The production of hydrogen through the splitting of the water molecule into its two main elements – hydrogen and oxygen – is called electrolysis and is carried out using electricity. This process has been well known since the end of the eighteenth century and has been used industrially since the late nineteenth century. Nothing new from a conceptual point of view.

The increasingly pressing needs of energy transition have led to an growing interest in the electrolysis process, previously limited to small sectoral applications, and to a massive development of the equipment that controls it: electrolysers.

Green hydrogen development prospects and technological advancement of electrolysers are the main topic of discussion at the World Electrolysis Congress, international congress held in Dusseldorf, Germany, from March 4 to 6.

The role of green hydrogen in the energy transition

Nowadays hydrogen – used almost exclusively in the steel, chemical and petrochemical industries – mainly derives from natural gas or coal, emitting 9-12 kg of carbon dioxide (CO₂) for every kilogram of hydrogen produced. This type of hydrogen, colloquially called “grey”, doesn’t represent a sustainable solution from a climate perspective.

“Green” hydrogen is produced exclusively from renewable sources and represents a key component of energy transition, especially for its potential application in the so-called “hard-to-abate” sectors, difficult to decarbonise with conventional approaches. This is due to its possible direct use as a completely renewable fuel or as a means of producing other renewable fuels (methanol, petrol, kerosene and many more), destined to replace their fossil-based counterparts.

Thus, fuelled by the prospects of green hydrogen development, the global market is experiencing a strong surge of international expansion. In Europe, in particular, the new directives of the “Fit for 55” package (above all RED III on the use of renewable energy sources, ReFuelEU Aviation on the decarbonisation of air transport, FuelEU Maritime on the decarbonisation of maritime transport, and IET on emissions from industrial processes), together with the substantial funding provided by the Repower EU plan, will generate considerable growth in the European hydrogen market in the coming years, which is expected to reach around 20 million tonnes per year by 2030.

Demand for green hydrogen is still limited by the high production cost, which today varies widely based on the application, but averages around 5-8€/kg. This precise aspect represents one of the key factors that are driving the development of electrolysers.

The global market of electrolysers

To be able to compete with grey hydrogen, the production cost of green hydrogen – the so-called “levelized cost of hydrogen” (LCoH), calculated over the entire lifespan of production facilities – must drop to 1-2 €/kg. This is a considerable technological challenge, considering the main problems that characterise electrolysers: use of critical raw materials (produced almost exclusively in China and the southern regions of the African continent) and special steels to limit electrode corrosion, still limited service life and complex energy management systems. These are some of the main aspects on which industry operators are working on, along with the necessary optimisations of integrated systems aimed at maximising efficiency, operative flexibility, and safety of the equipment.

But the key aspect that affects and will keep affecting the LCoH is the purchase price of renewable energy: about 50-60 kWh of electricity are required for the production of 1 kg of hydrogen.

Today, an electrolyser costs around 2500 € per kilowatt of nominal power – with variations depending on size and specific electrolysis technology – everywhere in the world except in China, where, due to the low cost of materials and labour, the cost of electrolysers is around 600 € per kilowatt.

Although the considerable public funding available for the market development will allow a significant price reduction in the coming decades, today it is having the opposite effect: the recent increase in demand for electrolysers in response to the numerous funded projects has not yet been followed by the necessary increase in production capacity by supplier companies, resulting in a price increase of 10-15% over the last 2 years.

 What technologies?

The competition is based on four main electrolysis technologies, more or less suited depending on the applications.

The alkaline technology, commercially mature, reliable and inexpensive but also inflexible to load variations. The Proton exchange membrane (PEM) technology , operating at low temperature, very flexible but more expensive than the alkaline, particularly suited for applications in integration with non-programmable renewable energy sources (such as solar and wind) and now commercially mature. The Anion exchange membrane (AEM) technology, also operating at low temperature, is very flexible and efficient but still unreliable due to limited commercial applications. Finally the Solid oxide electrolyser cell (SOEC) technology, operating at high temperature, is extremely efficient but a lot less flexible and above all not yet commercially available for large-scale applications.  

What the future holds

An ever-expanding market in Europe and worldwide, with several large companies ready to invest heavily (often supported by EU funds) in the construction of the so-called “gigafactories”, facilities capable to produce electrolysers with a total capacity in the range of hundreds or thousands of megawatts per year. Production costs of equipment that will hopefully start to fall as supply increases, which in turn will be able to keep up with the increase in demand. More stable and robust systems that will enable companies to provide buyers of production plants with greater guarantees regarding the reliability of the equipment. All of this will be accompanied by an increase in the production capacity of renewable electricity, which will necessarily result in a reduction in the price of kilowatt-hours.

There are still many variables, but if everything goes according to the strategies of policy makers, in Europe and beyond, we could already have a well-established green hydrogen and electrolyser market between 2030 and 2035, with the costs of hydrogen itself and synthetic fuels derived from it starting to become competitive with conventional fuels.

This is not the solution to all the problems of energy transition but it is certainly an indispensable contribution on the path towards climate neutrality. APettinau

This activity was financed by the Ministry of the Environment and Energy Security through the National Electricity System Research (Ricerca di Sistema Elettrico Nazionale, RdS) - Three-Year Implementation Plan 2022-2024 - 1.3 Integrated Hydrogen Technologies Project