Equities analyst Jefferies has estimated that that electrolyser manufacturing capacity in 2030 will be unable to meet expected pledged demand, let alone aspirations towards net zero.
The company’s Plugging into the Hydrogen Ecosystem report highlighted that renewable projects and initiatives will top $120bn per annum worldwide with specific carve-outs for green hydrogen at $20-30bn.
It noted that while the market for hydrogen is expected to grow eight-fold, with less than 1% of hydrogen production currently green today, electrolyser markets have the capacity to grow by 800 times by 2030.
“Our analysis suggests current hydrogen demand in industrial applications equates to 550-1800GW of green electrolysers vs current supply capabilities of perhaps 3GW per year.
“Increasing applications to include heating gas, biofuels or in mobile or stationary power drives 500-550 million tonnes by 2050 (Hydrogen Council and IEA) which would equate to an electrolyser market 1000-4000x larger than currently.”
The most obvious and nearest application is the replacement of carbon emitting hydrogen production used in industrial applications (ammonia production and refining), Jefferies stated.
“Our positive view only needs this to convert.”
The report highlighted developing use cases for hydrogen in gas (called Power to X or Power to Power), biofuels, mobility and stationary power, but stated: “A key pushback to hydrogen here is conversion losses of 70%, with the offset being cost, more longevity in storage and faster fuelling. Until renewable generation is plentiful, material developments in heating and transport are less likely.”
Green hydrogen production costs today are $5/kg.
The two key considerations for costs are the levelised cost of electricity (LCoE) and capex costs, which are 70% and 25% respectively of total input costs.
“Forecasting electricity costs is challenging but capex cost reductions should be driven purely by scale rather than a tech change and industry participants expect to see capex reductions of 40-75% to 2030 at the latest,” Jefferies stated.