The installed capacity of electrolysers in Europe is set to undershoot the EU’s 2030 targets by as much as 76% because of high costs and slow progress in securing offtake agreements, according to UK-based Aurora Energy Research.

Electrolysers are expected to make up more than 50% of the total hydrogen production by 2030, rising to 80% by 2040. However, expected installed electrolyser capacity in the EU of 35GW will fall way short of the targets set out under the EU’s Net Zero Industry Act and REPowerEU policies.

“This shortfall is attributed to high electrolysers’ capex, rising cost of capital and, and uncertainty in offtake agreements, delaying project investment decisions,” Aurora said in its Q2 2024 repot on the European hydrogen market.

“Further cooperation still remains a prerequisite for the realisation of national targets and the successful rollout of a future hydrogen market” Caglayan, Aurora

Doubts over the EU’s ability to meet its 2030 targets come despite 4% growth in the global electrolyser project pipeline over the last six months, with Europe leading the way. The global pipeline has grown by 55.2GW, with  Europe accounting for about 32% of total capacity under development, according to Aurora.

About 90% of projects are categorised as early stage, while approximately 130–140GWare at an advanced stage of development. The projects achieving FID amount to approximately 15GW, about 12% of the global operational or under-construction capacity. By region, Oceania is just behind Europe with a 21% share of projects in different operational or development stages, Aurora said in its report.

“The positive impact of clearer policy frameworks and support schemes is evident in electrolyser projects globally, with new projects as well as some of the existing ones reaching FID,” said Dilara Caglayan, research lead at Aurora. “However, further cooperation still remains a prerequisite for the realisation of national targets and the successful rollout of a future hydrogen market.”

Hydrogen production costs across European range from €4–20 /kg. The Nordics and Spain stand out by offering the most cost-effective hydrogen, Aurora said.

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Author: Stuart Penson