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6 January 2022

Electrolyzer Gigafactory pipeline swells with Cummins-Sinopec deal

US engines giant Cummins is continuing its push towards the hydrogen market, this week forming a joint venture with China’s state-owned oil major Sinopec to develop an electrolyzer Gigafactory in the southern province of Guangdong.

Following a surge of announcements over the past 18 months, projected manufacturing capacity is fast approaching what is needed to meet the green hydrogen production targets of 2030. As electrolyzers become commoditized, the technology will mimic the solar sector as it smashes past expectation through the drive to net zero.

The new joint venture, named Cummins Enze, will build a 1 GW factory to manufacture PEM electrolyzers in the city of Foshan. The $47 million plant will have an initial production capacity of 500 MW upon completion in 2023, rising to 1 GW when fully developed in 2028.

For Cummins, the deal reinforces its commitment to the nascent hydrogen economy. Having acquired electrolyzer manufacturer Hydrogenics in 2019, the company will now aim to push its PEM technology into China, where domestic players have been focusing on alternative AEM electrolyzer technologies.

The debate between PEM electrolyzers – proton exchange or polymer electrolyte membranes – and anion exchange membrane (AEM) electrolyzers remains ongoing. AEM electrolyzers are largely preferred on a material basis; their components are made of lower-cost and less corrosive materials. PEM electrolyzers, however, are a newer technology and potentially offer a higher efficiency and may offer a more cost-effective way of producing hydrogen when powered by the variable output from wind or solar projects.

China currently has many manufacturers focusing on the development of AEM electrolyzers, including Peric, Suzhou Jingli, and Shandong Saikesaisi. However, these have so far struggled to undercut the cost of western PEM electrolyzers. Officials in Beijing are aiming to address this through a national-level program to develop a competitive PEM supply chain. It seems that Sinopec will be central to this.

The country is currently the world’s largest producer of hydrogen, producing around 22 million tons – 30% of the global total – using it primarily as a raw material to produce plastics or chemicals, and producing most of it using unabated coal as a feedstock. Sinopec is responsible for 11% of China’s total production, with a capacity to produce 3.9 million tons of grey hydrogen per year, which it largely uses in its refineries and petrochemical facilities.

The company also has plans to build 1,000 hydrogen refueling stations during the 14th Five-Year Plan period to 2025 and has three more green hydrogen projects in its pipeline: two in Inner Mongolia; and one with an offshore wind farm off the coast of Fujian. It hopes to become China’s largest hydrogen energy company, aiming to produce of one million tons of green hydrogen per year between 2021 and 2025.

At the start of December, Sinopec announced that it had broken ground on a $470 million green hydrogen plant, powered by solar power, which should be the largest of its type in the world when it comes online in 2023 in the west of Xinjiang province.

Cummins has been similarly ambitious since its acquisition of Hydrogenics. Along with the Gigafactory announced this week, it also has plans in place for another in Spain in partnership with Iberdrola. With an initial 500 MW chunk coming online in 2023, it is likely to scale up operations at a similar rate at both factories.

These two projects are now among many.

The UK’s ITM Power has plans to develop up to 5 GW of production capacity by adding a further 1.5 GW chunk to its existing 1 GW per year facility at Bessemer Park, UK, by 2023. This hopes to lay the foundation for a further 2.5 GW per year at an international facility, which it hopes to have operating by the end of 2024.

In January last year, Norway’s Nel outlined plans to cut the cost of its electrolyzers by 75% in a new 2 GW factory from around 2025, after completing its 500 MW AEM production line in Heroya, Norway.

Belgian engineering conglomerate John Cockerill has also filed applications to develop a Gigafactory in the Haut-Rhine region of France by 2030, with an initial stage of 200 MW set to enter construction in the coming months. This is one of three gigafactories at various stages of development in France, with a second being developed by McPhy in Belfort in conjunction with Ohmium, with production set to start in 2024. A third is being developed by Genvia for Solid Oxide Electrolyzers (SOEs) in Beziers.

For SOEs, a third chemistry which uses solid ceramic electrolytes, Haldor Topsoe is also investing in a manufacturing facility with a total capacity of 500 MW per year from 2023, with the option to expand to 5 GW per year.

In India, Reliance Industries has tapped Stiesdal PtX Technologies to develop its HydroGen electrolyzers at a Gigafactory in Gujurat state on an unspecified timeline. Start-up Ohmium International also announced plans for the Bengaluru plant in the country, which will have an initial manufacturing capacity of 500 MW per year, before being ramped up to 2 GW in the long term.

In South Korea, US-based manufacturer Plug Power has signed a JV with SK Group to build a Gigafactory for electrolyzers and fuel cells in a key metropolitan area by 2024, building on Plug’s plans for a 1 GW plant in New York state, and another 2 GW factory in Queensland, Australia, with Fortescue Future Industries.

Green Hydrogen Systems in Denmark is also planning to use partnerships with the likes of Orsted to scale its existing 75 MW per year facility into a Gigafactory.

Germany manufacturer Thyssenkrupp has also announced plans to use highly automated processes to expand its existing 1 GW production capacity across multiple sites, to 5 GW in the long term, although it has not yet unveiled any specific gigafactory locations.

Modular AEM start-up Enapter, while only producing 2.5 MW of electrolyzers per year at its facility in Pisa, Italy, has also broken ground on an automated facility in Germany, and will have massive potential for expansion once up and running in 2023. The company’s Chief of Strategy has suggested that the location could be at 5 GW of production capacity by 2025 through the addition of more production lines.

Hero Future Energies (HFE) this week also announced a strategic partnership with Ohmium to develop PEM factories amounting to 1 GW of annual production capacity across India, the UK and Europe.

In total, these facilities – all of which have been announced since July 2019 – could amount to over 35 GW of electrolyzer production capacity before the end of the decade.

ITM Power managed to get its Gigafactory operational just 18 months after it was announced. With the project pipeline for green hydrogen production growing at an astounding rate, the true figure by 2030 is likely to be well in excess of 100 GW. If electrolyzer manufacturers can match the learning rate of the solar sector, units will fall in cost by 23% every time the installed capacity doubles from the current total of just 300 MW. This optimistic scenario for expansion would see the cost of electrolyzers fall by more than 95%, with global electrolysis capacity topping 250 GW by the end of the decade.