Despite this, hydrogen makes up a vast array of different technologies worth exploring in order to decarbonise the many hard-to-abate sectors. Unlike batteries, hydrogen is still a relatively new technology and thus innovation continues to soar throughout the industry.

Electrolysers are recognised as a key technology that generates green hydrogen when coupled with renewable energy sources. The process converts water to both hydrogen and oxygen molecules, providing a basis to not only create the clean energy carrier but also oxygen that can be used for many other purposes such as in the medical sector.

However, one question keeps being raised by those across the industry and those also looking into hydrogen as a potential energy vector for the present, not just the future – are we doing enough to support its production and integration?

Future electrolyser capacity

Hydrogen demand continues to soar across the world and, according to the IEA Hydrogen Projects Database 2021[1] global installed capacity will reach 54GW by 2030. Despite this, the IEA also believes that consumption of 220 million megatonnes of hydrogen per year will need to be consumed to attain our climate goals.

Clearly hydrogen production will need to increase, and the scaling of the production technology will additionally have to be advanced to ensure that the amounts required to decarbonise society, and also create a credible hydrogen market, are met. To achieve this, there are several key barriers that must be overcome to help hydrogen reach its potential and support climate goals as a key fuel for the future.

The European Union (EU) has placed a major emphasis on developing electrolyser technologies as a means to become a powerhouse for hydrogen technologies supporting decarbonisation not only in Europe but around the globe.

François Paquet, Impact Director at the Renewable Hydrogen Coalition, recognises the vital role electrolysers and hydrogen have in reducing carbon emissions in the EU. Paquet said, “This technology will further improve and it’s clear that’s a target set at EU level that will ensure that we deploy more electrolysers on the ground, and that will de facto bring the scale needed in the manufacturing in the cost reduction in the economies of scale. What is very interesting to look at the moment is the dynamics of energy prices.

“I think the recent gas crisis is very much a warning for investors looking into hydrogen today. This is clearly changing the dynamics of costs. I mentioned that the key challenge was cost.

“The cost of producing renewable hydrogen compared to blue hydrogen was cheaper for the very first time because of the inherent reality of blue hydrogen and natural gas.”

Read more: Natural gas pricing: What impact on hydrogen’s momentum?

With green hydrogen reaching cost parity with blue hydrogen, it could see a drive to scale electrolyser development in order to create larger amounts of green hydrogen for the market. Having more renewable hydrogen entering the energy market could be seen as a means to scale electrolyser manufacturing, however, there are several key factors restricting this.

Key barriers in scaling electrolysis

One of the biggest barriers from scaling electrolysis technology is the cost it takes to manufacture both PEM and AEM electrolysers. These technologies primarily need rare, expensive materials such as platinum and iridium to be created for the catalysts, however these offer significant bottlenecks in scaling the technology.

According to an extract within the International Journal of Hydrogen Energy[2], Iridium (Ir) is one of the scarcest elements on earth with a low occurrence of only 0.000003 parts-per-million (ppm) in the earth’s crust, with South Africa, Russia, the US, Zimbabwe and Canada all boasting the most concentrated geographical locations for the key electrolysis material.

When it comes to sourcing platinum it becomes apparent as to where much of the electrolysers costs come from. Much like iridium, platinum is regarded as a rare and expensive resource that is required for electrolyser systems to operate.

Several doubts have been raised surrounding the use of these materials and its availability geographically with the Platinum demand and potential bottlenecks in the global green transition: A dynamic material flow analysis journal explains, “Such a transition requires a large number of critical and precious metals, such as rare earth elements (REEs), lithium, cobalt, and platinum group metals (PGMs) amongst others.

“This consequently raises questions of resource availability issues for large scale implementation of these technologies due to the highly concentrated geographical distribution of these critical materials, lack of effective substitutes, and political instability in some producing countries.”[3]

This could provide significant obstacles in the future for the hydrogen industry with many fuel cells and electrolyser systems requiring platinum to operate.

A positive however is that with the banning of internal combustion engines in the coming years, the platinum here can be recycled, “As platinum demand and stocks continue to increase in the following decades, platinum scrap is expected to become more available, as shown in our scenarios, indicating increasing opportunities for recycling, especially in industrialised countries such as Europe and the US.

