GH2 hurdle: electrolyzer costs have jumped 50 percent, warns BloombergNEF

Rising material costs have made electrolyzers more expensive, in turn making green hydrogen a more expensive proposition, BloombergNEF reports in its Electrolyzer Price Survey 2024 report, highlighting a trend that runs counter to its previous prediction of a gradual decline.

The agency notes that the cost of producing and installing electrolyzers in three of the world's biggest markets — China, the US and Europe — has jumped more than 50 percent. A survey of more than 50 companies, mostly located in the US, China and Europe, reveals that the capital cost of installing an electrolysis system has increased by a median of 57 percent since 2022.

The report notes that average system-level cost (including both stack and balance of plant) now stands at a mid-range of $600/kW for an electrolyzer in China, whereas systems built in Europe or the US cost four times as much at around $2,500/kW.

It cites inflation, which has pushed up the costs of materials, increasing utility costs (such as water and electricity) and higher labour costs in the US and Europe as the major culprits. Another reason is the delay in set-up of sanctioned projects, which has prevented manufactures from reaping benefits of economies of scale.

It notes that most large green hydrogen projects were pending a final investment decision in 2023. European developers were waiting for the results of the EU's first subsidy auctions, while US developers awaited final regulatory guidance from government authorities.