European electrolyzer project proposals are not far off the EU's target of 6 GW of capacity by 2024, which would be able to produce up to 1 million mt/year of renewable hydrogen, according to data from S&P Global Platts Analytics.
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Proposed electrolyzer projects due online by 2024 in the EU amounted to 5.2 GW at the start of July, according to the Platts Analytics Hydrogen Production Database.
There is a larger shortfall between the EU's 2030 target of 40 GW of installed electrolyzer capacity and the 22 GW of announced proposals, though the more distant time horizon gives plenty of scope for an acceleration in project developments in the meantime.
Platts Analytics noted a rapid acceleration in project announcements in the last 12 months.
"Driven by increasing governmental support, the announced production capacity for clean hydrogen continues to grow, with new large-scale projects being announced regularly," the Hydrogen Council's executive director Daryl Wilson told S&P Global Platts by email July 5.
The dataset includes announced and operational electrolyzer plants powered by renewable electricity, though for some proposals the power source is not known. The EU target is for green hydrogen, produced from renewables.
Gains in Spain
Much of the announced capacity scheduled to come online by 2024 is planned in Spain, accounting for over 2.2 GW.
While projects in Denmark, the Netherlands and Spain have made early leads towards 2030 national and EU targets, there is still a long way to go before installations of the scale needed to meet these targets materialize.
"While the future of the European hydrogen economy remains dynamic, clear trends are emerging," Platts Analytics' lead analyst for European gas, Adrian Dorsch, said. "The Netherlands with its industrial clusters as well as renewable power and carbon capture storage capacity is set to be a front runner in the hydrogen space."
The Hydrogen Production Database shows Greece leading the way by 2030 with its giant White Dragon proposal of around 5 GW. Proposals in the Netherlands are near the upper bound of the country's target of 3-4 GW, and Spain is also approaching 4 GW.
Countries with more ambitious targets such as France (6.5 GW), Germany (5 GW) and Italy (5 GW) have much further to go, and less to show for it in terms of concrete announced projects.
Germany has pledged Eur9 billion ($10.8 billion) to develop renewable hydrogen, with Eur2 billion allocated for international partnerships. It is targeting 5 GW of electrolysis capacity by 2030, with 2 GW reserved for the transport sector, and a further 5 GW installed by 2040 at the latest.
Industry body Hydrogen Europe is confident the EU will meet its 2024 target, the group's head of policy, Constantine Levoyannis, said in May, citing data from the European Clean Hydrogen Alliance.
"Looking at the projects that have been submitted in this process, we're very close to hitting that 6-GW target already," Levoyannis said at the Reuters Hydrogen 2021 conference.
The EU set up the alliance under the auspices of the European Commission, with the aim of developing a pipeline of projects to meet the 6-GW target. The EC sees many projects coming online by 2025.
"We are seeing a significant interest in the deployment of hydrogen in Europe," a Commission source said June 29. The ECHA has collected over 1,000 projects, most of which will be rolled out in the next three to four years, the source said.
"These include projects for the production of almost 9 million mt of hydrogen by 2030," the source added. The EU's 2030 target is to produce up to 10 million mt/year by that date.
Consortiums bring scale
The headline capacity announcements are comprised of hundreds of individual projects, with a few gigawatt-scale plants adding to many more small-scale facilities. The top 10 projects by size account for over half the almost 22 GW of capacity announced for Europe by 2030.
Larger projects, such as the 1-GW SeaH2Land project in Northwest Europe, are often developed by a consortium of companies covering a significant portion of the renewable hydrogen value chain. SeaH2Land is backed by Orsted, Yara, ArcelorMittal, Dow and the Zeeland Refinery.
Projects of this scale typically plan to come online in stages, ramping up production over a number of years. Smaller projects also will start with a pilot phase in the single-digit or tens of megawatts, before increasing production.
Platts Analytics said electrolysis manufacturing capacity was the bottleneck in ramping up production, but said global capacity was adequate to meet the European targets.
Many of the projects in the database have not reached a final investment decision or secured offtake agreements, highlighting the degree of uncertainty there is in the rapidly expanding sector. Financing is key at this early stage of developing the renewable hydrogen market, and many projects are focused on clearing state aid hurdles to access EU funding.
UK-based electrolyzer manufacturer ITM Power said earlier in June that post-coronavirus pandemic economic support funds combining recovery packages with environmental measures boded well for the sector's growth prospects.
Hydrogen Europe's Levoyannis warned, however, that national governments needed to remove regulatory barriers and red tape if the sector was to thrive. He said strict "additionality" requirements -- whereby green generation used for electrolyzer projects must add to existing capacity -- and project construction rules requiring electrolyzers and associated renewables capacity to be built within 12 months of each other hindered development.
Levoyannis said three areas would be critical for financing hydrogen projects in Europe: the EU's taxonomy governing which projects were eligible for sustainable investment; EU funding programs, such as the recovery and resilience fund; and dedicated state aid guidelines for promoting hydrogen technologies.
RWE Generation's head of hydrogen strategy, Sebastian Vogel, said the company had finance available for further electrolyzer projects if needed, but more clarity was needed from regulators to support demand and give certainty to planning decisions.
"We really need to move fast to make it for 2024 and 2030, so we need planning reliability," he said. "We need stability regarding the framework and then the gigawatts will also come, but we should not waste any more time."
European hydrogen policies
Source: S&P Global Platts
Additional reporting by Camilla Naschert, S&P Global Market Intelligence