Latest technology costs for developing hydrogen energy in Europe in 2026
- 逸风 黄
- Jan 30
- 6 min read
This article describes the capital cost structure associated with electrolyzer projects and then discusses the costs of renewable hydrogen production systems and projects.
I. Capital Expenditures for Electrolytic Cell Projects
1. Cost of electrolytic cell stack
Commercial electrolyzers are not sold off-the-shelf, and manufacturers do not publish catalog prices for their electrolyzer stacks. The European Hydrogen Watch has published cost data collected from the proton exchange membrane and alkaline electrolyzer industry deployed in Europe. The survey found that the average cost of an alkaline electrolyzer is €323.4 per kilowatt , while that of a proton exchange membrane electrolyzer is €563 per kilowatt .
Electrolyzer stacks, as the core component of electrolyzer systems, have received considerable attention in modeling their cost reduction potential. A 2024 study estimated that by 2030, the manufacturing cost of future stacks could decrease from €242-388 per kW for alkaline systems and €384-1071 per kW for proton exchange membrane (PEM) stacks to €52-79 per kW and €62-234 per kW, respectively . The U.S. National Renewable Energy Laboratory analyzed the cost reduction potential of electrolyzer systems, focusing on the cost reduction of PEM stacks, and concluded that if all cost reduction strategies are implemented, the cost could potentially decrease from $316 per kW to $31 per kW by 2030. However, whether original equipment manufacturers (OEMs) can achieve these figures still largely depends on the economies of scale driven by the deployment of higher installed capacity.
2. Cost of the electrolytic cell system
The total cost of an electrolyzer system consists of the electrolyzer stack and the base plant (BOP) system, which includes all auxiliary equipment. The aforementioned survey by the European Hydrogen Observatory noted that the capital expenditure cost for an alkaline system is €1016 per kilowatt , and for a proton exchange membrane system, it is €1209 per kilowatt .
As a key technology for green hydrogen production, the development of electrolyzers has been hampered by a lack of detailed data, especially in niche markets. A paper addresses this gap by presenting a novel European dataset containing 165 electrolyzer projects from 2005 to 2031, providing complete information on capacity, investment costs, and other key factors. Analysis of this dataset reveals positive learning effects for certain types of electrolyzers, with cost reductions driven by economies of scale and technological advancements. The paper also estimates that achieving the EU's 2030 targets will require substantial investment, including approximately €2.3 billion annually over the next six years.
3. Cost range for deploying electrolytic cell projects
A 2024 cost analysis study based on projects funded by the Netherlands' Sustainable Energy Production and Climate Transition Incentives Program showed that capital expenditures for complete 100MW and 200MW projects ranged from over €3,050 to €2,630 per kW . According to a TNO report, projects reported that 20%–45% of this capital expenditure was allocated to the electrolyzer stack, 15%–40% to BOP system components, and the remainder to hydrogen compressors, contingency costs, or other indirect costs borne by the project owner, as shown in Figure 1. A 2024 survey by Bloomberg New Energy Finance on electrolyzer costs confirmed that European and American manufacturers were within this cost range, while Asian systems cost only one-fourth to one-sixth of that . The International Energy Agency also provided an estimate of electrolyzer costs, at least $1,700–$2,000 per kW ( including stack, BOP system, and engineering, procurement, and construction costs), with European projects potentially costing even more.
Despite projected cost reductions year by year, the latest available data shows that the cost of installing electrolyzer projects in Europe is higher than analysts' expectations. This is true for both proton exchange membrane and alkaline technologies. According to analyses from multiple institutions, this trend is due to:
Previous cost studies underestimated costs, with most focusing on the manufacturing costs of the fuel cell stack and BOP system. Costs such as power connection installation, engineering costs, and weighted average cost of capital were unknown or not properly assessed at the time, as large-scale projects had not yet been deployed.
