could reach 0.7 GW at the end of 2024, falling very short of the interim target of 6 GW established in the EU Hydrogen Strategy back in 2020.
The report says China’s continued expansion of manufacturing capacity is expected to drive down electrolyser costs, as has occurred with solar PV and battery manufacturing in the past. Moreover, several large Chinese manufacturers of solar panels have entered the business of manufacturing electrolysers and today they account for around one-third of China’s electrolyser manufacturing capacity.
The report states that alkaline technology continues to make up the largest share, accounting for more than 60% of the installed electrolyser capacity in 2023, followed by proton exchange membrane (PEM) with 22%. Between 2020 and 2023, the compound annual growth rate (CAGR) for water electrolyser installation has been around 60%, and if all projects for 2024 are realised on time, the year-on-year increase could be almost 400%.
Low-emissions hydrogen will remain expensive in the short term, but costs are expected to fall significantly going forward. The cost of low-emissions hydrogen production from renewable electricity can fall to $2-9/kg H2 by 2030 – half of today’s value – with the cost gap with unabated fossil-based production shrinking from $1.5-8/kg H2 today to $1-3/kg H2 by 2030.
