European electrolyzer manufacturers have enough capacity to meet potential orders, but weak demand and insufficient investment are leaving production facilities underutilized, according to data of Energy Industries Council (EIC), a leading trade organization representing the energy supply chain.
Europe currently has annual electrolyzer manufacturing capacity of 8.49 gigawatts (GW), according to EIC data compiled by Anadolu.
Electrolyzers use electricity to split water into hydrogen and oxygen. When powered by renewable electricity, they can produce green hydrogen.
However, only 3 GW of the 31 GW of electrolyzer capacity planned in Europe through 2030 has reached a final investment decision (FID).
The figures point to several challenges facing Europe's hydrogen industry, including high production costs, uncertain demand, changing regulations and a lack of long-term agreements with buyers.
Without long-term buyers, hydrogen projects can struggle to secure financing. Limited demand, along with insufficient transport and storage infrastructure, is also slowing new investment.
- Electrolyzer supply not a short-term problem
Electrolyzer manufacturing is not expected to be a major bottleneck for Europe's hydrogen industry in the short term, according to an EIC report.
Manufacturers are expected to have enough capacity to meet projected orders in 2027 and 2028, when the market could face an oversupply of electrolyzers.
Supply could become tighter from 2029 if more hydrogen projects receive investment approval. However, this would require a rapid increase in the number of projects reaching FID.
Six major manufacturers, ITM Power, John Cockerill, Nel, Sunfire, Thyssenkrupp and Topsoe, formed the Electrolysers4Europe coalition in February to promote hydrogen demand, improve regulatory clarity and increase access to financing.
- 624 hydrogen projects tracked across Europe
EICDataStream has recorded 624 hydrogen projects across Europe since 2020, including investments in production, pipelines, storage and other infrastructure.
Of those projects, 59 are operational and 74 have been canceled. About half of the remaining projects are at the feasibility stage, while 15% have been put on hold.
Green hydrogen projects account for the largest share of the portfolio, with 395 projects, followed by hydrogen pipeline projects, with 57.
The large number of projects still at the feasibility stage highlights the risk that hydrogen production facilities and the transport and storage infrastructure needed to support them may not be developed at the same pace.
- Europe seeks clearer policies and stronger demand
Commenting on the data Rebecca Groundwater, EIC's head of global external relations, said in the report that Europe had invested in electrolyzer manufacturing capacity but that policies now needed to turn project pipelines into real and firm demand.
She said this would require faster decisions on support mechanisms, greater clarity on long-term rules governing hydrogen offtake, and coordinated development of transport and storage infrastructure.
Without greater certainty, Groundwater said, projects would continue to be delayed, factories would operate below capacity and Europe's ability to meet its 2030 targets would become more difficult.
The UK has Europe's largest national hydrogen project portfolio, with 130 projects. However, only 8% of those projects are under construction or awaiting construction, while 21% have been put on hold.
The country is expected to reach 3.66 gigawatts of electrolytic hydrogen capacity by 2030, about 1.3 gigawatts below the government's target of 5 gigawatts.
Germany has 87 hydrogen projects, with 23% under construction or awaiting construction. That is the highest share among the major European markets examined in the report.
Germany is expected to become one of Europe's key hydrogen demand centers, supported by its planned 9,000-kilometer Hydrogen Core Network and import connections. However, there is a risk that hydrogen imports may not develop quickly enough to meet expected consumption.
Spain has 54 hydrogen projects, 60% of which are at the feasibility stage. The Nordic countries have 76 projects, with 18% under construction or awaiting construction.
Across Europe, EIC estimates that around 72 gigawatts of electrolyzer capacity is represented in planned hydrogen projects, requiring an estimated $269 billion in capital expenditure.
However, EIC cautions that these figures represent the overall project pipeline rather than committed investments or equipment orders.
By Gulsen Cagatay
Anadolu Agency
energy@aa.com.tr
