China is poised to maintain its lead in global electrolyser manufacturing, achieving a total capacity of 15 gigawatts (GW) by the end of 2023, which represents approximately 60% of the world's electrolyser capacity, according to a report released by the International Energy Agency (IEA). Projections indicate that by 2030, China's electrolyser capacity could expand to 50 GW, with 55% of this capacity already operational or having secured a final investment decision.
The rapid expansion of manufacturing capabilities is being driven by an increasing number of electrolytic hydrogen projects within China's domestic market. The IEA forecasts that the nation's installed electrolyser capacity will rise to 3.6 GW by the end of 2024, a significant increase from just 0.2 GW in 2022.
Currently, most of China's electrolyser manufacturing is focused on alkaline electrolysers. The growing market is attracting investments from various sectors, including solar companies such as Trina and Sungrow. Notably, electric vehicle manufacturer BYD has filed for patents related to electrolysers, signaling a potential entry into this burgeoning market.
In the IEA's Stated Policies Scenario (STEPS), annual production from Chinese facilities is expected to increase more than threefold to nearly 6 GW by 2035. Meanwhile, the Announced Pledges Scenario (APS) predicts production growth to over 40 GW. However, despite these increases, China's share of global production is projected to decline to around 60% by 2030, down from over 70% in 2023, with further decreases to approximately 50% by 2035 in the APS, as production capabilities in the United States and European Union are expected to ramp up.
The report further indicates that China is set to become the dominant exporter of electrolysers, potentially accounting for more than 95% of global exports by 2035 under the STEPS, primarily targeting markets in Central and South America, the Middle East, and other regions in Asia.
The IEA's Energy Technology Perspectives 2024 report also highlights that the cost of producing electrolysers in China will likely remain significantly lower than in other parts of the world. This is attributed to the country's reduced capital costs, extensive manufacturing capacity, and lower labour and energy expenses.