“Another advantage of recycling is the environmental benefit, since the emission intensity from recycling platinum is substantially lower than that from primary production.”[3]

In order overcome this barrier, electrolyser manufacturers must research and develop new, inexpensive materials that can be utilised within electrolysers. In not doing so, electrolyser manufacturing will continue to remain a highly priced product and could potentially lose potential projects and customers because of these steep prices. With this of course, comes significant investment in R&D efforts to develop those components and technologies.

Another factor often countered by those in the business of both electrolysers and hydrogen itself, is the use of water resources. We’ll come back to that later…

Location, location, location

Combining any considerations in rare materials sourcing, availability of water and renewable resources and, potentially the scale-up in electrolyser capacities, is the matter of location. This is pertinent where the goal is truly green hydrogen.

Electrolysers provide a means to decentralise energy production and accelerate the transition towards a greener future. Although considered a key zero-emission fuel, it is important to note that this will not be the sole element for reaching climate goals, however it is one which can complement contemporary clean technologies, such as renewable electricity and batteries, to maintain energy levels.

Dr. Bryan Pivovar, Senior Research Fellow I-Materials Science with NREL, told H2 View that electrolysers can’t just be plugged into the grid as it may not reach certification for truly green hydrogen production.

“You’ve got to be careful with green because with electrolysis, if you’re just plugging into your local grid, it’s not really all green. You know, you really have to directly couple this to renewables to make it green,” he said.

“That’s one of the problems, we didn’t used to have the renewables. Renewables used to not be cost-effective enough and we used to not have enough of them to basically do this green part of it. But that’s changed in some places, and it’s quickly changing in other places. This evolution of low cost and renewable electricity is making a difference.”

In order to produce green hydrogen, the renewable energy supplied must be produced off-grid and thus, coupling electrolysers directly with the energy sources is a primary method of creating green hydrogen and additionally decentralised clean energy. The fundamentals for the green hydrogen ecosystem clearly need to be in place first and foremost.

Top regions for hydrogen production from renewables

With this in mind, where are the current hotspots for electrolyser activity, and where would the natural hotspots be in the years ahead?

Many countries recognise the value of both a hydrogen society and the matrix of renewables to make it truly green, and have been accelerating their own hydrogen roadmaps and electrolyser capacity programmes.

According to IEA research[1], Canada is a leading nation in terms of installed electrolyser capacity. With this in mind, and with the data to back this up, it could see Canada become a key region for the manufacture of electrolysis units.

Canada, however, is not the only region that has seen significant growth in its electrolyser manufacturing capabilities. Rounding off the top regions are China and Europe – two locations which many categorise as central locations for building the hydrogen economy.

Electrolyser projects and indeed players continue to enter the market and continue to march forward. According to the IEA’s Hydrogen Projects Database, with all projects planned, global installed electrolyser capacity set to reach 54GW by 2030. That’s despite an approximate 25% decrease in projects operational or under construction in 2020, likely a result of the Covid pandemic.

The largest share – over 40% – of global installed electrolyser capacity is in Europe, followed by Canada and China. Nearly half of projects under construction in 2022 are in Europe.

When we look at the breakdown of that current and future electrolyser capacity, it was clear that from 2017 to 2021, global capacity was dominated by alkaline electrolysers, perhaps unsurprising due to their lower capital costs and no requirement for precious metals.

But what areas of the globe hold significant potential in producing low-cost hydrogen?

According to an IEA study into hydrogen costs from hybrid solar PV and onshore wind systems in the long-term[4], there are several hotspots around the globe which hold the most promise in hydrogen production through electrolysis.

According to the image above, it is clear that there are several regional hotspots for electrolyser production from solar and onshore wind most notably in the Middle East, Africa, China, Australia, and South America.

Africa, the Middle East and Australia clearly have significant potential through the use of solar radiation that can be channelled and harnessed to provide renewable electricity to power electrolysis systems. It is to no surprise that the Middle East and Australia are among the highest ranked nations for electrolyser capacity (and planned projects).

