28

2024

-

03

'Severe overcapacity' | The global supply of electrolysers far outstrips demand from green hydrogen projects: BNEF

Author:

Hydrogeninsight


 

Research firm warns that new firms are flooding an already oversupplied market

 

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, warns research firm Bloomberg New Energy Finance (BNEF).

 

In their analysis, entitled Electrolyser Manufacturing 2024: Too Many Fish in a Tiny Pond, BNEF noted that factories around the world could produce up to 31.7GW of electrolysers per year at the end of 2023 — nearly 17 times what was delivered that year and more than seven times the capacity expected to be delivered in 2024.

 

Despite this, manufacturers have announced further expansions, bringing annual stack assembly capacity to more than 50GW by the end of this year, rising to nearly 75GW in 2025.

 

On the surface, this rapid scale-up could be good news for green hydrogen project developers, ensuring that gigawatt-scale orders can actually be met, with economies of scale potentially reducing the price per unit.

 

However, developers have not placed the major orders expected in 2023, mostly due to slower-than-expected rollout of subsidies in the US and EU — leaving electrolyser manufacturers with little to no income from their high-cost investments.

 

According to BNEF, only one pure-play electrolyser maker reported a profit in 2023 — Thyssenkrupp Nucera, which saw a positive net income of $23m. This was mainly due to the ongoing fulfillment of a 2.2GW order from the world's largest under-construction green hydrogen facility, the Neom project in Saudi Arabia.

 

The rest reported annual losses ranging from $13m for Enapter to nearly $1.4bn for Plug Power.

 

And while 68% of global electrolyser manufacturing capacity — 21GW — is sited in China, BNEF notes that the share owned by Western firms in the country has steadily fallen to less than 10%.

 

These companies are generally not investing in extra manufacturing capacity in this region due to growing competition from new Chinese suppliers that have entered the market, as well as the likelihood of government support from the EU and US, as well as incentives from India, for domestic manufacturing.

 

Some electrolyser manufacturers such as Nel have pushed back on accusations of oversupply across the industry, arguing that nameplate manufacturing capacity does not necessarily reflect how many electrolysers can actually be produced by a given factory.

 

However, BNEF responds that even assuming that only 50% of the nameplate capacity is producing electrolysers, “overcapacity is still an issue at the global scale”.

 

More competition

 

BNEF also warns that despite this major oversupply, more electrolyser manufacturers are flooding the market, with more than 100 companies now claiming to produce the equipment.

 

This has significantly diluted the alkaline electrolyser market, with the top ten manufacturers representing only 50% of capacity at the end of 2023, compared to 84% in 2021.

 

The market for proton-exchange-membrane (PEM)) electrolysers is much more concentrated, with five companies likely to account for 72% of production capacity by the end of this year.

 

BNEF also notes that alkaline electrolyser manufacturing remains dominant over PEM at 75-80% of market share.

 

Source:Hydrogeninsight

 

Hot News

FuelCellChina Interviews