Europe’s hydrogen projects envisage approximately 72 gigawatts of electrolyzer capacity and $269 billion in capital expenditure, yet investment is not progressing at the expected pace.
Existing electrolyzer manufacturing capacity has reached 8.49 gigawatts per year. However, only 3 gigawatts of the 31 gigawatts of capacity planned to be installed by 2030 has reached a final investment decision.
Project progress depends on demand and infrastructure
Electrolyzers use electricity to split water into hydrogen and oxygen. When powered by electricity generated from renewable sources, they are used to produce green hydrogen.
High production costs, uncertainty over hydrogen demand, changing regulations and a shortage of long-term offtake agreements are limiting investment in the sector.
The absence of long-term buyers is making it more difficult for projects to secure financing. In addition to demand, gaps in transport and storage infrastructure are also hindering new electrolyzer investments.
Surplus supply expected in 2027 and 2028
Electrolyzer production is not expected to be the main bottleneck in Europe’s hydrogen sector in the short term. While a supply surplus is projected for 2027 and 2028, manufacturers are considered to have enough capacity to meet expected orders.
If new hydrogen projects receive more investment approvals, electrolyzer supply could come under pressure from 2029 onward. The emergence of such a risk will depend on a rapid increase in final investment decisions.
624 hydrogen projects tracked in Europe
According to records maintained by EICDataStream since 2020, Europe has 624 hydrogen projects, including production facilities, pipelines, storage and other infrastructure investments. Of these projects, 59 are operational and 74 have been canceled.
Approximately half of the remaining projects are at the feasibility stage. While 15% of the projects have been put on hold, green hydrogen investments make up the largest share of the portfolio, with 395 projects. Hydrogen pipelines rank second, with 57 projects.
The fact that a significant proportion of the projects are still at the feasibility stage increases the risk that hydrogen production facilities and transport and storage infrastructure will not be developed simultaneously.
Six manufacturers form joint coalition
ITM Power, John Cockerill, Nel, Sunfire, Thyssenkrupp and Topsoe established the Electrolysers4Europe coalition in February to expand hydrogen demand, clarify regulations and facilitate access to financing.
Policies expected to create firm demand
Rebecca Groundwater, head of Global External Relations at EIC, said Europe was investing in electrolyzer manufacturing capacity. Groundwater said policies needed to turn project portfolios into firm demand.
Groundwater also said faster decisions were needed on support mechanisms, long-term rules for hydrogen offtake had to be clarified, and transport and storage infrastructure needed to be developed in a coordinated manner.
Groundwater said projects would continue to be delayed if confidence was not established, adding that factories could operate below capacity and that reaching the 2030 targets would become more difficult.
Project portfolios in the United Kingdom and Germany stand out
The United Kingdom has Europe’s largest national hydrogen project portfolio, with 130 projects. Eight percent of the country’s projects are under construction or awaiting the start of construction, while 21% have been put on hold.
The United Kingdom is expected to reach 3.66 gigawatts of electrolytic hydrogen capacity by 2030. This level is projected to fall approximately 1.3 gigawatts short of the government’s 5-gigawatt target.
In Germany, 23% of the 87 hydrogen projects are under construction or awaiting the start of construction. This is the highest rate among the main European markets examined.
The planned 9,000-kilometer Hydrogen Core Network and import connections could make Germany one of Europe’s major hydrogen demand centers. However, there is a risk that hydrogen imports may not develop quickly enough to meet expected consumption.
Fifty-four hydrogen projects are being tracked in Spain, and 60% of them are at the feasibility stage. In the Nordic countries, 76 projects are being tracked; 18% of these projects are under construction or awaiting the start of construction.
Planned capacity reaches 72 gigawatts
EIC estimates that hydrogen projects planned across Europe represent approximately 72 gigawatts of electrolyzer capacity. The portfolio is expected to require total capital expenditure of $269 billion.
This figure represents the total portfolio value of the projects, not committed investments or equipment orders.
