Siemens Energy AG is steeling itself for a potential glut of electrolyzer orders once the Biden administration makes up its mind on a clean hydrogen production standard, a move many US developers are waiting on before investing in hydrogen.
Already a month past deadline, the US Treasury Department is poised to release guidance expected to clarify which hydrogen projects meet the emissions criteria for federal tax credits. The guidance could spur a rush of new customers for the electrolyzers needed to produce green hydrogen, Siemens Energy North America President Rich Voorberg said in an interview.
"Suddenly the floodgates are going to open when the rules become real and we'll see who can make a business case and who can't," Voorberg said on the sidelines of the US Energy Department's hydrogen summit in Washington, DC. "If too many people figure out that, 'Hey, I can make a business case on it,' we're all going to get overwhelmed."
The comments came as Siemens Energy gets ready to bring a new Berlin electrolyzer factory online in November, starting at 1 GW of manufacturing capacity with the ability to ramp to 2-3 GW. Meanwhile, Siemens Energy CEO Christian Bruch has been hinting to the press about the possibility of a US electrolyzer manufacturing facility.
"My position is [that] I want to see how Berlin goes, and I also want to see how the market develops," Voorberg said of the potential US site. "I want to make sure they shake out any problems — any new line's going to have problems — so let's make sure it's working, and let's copy and paste it into the US."
The US enacted clean hydrogen production subsidies in 2022 through the Inflation Reduction Act, authorizing tax credits worth up to $3 per kilogram. The program, called 45V, opened a new market in North America for the electrolyzers used to produce zero-emissions hydrogen from electricity and water. But of the dozens of hydrogen projects announced in the US, few have secured capital commitments as investors await assurance on which production methods will be eligible for the lucrative subsidy.
The Treasury Department had a deadline of Aug. 16 to release its 45V tax credit guidance but has yet to do so. Some industry watchers are not expecting the rules until November or December.
"I think clarity will be this quarter," Voorberg said. "Clarity enough for people to go, 'OK, now I'm really serious about this.'"
Electrolyzer demand may come gradually as early-stage developers await the results of front-end engineering design (FEED) studies before ordering equipment, Voorberg said. But "if somebody that sits over here at pre-FEED study says, 'Man, I'm going to lose my spot in line. I'm just going to start buying electrolyzers because they're modular and cookie-cutter enough; I think my project works' — that could really start overloading us."
With too much demand, Voorberg said Siemens Energy risks "disappointing customers" and running short of raw materials, including iridium and platinum.
The German technology manufacturer recently took a €2.2 billion hit after disclosing technical and operational problems in its wind turbine unit, Siemens Gamesa Renewable Energy SA. The failures affected about 4% of the subsidiary's overall wind fleet.
Voorberg did not discount that the wind manufacturing sector's underlying problems — too many factories and a rush to prove out the technology — could befall the more nascent electrolyzer market. "If we don't have discipline as an industry, yes," Voorberg said. "We've just got to step back and look at what the adjacent industries have done."
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