The European Commission has raised an example which outlines what the 25% cap on electrolyzer components really means, and it seems to imply the constraint is harsher than many previously thought.
If a 100 MW project is formed of ten stacks worth 10 MW each, and three of those stacks contain either cells or surface treatments originating from China, or have either been assembled in China, the project won’t be eligible for any auctions. These constraints do however discount any balance of plant equipment.
Projects nowadays are far from the 100 MW mark so the implications can be a bit different for smaller projects. We are deeming the regulation to be harsher than originally interpreted because the clarification essentially says that if any part of your stack has something to do with China, then your project won’t count for subsidies.
This could also mean that OEMs can start making two out of ten stacks in China and reduce costs that way. If 20% of the production line is at a lower cost, then the overall project cost is still somewhat reduced. Even if the Chinese line sits at half the cost of the European line let’s say, then the overall project cost will only be alleviated by 10% compared to a fully European line.
Electrolyzer OEMs are still waiting for more specific clarifications from the European Commission, as is the case with HydrogenPro who publicly stated that in spite of having a 500 MW assembly line in China, it won’t suffer much from the regulations. As it happens, according to its CEO, 70% of its projects are not subsidy dependent.
With Europe planning to import 10 Mtons of green hydrogen from 2030 from destinations like Canada, North Africa, and the Middle East, electrolyzer OEMs with Chinese supply chains might shift focus on to these projects and still benefit from the offtake. We have already seen Chinese OEMs get involved in some of those African projects.
ITM Power and Nel have also raised the point that it is not realistic for developers to use multiple electrolyzer brands for one single project which means project expansion will somewhat be guaranteed for the original project supplier if the case allows it, and subsequent players undercutting on price won’t be much of a threat whether they have Chinese supply chains or not.
In other hydrogen news
Electric Hydrogen will supply 200 MW of PEM electrolyzers for Uniper’s Wilhelmshaven green hydrogen project in Germany. This marks Electric Hydrogen’s European market debut. The project will deploy 1 GW of electrolyzers to produce 300,000 tons of hydrogen annually, contributing 10-20% of Germany’s 2030 hydrogen demand.
A consortium of developers and state agencies in Malaysia has announced plans to build a 10 GW green hydrogen hub in Sabah, located on the northern tip of Borneo. Led by property developer LBS, the project will include an electrolyzer facility capable of producing 250,000 tons of hydrogen annually, along with a co-located green industrial park. The site, covering 15,000 to 30,000 acres in Kota Marudu, benefits from high solar irradiance and consistent wind speeds, making it ideal for renewable energy production. However, no timeline, cost estimate, or details on the target industries for hydrogen supply have been provided yet.
Fusion Fuel, a green hydrogen company based in Portugal, has filed for insolvency for its subsidiary after a private investor, Hydrogenial, failed to provide a promised $33.5 million in funding. The funding was supposed to come from the purchase of shares and warrants but was not delivered by the agreed deadline of 25 October. This failure has forced Fusion Fuel to file for insolvency for its Portuguese operations, which were crucial to the company’s projects. This includes the H2Evora project, a 630 MW green hydrogen initiative in Sines, Portugal, which had received EU state aid approval. Additionally, the company faces potential delisting from the Nasdaq due to failing to meet the minimum equity requirement.
Tata Steel has formed a partnership with Ecolog, the Port of Amsterdam, and Gen2 Energy to create a corridor for importing liquid hydrogen produced in Norway to the Netherlands for use in green steelmaking. Gen2 Energy is developing several green hydrogen projects in Norway, with operations expected to begin in 2027. Ecolog will transport the hydrogen as a liquid and re-gasify it at a planned terminal in Amsterdam. Additionally, Tata Steel will ship CO2 emissions for subsea storage in Norway. However, no commitments have been made regarding hydrogen or CO2 volumes.
Air Products and Qair are set to receive land at the Port of Le Havre, France, for renewable hydrogen projects. Air Products will invest €1.1bn to build a renewable hydrogen import hub, primarily using ammonia, which will be re-converted into hydrogen. Qair is committing €500m for an e-methanol plant to produce 200,000 tons of e-methanol from renewable hydrogen, aimed at hard-to-abate industries and maritime transport. Both projects benefit from accelerated approval procedures, grid connections, and aid from Haropa Port.