BOSTON, May 17, 2024 /PRNewswire/ -- Green hydrogen
production utilizes four main electrolyzer technologies:
alkaline water electrolysis (AWE), proton exchange membrane (PEM),
anion exchange membrane (AEM), and solid oxide electrolyzers
(SOEC). Each technology has its own operational principles,
performance characteristics, and commercial maturity. These systems
integrate with the balance of plant (BOP) components, including
transformers, rectifiers, and purification systems, to produce
hydrogen at the right pressure and purity.
Electrolyzer OEMs have adopted various business strategies to
deploy their systems into commercial projects. This article shares
some of the research from the IDTechEx report "Green Hydrogen
Production & Electrolyzer Market 2024-2034: Technologies,
Players, Forecasts", highlighting some of the main business models
along with industry examples.
Licensing of electrolyzer stacks and use of system
integration partners
New OEMs often choose to license their technology to concentrate
on their core strengths – designing, enhancing, and manufacturing
electrolyzer stacks. This strategy allows them to expand without
the significant capital investment required to establish
international offices and integrate BOP and commissioning projects.
Licensing speeds up technology deployment and revenue generation
but comes with risks like potential IP mismanagement and quality
inconsistencies due to third-party integration.
Notable companies that license their stack technologies include
Ceres Power (SOEC), Hoeller Electrolyzer (PEMEL), PERIC (AWE), and Enapter (AEMEL). Enapter
exemplifies a relatively young company successfully adopting this
business model. By building a network of distribution partners and
system integrators, Enapter has managed to extend its reach quickly
beyond European markets, demonstrating the effectiveness of
licensing in facilitating rapid geographic and market
expansion.
Turnkey solution providers (stack + BOP)
This model involves the OEM supplying both the electrolyzer
stack and all necessary BOP components, often delivered in
containerized or skid-mounted systems. It appeals to clients
looking for a simplified procurement and installation process with
a single point of contact for the entire system. This approach can
significantly increase revenue per project and strengthen customer
relationships. However, it requires substantial investment in
design, assembly, and maintenance capabilities and carries risks
related to project execution failures and supply chain disruptions
related to the BOP.
A wide range of electrolyzer OEMs, including well-established
players such as Nel, Plug Power, thyssenkrupp nucera, and ITM
Power, opt for this approach as one of their revenue generation
strategies. While all types of electrolyzers can be configured into
turnkey systems, it is more common among PEM electrolyzer OEMs.
This preference is due to the superior dynamic ramping capabilities
of PEM systems, which are advantageous for renewable energy storage
and smaller, more modular applications like hydrogen refueling
stations. In contrast, AWE OEMs often provide more customized
systems that cater to specific client needs and larger-scale
applications.
Customized systems for projects
OEMs also provide customized systems where the electrolyzer
stack and BOP are designed to meet specific project requirements,
optimizing overall system efficiency and performance. This bespoke
approach caters to clients needing systems tailored to large-scale
industrial applications or integration with existing
infrastructure. However, customized systems require extensive
engineering expertise and manage complexities in project
development, potentially extending timelines.
Many of the same OEMs that provide turnkey solutions also offer
customized systems. These companies recognize the dual benefits of
being able to cater to a broader range of market needs – from
standardized turnkey solutions for quicker deployment to highly
customized systems that optimize performance for specific
applications. By offering both, these OEMs can accommodate a wider
array of client requirements, ensuring flexibility and adaptability
in their service offerings.
Consortium approaches in project development
Electrolyzer OEMs often participate in consortiums developing
projects. This involves multiple entities, including possibly
competing firms, collaborating to share the risks and rewards of
large-scale projects. This strategy allows for pooling of expertise
and financial resources, reducing the burden on any single company
and potentially allowing projects on a scale that would be
difficult to achieve alone. This is particularly suitable for large
complex projects with multiple end-users that are often aiming to
demonstrate a concept. The main disadvantages are potential
differences in corporate processes leading to slower
decision-making and complexities in aligning different technical
approaches.
In-house project development by electrolyzer OEMs
OEMs that develop projects on their own take full responsibility
for every aspect of the project. This includes technology
development and manufacturing, as well as contracting EPC
companies, securing long-term offtakers, financing the project, and
overseeing commissioning and operations. This model allows for
maximal control over the value chain, which can lead to higher
margins and a direct relationship with end-users. It is
particularly suited to large companies with robust financial
backing and extensive expertise across multiple domains. However,
the primary challenges include substantial capital requirements,
the management of various project elements, and the full assumption
of operational and market risks.
Plug Power is as a notable example of a pure-play hydrogen
equipment company that adopts this in-house project development
approach. The company is developing multiple liquid hydrogen
production sites across the US, managing all project elements from
production to the delivery of liquid hydrogen to its customers.
Despite its pioneering efforts, Plug Power is facing financial
challenges as it bears most of the project risks on its own. 2023
and 2024 financial reports indicate a significant increase in
quarterly losses amid a drop in revenue as the company awaits the
commissioning of several of its PEM electrolyzer systems and a new
pricing regime to take effect. These financial strains underscore
the inherent risks of this business model, especially when
transitioning to larger product scales and managing upfront costs.
Nevertheless, Plug Power expects to see an improvement in its
performance in the second half of 2024.
Technology-specific narratives and further insights
AEM electrolyzers, typically used in small-scale applications,
are less mature compared to PEM and AWE technologies, with
significant developments now pushing into medium-scale capacities.
PEM electrolyzers, recognized for their operational reliability,
are commonly deployed in applications ranging from small to medium
scales, with current project capacities under 50 MW. Though PEM
technology is mature, larger projects over 100 MW are still in the
development stages. Alkaline water electrolysis (AWE), the most
mature technology, is employed widely across small to large-scale
projects over 100 MW, including emerging GW-scale projects. Solid
oxide electrolyzers (SOEC), which operate at high temperatures, are
optimal for integration with industrial processes that can provide
necessary heat or steam, facilitating highly efficient operations
and allowing for innovative applications such as synthetic fuel
production by co-electrolysis of CO2 and
H2O.
The IDTechEx report "Green Hydrogen Production &
Electrolyzer Market 2024-2034: Technologies, Players, Forecasts"
provides further discussions and commercial examples of
electrolyzer firms' efforts. The report also provides 10-year
market forecasts in gigawatts (GW) of electrolyzer capacity and US$
billions (US$B) for the key electrolyzer technologies, discussion
of novel electrolysis technologies (e.g., seawater &
CO2 electrolysis), comprehensive analysis of
electrolyzer manufacturers by state of development and system
specifications, analysis of manufacturing capacities by technology
and region, green hydrogen project case studies as well as outlooks
on future electrolyzer technology adoption.
To find out more about this report, including downloadable
sample pages, please visit www.IDTechEx.com/Electrolyzer.
For the full portfolio of hydrogen market research from
IDTechEx, please see www.IDTechEx.com/Research/Hydrogen.
About IDTechEx:
IDTechEx provides trusted independent research on emerging
technologies and their markets. Since 1999, we have been
helping our clients to understand new technologies, their supply
chains, market requirements, opportunities and forecasts. For more
information, contact research@IDTechEx.com or
visit www.IDTechEx.com.
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