— The extent of cost reductions in fuel cell stacks has been overestimated. The maturation and scaling up of fuel cell stack assembly capabilities should have driven down costs. However, Western original equipment manufacturers (OEMs) have not yet achieved this due to a lack of orders, which in turn hinders economies of scale. The International Energy Agency reports that current plant utilization rates are around 10%.
— According to the International Energy Agency, inflation and rising weighted average cost of capital accounted for more than half of the system cost increase between 2021 and 2023.
II. Cost of Renewable Hydrogen
The production cost of renewable hydrogen is typically expressed as the levelized cost of hydrogen production (LCOE) because this allows for comparisons across different production processes or electrolyzer designs. The cost of producing renewable and low-carbon hydrogen via electrolysis depends on several factors specific to each project, including:
◆ The capital investment in an electrolytic cell system depends on the technology used and its scale, as mentioned above, but also includes land acquisition and capital expenditures required for engineering, procurement and construction.
◆ Operating expenses are largely affected by the price of electricity supplied to the electrolyzers.
◆ Other electricity-related costs, such as electricity grid-related taxes and fees.
◆ Load or utilization factor.
◆ Other operating expenses, such as water costs and operating and maintenance costs. These are less important than the other factors mentioned above, but can still affect the final cost of hydrogen.
◆ The capital cost required to finance the deployment of electrolyzers.
1. System-level costs
At the electrolyzer system level, the two most important factors affecting the levelized cost of hydrogen production are:
(1) Cost of the electrolysis system;
(2) Electricity price.
Their final share in the levelized cost of hydrogen production varies depending on the utilization factor of the electrolyzer, as shown in the theoretical diagrams in Figures 12 and 13.
As the utilization factor of the electrolyzer increases, the relative weight of electricity costs (which constitute a large portion of operating expenses) increases and dominates the total cost of hydrogen. Models and calculators, such as those developed by the European Hydrogen Observatory, are becoming increasingly sophisticated, encompassing more aspects of newly installed systems, such as the characteristics of renewable electricity sources, local regulations, and taxes. Furthermore, cost models now benefit from the development costs of actual electrolyzer plants, enabling more accurate cost modeling for larger future projects.
2. Costs at the factory level
At the level of a fully integrated hydrogen plant, the cost of a large-scale electrolysis plant can be broken down into several different categories:
Capital expenditure is a significant component, encompassing the upfront costs of purchasing and installing electrolyzer equipment (electrolyzer stack, hydrogen compressor) and related infrastructure for power supply and/or on-site hydrogen storage. Capital expenditure is also sensitive to the materials used and the characteristics of a given stack component. Stacks with less degradation and longer lifespans may be more expensive.
◆ Operating expenses are another key category, covering the ongoing costs of operating facilities, including energy consumption, maintenance, and labor unrelated to electrolysis. Operating expenses are highly influenced by system-specific parameters such as efficiency, as less efficient systems increase the electricity consumption and operating expenses of that particular system. Additionally, there are costs associated with hydrogen production itself, including the cost of electricity and water.
◆ Other costs, such as those related to financing, land acquisition, insurance and contingency funds, permits, grid connection fees, and hydrogen transportation infrastructure, also constitute part of the total cost of a large-scale hydrogen project.
These factors can have a significant impact on the final price of hydrogen production, sometimes even exceeding the capital expenditure of the electrolyzer. For example, the International Energy Agency, based on industry surveys, estimated the cost difference in hydrogen production between electrolyzer plants built using European or Chinese fuel cell stacks. The assessment concluded that systems built using Chinese fuel cell stacks (or electrolyzers) and BOP (Balance of Plant) systems can only reduce the levelized cost of hydrogen production by 3% to 13%, depending on the power source design. The 13% cost difference refers to projects that obtain power from photovoltaic solar energy and are located in Southern Europe. Furthermore, according to analyst reports, the still lower efficiency and inferior performance of Chinese electrolyzers result in a higher share of electricity costs, thus offsetting some of the savings in capital expenditure costs.
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