EIC warns 8.49GW-a-year manufacturing base is being left underused as weak offtake, high hydrogen costs and regulatory delays prevent projects from moving beyond feasibility

• Europe can manufacture an estimated 8.49GW of electrolysers annually, but only around 3GW of the 31GW of green hydrogen capacity expected by 2030 has reached final investment decision.
• The mismatch is creating short-term overcapacity and pressure on European manufacturers, even as the EIC warns that equipment shortages could emerge from 2029 if delayed hydrogen projects finally begin moving into construction.

Europe has built the factories needed to manufacture electrolysers at scale. What it has not built is enough bankable hydrogen projects to keep them busy.

That is the central warning from the Energy Industries Council’s new Europe Hydrogen Insight Report, which finds that European electrolyser manufacturers currently have enough capacity to satisfy expected orders through at least 2028, while hydrogen projects themselves continue struggling to reach final investment decisions.

EIC estimates maximum European electrolyser manufacturing capacity at approximately 8.49GW a year. That figure includes Topsoe’s 500MW-a-year manufacturing facility in Denmark, which is currently inactive, while excluding some smaller manufacturers that do not publicly disclose capacity.

The problem is on the demand side.

Europe certainly does not suffer from a shortage of hydrogen project announcements.

EICDataStream has recorded 624 hydrogen projects announced across Europe since 2020, covering hydrogen production, pipelines, storage and related infrastructure. Green hydrogen dominates with 395 proposed projects, while hydrogen pipelines account for another 57 developments.

But project numbers on paper give a misleading picture of how quickly the market is actually developing.

Only 59 of the 624 projects are operating, while 74 have already been cancelled. Of those remaining, almost half are still at feasibility stage and around 15% are on hold.

The EIC identifies familiar problems: high hydrogen production costs, inadequate offtake demand, regulatory uncertainty, limited availability of renewable electricity and delays in hydrogen transport and storage infrastructure.

These problems feed into each other.

A producer struggles to finance an electrolyser without a long-term buyer. An industrial customer is reluctant to commit without competitive hydrogen prices. Pipeline developers hesitate when future hydrogen volumes remain uncertain, while hydrogen producers cannot reach customers without pipelines and storage.

The result is a project pipeline that can look enormous while relatively little steel is actually being ordered.

Electrolyser Manufacturers Are Paying the Price

Europe’s electrolyser industry expanded manufacturing capacity in anticipation of the hydrogen market taking off during the second half of the decade.

That demand has arrived much more slowly than expected.

The EIC says limited FIDs are now creating short-term equipment oversupply, shorter lead times and commercial pressure on manufacturers. Its report points to the formation of the Electrolyser4Europe industry coalition as evidence of growing concern that European policy ambitions have failed to produce enough actual demand or bankable projects.

The consequences are already visible.

Green Hydrogen Systems and McPhy both collapsed in 2025 after struggling with cash burn and insufficient demand as the European market failed to scale as quickly as anticipated.

Low factory utilisation can itself become another problem. The International Energy Agency has previously warned that poor utilisation of electrolyser factories can substantially increase manufacturing costs, undermining the cost reductions that mass production was supposed to deliver.

That leaves manufacturers caught in a difficult position: Europe needs them to maintain production capacity for a future hydrogen economy, but there are not currently enough firm orders to use that capacity efficiently.

Rebecca Groundwater, EIC Global Head of External Affairs, called for “faster decisions on support schemes,

clearer long-term rules for offtake and coordinated investment in transport and storage.”

Today’s Oversupply Could Become Tomorrow’s Shortage

There is an important twist in the EIC assessment.

Europe may currently have too many electrolyser factories for the projects being ordered, but that position could reverse quickly.

The EIC expects existing manufacturing capacity to satisfy projected demand during 2027 and 2028. From 2029 onwards, however, equipment shortages could emerge if a larger share of the project pipeline finally reaches FID and enters construction simultaneously.

Closing factories now because demand is weak could therefore leave Europe without enough domestic manufacturing capacity when projects eventually accelerate.

That also creates a strategic problem as Chinese manufacturers expand internationally.

European electrolyser companies are already facing increasing competition from Chinese suppliers, particularly in alkaline electrolysis. World Bank estimates cited by Gasworld put China at 86% of global alkaline electrolyser manufacturing capacity.

Europe therefore risks losing manufacturers during the market downturn and becoming more dependent on imported equipment when hydrogen demand eventually catches up.

Germany Leads Europe — But Is Still Behind

Germany is further advanced than most European markets.

EIC tracks 87 proposed German hydrogen projects, with around 23% either under construction or awaiting construction. The country is targeting 10GW of electrolyser capacity and is developing a roughly 9,000km Hydrogen Core Network intended to connect domestic production, storage, imports and industrial users.

Even Germany, however, remains dependent on projects and import corridors elsewhere in Europe, Scandinavia and North Africa that are experiencing their own delays.

Spain has a 12GW electrolyser target and some of Europe’s strongest renewable resources, but the EIC says most Spanish hydrogen developments remain at feasibility stage and need to move much faster through FID and construction.

The UK has the largest national project pipeline tracked by EIC, with 130 proposed hydrogen developments. Yet only around 8% are under construction or awaiting construction, and EIC forecasts just 3.66GW of electrolytic hydrogen capacity by 2030, more than 1GW short of the government’s 5GW target.

Europe’s Problem Is No Longer Announcing Projects

The numbers expose a change in what Europe’s hydrogen industry actually needs.

The continent already has targets. It already has hundreds of announced projects. It has electrolyser technology, engineering companies and factories capable of manufacturing several gigawatts of equipment every year.

What it lacks is enough customers prepared to sign long-term hydrogen contracts at prices that allow projects to secure financing.

The EU’s broader ambition remains enormous. The EIC report notes a goal of 40GW of electrolyser capacity and REPowerEU ambitions to produce 10 million tonnes of renewable hydrogen domestically and import another 10 million tonnes by 2030.

But less than 10% of the 31GW project pipeline identified for 2030 having reached FID shows how wide the gap between ambition and construction remains.

Europe does not need another wave of project announcements.

It needs the projects already announced to find buyers, financing, infrastructure and enough regulatory certainty to actually get built.

Source:  Fuel Cells Works