More than 100GW of electrolysers will be manufactured each year by the end of this decade, up from 2GW in 2020, in line with growing demand for green H2, according to a new report by Rethink Energy.
The UK-based analyst says that Western manufacturers have already committed to building factories to produce more than 42GW of electrolysers annually by 2030, providing the crucial economies of scale that will help reduce the price of electrolysers from about $1,400/kW today to $340/kW by 2030.
These lower electrolyser costs, combined with reduced renewable energy prices, will help ensure that the average cost of green hydrogen globally will reach $1.50/kg by 2030, far below the current worldwide low of $4/kg in the US Northwest (according to S&P Global Platts).
“The ability to produce small-scale, modular electrolysis cells at scale will make hydrogen accessible for swathes of industries that need it to decarbonize,” says Rethink in a press release accompanying the new study, The Swelling Pipeline of Electrolyzer Gigafactories. “Just as solar modules have in power generation, and batteries have in the EV [electric vehicle] space, electrolyzers will outperform expectations.
“Rethink Energy predicts that even without any sudden improvements in technology — of which several are almost certain — the learning rate for electrolyzer units will be 14%.
“Incremental improvements in efficiency and capacity factor will also see a reduced demand for electricity, which itself will be falling in price. With similar economies of scale, the cost of solar power in particular will fall below $20 per MWh by the end of the decade, accounting for 37% of the overall cost reduction of green hydrogen. By 2030, the global average cost of green hydrogen will have fallen to $1.50 per kilogram.”
Rethink anticipates that global hydrogen demand will grow from around 70 million tonnes today — which is mainly used for chemicals production and oil refining — to 735 million tonnes by 2050, “with almost all of this being produced using electrolysis”.
This is even more bullish than the Hydrogen Council lobby group’s forecast of 690 million tonnes by 2050, while the International Energy Agency expects 520 million tonnes by mid-century in a net-zero scenario, and analyst Wood Machenzie predicted 211 million tonnes.
“A herculean effort will be required to build enough factories to support such a build out — but the market leaders are ready. As are a handful of new-entry innovators,” says Rethink.
Each gigafactory — able to build more than 1GW of electrolysers annually — will take about two years to build, it adds.
“New plants, with a combined capacity of around 12GW per year, will have to be announced and added every year between 2026 and 2032.”
A chart in the report suggests that the annual demand for electrolysers will grow from less than 5GW a year in 2023 to 20GW in 2024 and 40GW in 2027, to around 100GW by 2031, with manufacturing capacity always slightly ahead of demand, rising from about 10GW in 2023 to more than 100GW in 2030 and over 130GW in 2032.
It adds: “The boom has already started, with nearly 40GW of electrolyzers set to be installed in the next five years alone.”