In comparison to the onshore wind capacity, South America has one of the most concentrated spots for green hydrogen production on its west coast in Chile. It is no surprise that many companies, including ENGIE and Porsche, are developing hydrogen projects within the region that is often set to become one of the key exporters of hydrogen across the globe.

Chile has recognised its potential and has outlined a hydrogen roadmap that aims to make the country a green hydrogen export powerhouse, this is all enabled through the use of electrolysis coupled with wind energy.

Speaking on this, the International Trade Administration said on Chile, “The Ministry projects that Chile could produce up to 160 megatons per year of green hydrogen and become the leading low-cost exporter by 2040, when the local market will be worth an estimated $33bn, including $24bn in exports.”[5]

Water scarcity and its impact on hydrogen production

These ambitions, however, could all be jeopardised by a key factor that must be taken into consideration with the electrolysis process: water.

To create hydrogen from electrolysis you need water, and larger projects thus need more water availability to produce sufficient amounts of green hydrogen at a cost-competitive level. This is a long-running hot topic at H2 View, with a tidal wave of questions often concerning the effects of green hydrogen on the constrained water resources globally. We’ll be bringing readers an in-depth exploration of the water challenge in the weeks ahead.

According to research by Rystad Energy[6], 70% of the world’s current and planned hydrogen projects fall under locations that are situated in extreme water stressed areas, which could prove detrimental to its long-term success.

Due to the majority of planned projects falling in areas with low water supplies, Rystad has suggested that an additional desalination market will need to be created to produce most of the 620 million cubic meters of water required for these projects.

With the current pipeline of projects aiming to produce about 30 million tonnes of hydrogen per year by 2040, an annual requirement of 620 cubic meters of purified water will be required. Coupled with rising population growth in the coming years, the supply of water could become a key market and could radically increase to price of green hydrogen.

With the number of projects being developed in areas that fall under extreme water stress, most notably in areas with high renewable energy potential such as Chile, Africa and the Middle East, it poses the question as to whether future research and development should focus on producing more electrolyser systems or should it concentrate on maximising the hydrogen yield from the electrolysis process?

Several companies have shifted their focus to do exactly this. Electrolysis is still a youthful technology and thus innovation can be achieved, and it would not be unlikely to see electrolysis systems become vastly more effective in 2030 than they are today.

Companies such as DNV, Smoltek and Sunfire have also pushed to create more efficient electrolysis systems in recent months and with this it could prove to be a key instigator in scaling up green hydrogen production through electrolysis.

But how can this be counteracted? The answer to that could be through the use of seawater electrolysis. Kasper Tipsmark, Chief Technology Officer of Green Hydrogen Systems, spoke about its potential and where it could be implemented on H2 View’s Electrolysers Special webinar this month (February).

Tipsmark said, “If we’re considering regions where we’re little water is available, it’s typically in geographical areas where it’s also quite warm. That means that if you are located not too far away from the ocean, you will have to use the opportunity to use the excess heat from the electrolysis to desalinate.

“There’s good correlation between the amount of excess you have, and the amount of energy required to produce to the water. You are unique and of course, that might change in the future if electrolysis become more efficient.”

Clearly the issues with water scarcity could be counteracted with the use of seawater electrolysis, however, this hugely depends on the efficiency of the technology in addition to its potential in being scaled for industrial use.

This reiterates a major discussion point for electrolysers moving forward. Should the efficiency of the systems be optimised as opposed to more being manufactured?

Are we moving quick enough?

The business of scale is clearly a conundrum of further questions and considerations, but in closing, let’s come back to our original question – are we moving fast enough in electrolyser projects and capacities?

Kasper Tipsmark believes so, while also acknowledging that against the ticking clock of climate change, nothing will be quite quick enough…

“I think if in eight years’ time and we see that we have 54GW installed capacity of electrolysis, I would say we’ve done a really good job of building electrolysis,” Tipsmark said.

“We both need to build, first of all, infrastructure, and we need to build demand. We need to build value chains. We need to build industry and manufacturing industry. We need to build a supply chain such suppliers throughout Europe and the world, for that matter.

“If we have succeeded with 54GW, it would be a tremendous achievement in just eight years.”