European electrolyser manufacturers have announced major investments in US manufacturing capacity amid a surge in demand following the passing of the Inflation Reduction Act (IRA). But proposed EU support measures and firm orders within the bloc mean Europe remains a major electrolyser demand centre.

The IRA, which was signed into law in August last year, has been described by many in the industry as a “gamechanger” as it offers hydrogen production tax credits of up to $3/kg, potentially positioning the US as one of the lowest-cost production locations in the world.

Norwegian alkaline electrolyser manufacturer Hydrogenpro will invest $30–50mn into building a 500MW factory in Texas, bolstering its global manufacturing capacity to 800MW. The company describes the US market as its “top priority”, noting electrolyser demand since the IRA has grown by between four and six times what it was previously.

“There is fierce competition between continents for global leadership in renewable hydrogen technology” Volldal, Nel

“The US factory will be our bridgehead into the North American market. A key factor for us to become the leading provider of green hydrogen technology and systems is our presence across continents, securing sustainable and local supply chains,” says Hydrogenpro CEO Tarjei Johansen.

Hydrogenpro has already been contracted to supply 220MW of electrolyser capacity to the planned Advanced Clean Energy Storage project in Utah, with equipment manufacturing expected to be completed in the second half of this year.

Currently, all 300MW of Hydrogenpro’s manufacturing capacity is based in Tianjin in China. US policy to date has focused on ramping up domestic manufacturing capacity rather than restricting electrolyser imports in a similar vein to the ban on solar panels manufactured in Xinjiang. But as the transition technology grows in prominence—and China seeks to gain market share—tensions between the two countries could present a potential risk of import restrictions in the future.

Fellow Norwegian manufacturer Nel has also announced FID on an expansion of its Wallingford proton-exchange-membrane (PEM) electrolyser factory from 50MW to 500MW by 2025. It is also considering potential sites for a 4GW factory, which will produce both PEM and alkaline electrolysers.

Europe stays firm

However, despite this gold rush for the US, Europe continues to represent a major demand centre for green hydrogen equipment. The EU’s recently unveiled Net Zero Industry Act, part of its response to the IRA, includes electrolysers and fuel cells as strategic technologies for the energy transition, and therefore subject to accelerated permitting for manufacturing facilities. It also sets a target for 40pc of electrolysers deployed in the bloc to be domestically produced by 2030.

“There is fierce competition between continents for global leadership in renewable hydrogen technology, and we welcome the EU setting a target for the production of electrolysers made in Europe,” says Hakon Volldal, CEO of Nel.

Nel has also recently secured a firm purchase order for 120MW of alkaline electrolysers worth €34mn ($36.6mn) with German developer HH2E.

UK technology firm Ceres has similarly in March signed contracts with Germany’s Bosch and Linde Engineering to prepare a two-year demonstration of its solid-oxide electrolyser in Stuttgart from 2024.

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Author: Polly Martin