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Metacon enters agreement with PERIC to build an electrolysis gigafactory

Metacon AB entered into an OEM license and manufacturing agreement with PERIC Hydrogen Technologies Co., Ltd. It is the first time in PERIC’s over 60-year long history that a similar agreement is made. The agreement gives Metacon an exclusive right for a large number of countries in Europe to manufacture complete H2 Generation Systems (HGS) based on PERIC’s world-leading technology for pressurized alkaline electrolysis modules (stacks).

Metacon is investigating the conditions and financing possibilities for building a factory in Sweden or in another country within the EU. Under the right conditions, this could be the first factory of its kind in Sweden and within a few years one of the largest in Europe. Metacon is initially planning for a production volume of up to 0.5 GW/yr, which corresponds to 50 – 100 complete electrolysis plants based on 5 MW and 10 MW electrolysis modules, respectively. In the next step, it is planned to be able to scale up to a capacity of 1 GW/yr and more. Metacon will evaluate different forms of financing for the new factory including national and EU support programs.

The agreement provides a unique opportunity for Metacon to manufacture, quality assure and sell its own electrolysis plants based on large, pressurized electrolysis modules, which is what is frequently in demand by the market, especially in the industrial sector. The ability to meet current and future market needs in Europe with local manufacturing as well as manufacturing under European standards and quality assurance is one of the driving factors behind the investment. PERIC belongs to a very small group of companies in the world that over many years have built up the technology and industrial capability to be able to deliver larger volumes of large electrolyzer systems and electrolysis modules for the rapidly emerging needs for fossil-free green H2. PERIC’s 5-MW electrolysis module has more than 10 years of operating data to rely on, which is one of the longest in the world for this size and makes it perhaps the most proven large-scale pressurized electrolysis module available.

PERIC has also launched a 10-MW electrolysis module, which is the largest in the world today. This is a significant competitive advantage, especially to customers with very large production needs, such as in the markets for fossil-free steel, green fertilizers, green ammonia and electro fuels, as large economies of scale can be achieved. For example, this means that a 500-MW electrolysis plant can be built with 50 10-MW electrolysis modules instead of 100 5-MW modules. The importance of reducing the complexity of the plant becomes evident when you consider that a 5-MW electrolysis module weighs just over 50 tons and a 10-MW module just over 70 tons. The electrolysis modules are also uniquely designed to work together with irregular electricity production from renewable energy sources such as wind and solar power.

Through the agreement, Metacon will be able to build its own electrolysis plants under its own name and brand, initially with certain components from PERIC, including the electrolysis modules (stacks), which in a complete electrolysis plant are supplemented with Metacon’s own produced or purchased components. Metacon will carry out the adaptations necessary to meet all European requirements and manufacturing standards and ensure that large parts of the electrolysis plants can be built with local components, maximizing sustainability and providing a stronger offering to the European market. The collaboration with PERIC and the ability to purchase core components from PERIC gives Metacon the conditions to quickly get started with manufacturing with, in this context, limited initial investments.

This agreement, which has been negotiated between the parties over a longer time period, gives Metacon similar rights for the European market that are currently being discussed with PERIC during the MoU announced on November 23 regarding an OEM license to PERIC for the manufacture and sale of Metacon’s reformer-based H2 generators (HHG system) for the Chinese market. Together, these agreements will create the conditions for a strong and long-term cooperation and incentives for both companies to market and sell each other’s products in their respective home markets.

The agreement complements Metacon’s strategy, which aims to create a unique and world-leading technology portfolio of own products for all significant ways to produce fossil-free green H2, including reforming, where we already own and develop other products for the production of the same green H2 independent of the electricity grid. Given the global context and importance that electrolysis has for large-scale industrial projects, the European market thus gains access to another local manufacturer and supplier of electrolyzer plants and will position Metacon next to large and well-known European companies in the industry.

The market for electrolyzer plants is expected to grow dramatically in the next few years and, according to the International Energy Agency (IEA), in order to achieve the greenhouse gas emission targets under the Net Zero Scenario, 2021–2030, the annual production of electrolyzer plants in the world must increase from today’s approximately 11 GW to 184 GW for the year 2030. According to the IEA, today’s manufacturing capacity of about 4 GW per year in Europe is expected to increase to about 25 GW/yr by 2030, which based on the EU countries’ national H2 plans of an estimated need of 40 GW, is estimated to be far below the need for electrolyzer plants. The Swedish investments in green steel, green fertilizers and electro fuels alone have a planned capacity requirement that amounts to a large proportion of the world’s current total production capacity. As this supply-demand gap continues to grow rapidly and is expected to do so in the long term, the need for electrolyzer plants will be far greater than the total manufacturing capacity.

Converted to a theoretical number of 5 MW of plants, approximately 8,000 electrolyzer plants need to be manufactured per year to meet the 2030 targets in the European H2 strategies (approximately 40 GW/yr). With a current price of approximately SEK 40 – 50 million per 5 MW production facility depending on configuration, the forecasted addressable market value amounts to around SEK 400 billion for 2030. If Metacon can achieve a production level of 1 GW in 4-5 years’ time, it means that Metacon can build 100-200 electrolysis plants per year depending on size, which at that time should correspond to 1.5%–3% of the addressable European market.

Exploratory talks have been made with major stakeholders who have been positive about buying Swedish or European made electrolyzer plants. Metacon will evaluate the possibility of obtaining financing through national and EU support programs and will also evaluate additional forms of financing for the construction of the new manufacturing plant.

In addition to its own production, Metacon will continue to be a reseller of PERIC’s own electrolysis systems on the European market, ensuring continued deliveries without interruption and flexibility towards customer preferences.

The work that is now being initiated involves investigating the conditions in detail and developing plans to be able to start production. This means, among other things, site selection and finding a suitable factory premises or land for establishment, access to labor and access to good communications, logistics and maritime transport, as well as the opportunity to expand.