In our latest report, we look at what’s giving China its competitive edge in the production and export of electrolyser technology.

China has established itself as a key player in the global electrolyser market leveraging its mature manufacturing capabilities of alkaline (ALK) water electrolysis technology. With manufacturing automation further ahead than anywhere else in the world, China’s GW-scale ALK capacities stem from around 40 years of experience in the chloralkali electrolyser industry. It’s this experience and longevity that has allowed China to build a vertically integrated supply chain, resulting in cost savings few other countries can match.

Chinese solar and wind equipment manufacturers are looking to expand their business into electrolysers as a way of diversifying their product offerings. These new entrants are reshaping the existing electrolyser market, with fast capacity deployment, fully automated production processes and lessons learned from the renewables sector.

At present, it’s a different story for China’s proton exchange membrane (PEM) technology which lags Western PEM in membrane technology and remains in the initial stages of MW-scale manufacturing. However, with its production capacity and strategic cost advantages, China holds a strong position for future growth.

A dominant production capacity

China currently houses roughly 60% of the world’s electrolyser manufacturing capacity and is expected to retain this position by erecting most of the new-build capacity over the next few years. High manufacturing production capacity means Chinese electrolyser equipment can significantly cut project costs, which has intrigued European project developers and concerned European OEMs.

Chinese pressurised alkaline (ALK(P)) technology is projected to deliver around 45% total investment cost savings for projects in Germany by 2030. It has a competitive edge due to its extensive manufacturing base and numerous operational projects, which provide valuable feedback for Original Equipment Manufacturers (OEMs). Most global projects taking FID in the next few years will target ALK(P) technologies near-term, giving China the global advantage for supply through to 2030.

The European Hydrogen Backbone Initiative Infrastructure Maps Update for September