Green hydrogen costs depend on much more than electrolyser stacks, and China’s approach offers important lessons for reducing total plant costs.
The need to reduce costs beyond the stack: lessons learned from China.
It has been clear for some time now that, to build a complete green hydrogen plant, you need much more than just a good stack. You need a balance of system (purifiers, separators, transformers, rectifiers), a balance of plant (compressors, water treatment systems, cooling systems, substations) and EPC/EPCM works (permitting, construction, civil works and infrastructure).
According to the recent World Bank report on electrolysers, from which the graph is taken, these costs could be up to four times higher in Europe than in China: from 250 €/kW to 1,000 €/kW!
There are many explanations for this, but I would highlight two main ones: (1) R&D investments together with large manufacturing capacities, and (2) a different approach to risk management and a willingness to make great things.
(1) Balance of system and balance of plant are made up of components that Chinese companies have been producing for some time now. Separators, purifiers, power electronics, cooling systems and compressors are pieces of equipment that Chinese manufacturers have been optimising for decades, with high R&D investment helping them not only to produce cheap equipment, but also robust and durable equipment. In addition, they have developed the manufacturing capacities needed to further optimise their production costs.
(2) Chinese policies and the engineering mentality of recent decades have created a culture in which everything seems possible, helping to minimise risks when new challenges arise and, therefore, to overcome them. In addition, they have taken advantage of the need of Western companies to move to China to reduce their manufacturing costs, creating joint ventures and working closely with local authorities to become not only the factory of the world, but also a place to make new and great things happen.
Highly efficient technologies are key for everyone to produce cost-competitive hydrogen, and this is still where Europe has an advantage over Chinese technology. At Electrogenos, we show how we can even beat Chinese companies in price per kg/h thanks to our highly efficient technology. However, if we do not manage to reduce the rest of the costs involved in the construction of our hydrogen plants, we will lose this competitive advantage.
Source: Carlos Bernuy-Lopez (LinkedIn)
