Posted on 05 Nov 2024
China is set to become the major global supplier of electrolysers by 2030-2035, thanks to the low cost of making electrolysers in the country, the International Energy Agency (IEA) says in a new report.
Under IEA’s Stated Policies Scenario (STEPS), the Asian country is projected to account for over 95% of global electrolysers exports in 2035, primarily serving Central and South America, the Middle East and other Asian countries. The IEA says that over 75% of the electrolysers made in the country will be exported by 2035, Kallanish Power Materials noted.
“China’s exports of electrolysers are currently minimal, but the country is set to emerge as a major supplier to the global market over the next decade,” the report notes.
The Chinese share of total exports is expected to increase much faster under the Announced Pledges Scenario (APS), crossing 95% in 2030. However, under this scenario, the country’s share of exports in production would decline to around 40% by 2035 from around 75% in 2030, with other regions ramping up production to meet domestic demand.
That said, the IEA expects the cost of manufacturing electrolysers to remain “significantly lower” in China compared to the rest of the world under both scenarios.
“Costs remain highly competitive in both scenarios thanks to the lower capital cost, the country’s large existing manufacturing capacity and economies of scale, and lower labour and energy costs,” the report adds.
The average levelised cost of production in China will be 40% cheaper than those manufactured in Europe in 2030, and 25% lower than in the US. “Factoring in tariffs and NTMs [non-tariff measures], the weighted average import price of Chinese electrolysers is around 5-40% less than domestically produced ones in many countries.”
China, which currently leads global electrolyser manufacturing, accounted for 60% of the worldwide electrolyser manufacturing capacity at the end of last year, with around 15 gigawatts (GW) of installed production capacity.
Based on the announced projects, the total capacity in China could reach 50 GW by decade-end, of which 55% is either already operational or has reached the final investment decision (FID). The increasing pipeline of electrolytic hydrogen projects is the primary driver behind this expansion, the IEA adds.
“Annual manufacturing output from Chinese facilities rises more than threefold to almost 6 GW in 2035 in the STEPS and to more than 40 GW in the APS, driven mainly by strong domestic demand,” the report adds. “In both the STEPS and the APS, China’s share of global production declines to around 60% in 2030, from over 70% in 2023, and further declines to around 50% in 2035 in the APS.”
Source:Kallanish
