Decarbonisation is now at the forefront of the post-Covid policy agenda of most EU countries. Suppliers and technologies are positioning to take their place in a sustainable future. Hydrogen is acknowledged to both enable wider base renewables penetration and accelerate their penetration into harder to reach energy applications, including long haul-transport, aviation, industry, heating etc. National hydrogen strategies are becoming the norm and it is expected that migration from demonstration to roll-out for the hydrogen sector. Given this momentum, electrolyser OEMs must rapidly scale their systems.
Historically, electrolyser OEMs have delivered complete integrated systems. These containerised systems offer minimised footprint, optimised utility integration and reduced installation costs.
The future looks completely different, so what is changing?
The EU has set a goal of 40GW of electrolysis to be in place by 2030. This represents 45% of the IEA’s global forecast of hydrogen produced from renewable power. European countries are setting their own targets as well which makes the 40GW goal look achievable – in terms of projects in construction by 2030 at least.
The mature alkaline technology is seen as bankable at scale today, but with Air Liquide’s 20MW Hydrogenics supplied Bécancour Québec facility inaugurated in January, Shell’s REFHYNE in July and Linde’s Leuna plant due onstream soon, both the latter supplied by ITM, PEM is beginning to bridge the financial gap.
Historically, most engineering, procurement and construction (EPC) companies have observed electrolysis development from the wings until the right time. Now they are coming to the market offering their traditional gas management and utility services for projects which are at such a scale that their skills and expertise eclipse those within many of the electrolyser companies. The integration opportunities within the balance-of-plant (BoP) of a scaled-up electrolysis system are significant. Instead of BoPs servicing small numbers of stacks we are seeing them service multiple mega-Watt modules, which can then be repeated as required. The development of these large scale modules will allow replication, thereby reducing engineering costs, whilst simultaneously optimising component costs. EPCs have a key role and a set of core competencies to bring to the electrolysis value chain. Today we already see electrolysis teams in many EPCs, gearing up their market knowledge and forming commercial arrangements with the larger electrolyser companies.
The PEM electrolyser companies have focussed on the BoP elements of their systems to ensure proven robust operation at small scale. Interfacing with external companies when a full understanding of the system process is required is unattractive. However, once this is fully understood and systems emerge from their containerised straitjackets, handing responsibility for the optimisation of large-scale BoPs should come as something of a relief. Volume production in ‘giga-Watt’ factories is beginning. This will allow volume cost optimisation on the stacks. As demand ramps up stacks are likely to become the attention grabber for the main electrolysis OEMs. They can repeat manufacture the same unit, something which has not yet been possible within the demonstration phase of hydrogen. As such, profitability of the stack is still likely to be higher than that of a complete, smaller containerised system, even though there will be future market price pressure.
As an alternative to EPCs, over the last two decades a group of companies have emerged who are extremely hydrogen competent. They have turned their hands to fuelling stations, storage systems, and the combination of multiple equipment packages to form single integrated operating systems. Mostly, this has been via contracts from larger organisations but occasionally they have made the step to enter the market under their own brand. These companies are now beginning to emerge as potential alternative providers of containerised hydrogen electrolyser systems. Like EPCs they have wide ranging hydrogen engineering expertise, but in this instance, it has tended to be deployed at a different scale i.e. for skid or containerised systems. Providing they have access to stacks, and there are some electrolyser companies who are willing to sell individual units, they have the in-house capability of delivering containerised electrolysis systems.
Expect new names to begin emerging within the coming months!