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Two years ago, the electrolyser market was about 135 MW/year, with the largest manufacturers in the order of 10-20 MW/yr. As shown in the figures above, this is where the cost contribution of fixed costs is the largest. Today, various estimates and announcements point towards a higher manufacturing capacity. The World Bank estimates the capacity to be 2.1 GW/year with announcements on capacity expansion adding up to 4.5 GW/year (World Bank, 2020). The IEA estimates a capacity of 1.2 GW/year just in Europe. Looking at claims and announcements from manufacturers: Thyssenkrupp has a manufacturing capacity of 1 GW/year that could be expanded. NEL is expanding the capacity of their facility at Herøya Industrial Park (Norway) from 40MW/year to 360MW/year, with future expansion plans of up to 1 GW/year. ITM is part of the Gigastack project, that aims to ramp up production capacity to 60 stacks per year (300 MW/year) by 2023 and 200 stacks (1 GW/year) by 2025. This is to be done with a simultaneous increase in the system size to 20MW to achieve a specific investment cost of GBP400/kW with a module size of 100 MW. The ramping up is 60 stacks per year (300 MW/year) by 4.2 LEARNING-BY-DOING 2023 and 200 stacks (1 GW/year) by 2025. The project is currently in the frontend engineering and design (FEED) phase (Phase II), with the design of the 100 MW facility, which is 5x20 MW, with this expected to be completed by the end of 2020. A scale of 1 GW/year for the manufacturing plant might be enough to achieve economies of scale during production. Some manufacturers already claim to be at this scale or with plans to achieve such a production level While Siemens does not have an explicit manufacturing target, it is also involved in various 100MW+ projects around the globe, putting them in a good position to expand capacity. One of these projects is the Murchison Renewable Hydrogen Project in Australia, which has scope for up to 5 GW of renewable capacity and is initially expected to produce hydrogen for transport fuels, followed by blending with natural gas and exports. The experience curve or learning curve22 refers to the decline in production cost as the cumulative capacity for a specific technology doubles. This represents innovation by production and is driven by competition between firms in the market that complements innovation driven by research. There are multiple ways this cost decrease can be achieved. For example, a lower contribution from fixed costs, a reduction in the production time, standardisation, specialised companies for certain parts of the value chain, and alternative processing steps, including simplification. Larger cumulative deployment not only leads to more experience from project developers, but also financial institutions. This can in turn lead to lower risk perception, lower the cost of debt and further cost reduction. Water electrolysis shares the same principles as chlor-alkali production (which already produces hydrogen today). This means, for learning purposes, the starting point for water electrolysis is not the 0.2 GW of PtX existing today, but instead the cumulative 20 GW of electrolyser capacity that SCALING UP ELECTROLYSERS TO MEET THE 1.5°C CLIMATE GOAL 22 In a more nuanced differentiation, the learning curve refers to the relationships between cumulative capacity and lower production time, while the experience curve relates capacity to cost (Böhm, 2019). 77PDF Image | GREEN HYDROGEN SCALING UP ELECTROLYSERS
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