The surprising growth of hydrogen in China during the first half of 2021 could drive the electrolyzer market to exceed two gigawatts in 2022. Still, clean H2 demand lags behind electrolyzer makers’ aggressive capacity expansion plans. To sustain the momentum, more policies stimulating clean H2 demand need to emerge. China’s carbon neutrality target may be doing the most on this front, the 2H 20021 Hydrogen Market Outlook of BloombergNEF states.
Electrolyzer shipments are set to double in 2021 and quadruple in 2022, reaching at least 1.8GW. China should account for 60-63% of global installations. By 2030, cumulative global installations could cross 40GW based on developer disclosures. Alkaline electrolyzers will continue to dominate the market due to better economics, with an 80% share in 2022.
16GW manufacturing capacity by 2024
Electrolyzer manufacturers are building more factories than needed in response to rising sales. Some 16GW of manufacturing capacity could come online by 2024, enough to meet demand several times over. This may leave many factories underused, pushing down prices.
Net-zero emissions targets are driving H2 deployment in Europe and China. In Europe, a rising CO2 price is incentivizing industrial companies to explore hydrogen. In China, large firms are investing in H2 to demonstrate alignment with the country’s carbon neutrality target.
Government funding is on the rise, with $11.4 billion per year available for low-carbon H2 projects over 2021-30. For most countries, these subsidies total less than 0.1% of GDP, well below what solar got in its early years, but still a sizeable boost compared to a few years ago.
90 projects planned worldwide – China leading
But widespread demand for clean H2 is still a few years away. Few countries have laid out clear plans to drive a broad base of demand. That said, several large projects have been proposed for later in the decade and more may emerge soon in China. Plans to build significant H2 storage infrastructure in Europe will also enable large-scale demand in future.
„More than 40 countries have now published a hydrogen strategy or are developing one. More than 90 projects are being planned worldwide to use hydrogen in industry. Electricity generators have almost doubled their planned hydrogen-fired turbine capacity since January“, Martin Tengler, lead hydrogen analyst at BloombergNEF said.
“What's happening in China right now is revolutionary for clean hydrogen. Chinese companies are racing to show their compliance with the country's carbon neutrality target, pushing the market for electrolyzers – the devices that produce hydrogen using water and electricity – to be at least nine times bigger in 2022 than in 2020“, Tengler stressed.
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Carbon prices of at least $100 per ton by 2030 necessary
"We'll need to see CO2 prices of at least $100 per ton by 2030 to incentivize hydrogen adoption. No country has such carbon prices today, and we forecast only three markets to reach that level before 2030: Canada, the EU and the U.K. It is no surprise then that the vast majority of announced large-scale demand-side clean hydrogen projects come from these regions“, Tengler said. (hcn)
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