Electrolyzer Efficiency Is Almost Irrelevant When Power and Capital Costs Dominate Economics

Key Points

New entrants into the electrolyzer industry could not be timing things any worse. No one can provide breakthrough technology that would make a difference today based on most electric power options.
Niche technologies like Utility Global are opportunities only in certain situations, and no bio-based routes to hydrogen are on the radar. Capital costs are more likely to drive electrolyzer preferences than efficiency.
Efficiency matters when power costs are high, but no one can afford hydrogen when power costs are high, so efficiency is largely irrelevant. Those funding electrolyzer start-ups today are likely wasting money.
We expect the industry to consolidate, in a very ugly way, and a few large platforms survive, most likely owned by large equipment companies with balance sheet strength; some incremental technology may be valuable.
Otherwise, we show three new projects, competing to see who can be the least economical! We look again at Air Products hydrogen/ammonia portfolios and the perils of the battery markets today.

Exhibit 1: The power consumption is the overwhelming operating cost unless power is close to free.