Electrolyser production capability is ramped up and ready to go, with more factories possible within timeframes of 18 months - but green hydrogen developers must commit hard cash to their projects if they want more GWs of capacity, electrolyser manufacturers have warned.
Speaking at the Financial Times Hydrogen Summit in London this month, Jon André Løkke, CEO of Norway’s Nel and Graham Cooley, CEO of the UK’s ITM, both warned that a lack of policy decision-making and investment were putting the brakes on further manufacturing expansion.
“The industry is ready to scale up, but there’s only so much that Graham and I can do to prepare for something that is coming,” said Løkke. “There are still a lot of investment decisions that need to be made.”
“The money isn’t starting to flow,” agreed Cooley, noting that an 18-month lead time would be “reasonable” for a new factory.
“We’re ready to go and we just need the EU to put those incentives in place and the larger projects to get to financial close,” he explained.
Hydrogen developers have been wracked with anxiety over the availability of electrolysers to support their projects, with many pointing the finger at manufacturers for not expanding fast enough to support final investment decisions (FID).
The situation has been exacerbated by EU’s decision to raise its green hydrogen target to 200GW by 2030 under the RePowerEU programme – without yet unlocking funding.
But the visibly frustrated Løkke railed against the “endless amount of announcements, and ambitions and frame agreements and targets” which he implied are no substitute for firm investment in projects.
“We cannot continue to invest ahead of the curve, we need to have some visibility as well,” he warned. “We need to see concrete being poured and steel being welded.”
“We cannot be more ready,” he added. “Now it is up to the European Commission and the downstream players, the users of molecules to start making investment decisions, and start building. And then we will respond by adding even more capacity.”
“No constraint”
Nel has already cautioned that it could succumb to the “ketchup effect”, where production capacity is abruptly overwhelmed by a sudden influx of green hydrogen FIDs. The company plans to ramp up its 500MW factory in Herøya, Norway to 2GW once firm orders start flowing. And ITM, which is putting additional automation in its Sheffield factory, plans to be at 2.5GW capacity by 2023 and 5GW by 2024.
Nevertheless some experts have warned that the raw materials required for electrolyser manufacture such as nickel, copper, steel, and titanium, and rare platinum group metals — including the iridium used in PEM electrolysers — are all likely to be in tight supply in the coming years and could have a chilling effect on medium term production capacity.
But Paddy Padmanathan, CEO of ACWA Power which has just placed an order for 2.2GW of electrolysers for the Neom project in Saudi Arabia, called for calm.
“[Electrolyser manufacture] is not a constraint at all,” he told the FT audience. “The issue is there are a lot of people wondering whether the chicken or the egg is going to come first. It needs somebody stepping up and having the courage and conviction to say I’m going to build it and they will come.”
He added: “Right now we are all frozen [like] rabbits in headlights waiting to see who blinks first. There is no impediment today. The market is there. We just need to get on with it.”
