Green hydrogen's global manufacturing capacity to double by 2025: CEA

Over the next three years, a significant boost in global green hydrogen production capacity is expected, especially from alkaline electrolysis technology, according to a Clean Energy Associates' report released Feb. 8.

The report forecasts a doubling of green hydrogen's global manufacturing capacity by 2025, with rapid gains in North America due to "strong support from the US Inflation Reduction Act," and forecasts 54 GW of capacity by 2027, with China holding around half of global capacity by then. The report states China currently holds 61% of global manufacturing capacity.

The latest semi-annual Green Hydrogen Supply, Technology, and Policy Report from CEA says green hydrogen, or hydrogen produced with renewable energy and water electrolysis, will be the "big enabler of net zero emissions."

In a comparison between US and EU policies, the report states the EU's green hydrogen threshold is much higher but lacks incentives.

"In the US, the Section 45V credit incentivizes investments that achieve a 60% GHG reduction threshold compared with hydrogen derived from fossil fuel sources," the report states.

The electrolyzer market

The report's forecast boost in capacity is paired with an analysis that alkaline electrolyzer technology dominates the market and will continue to do so as hydrogen production increases over the next three years.

Overall annual electrolyzer capacity jumped 138% in 2023 from 2022, according to the report. Alkaline electrolyzers make up a majority of the capacity in the data, with proton exchange membrane (PEM) electrolyzers in second place.

Alkaline electrolyzers are cheaper and easier to acquire than competing technologies due to suppliers having built out manufacturing capacity, said Brian Murphy, Senior Hydrogen and Low-Carbon Fuels Analyst at S&P Global Commodity Insights.

"China has implemented favorable hydrogen and electrolyzer policies leading to many large electrolysis projects being built there with cheap domestically-sourced (alkaline) systems," Murphy said.

Alkaline and PEM electrolyzers are the two technologies currently commercialized, with other technologies being in the research and development stage. The report calls alkaline tech "mature, cheap but low efficiency" and calls PEM tech "mature, expensive but high efficiency."

"There is no clear winner across all applications, which leaves the door open for competition and innovation to drive costs down," it states.

The average costs of hydrogen produced via alkaline and PEM electrolysis were $2.30/kg and $3.19/kg on the US gulf coast in January, respectively. The average is boosted by an outlier spike in prices in the middle of the month, where prices for both methods spiked to the highest levels since September 2023.

The monthly average price data is from an analysis of daily price assessments by Platts, part of S&P Global Commodity Insights.