Updated Manufactured Cost Analysis for Proton Exchange Membrane Water Electrolyzers

Enabling rapid and extensive decarbonization within the electric power and industrial sectors is likely to require high levels of renewable energy deployment, supported by technologies that store and transform renewable electricity into other useful forms. Within hard to decarbonize sectors such as organic chemicals and heavy-duty transportation, the use of low-carbon intensity hydrogen as a fuel and chemical building block is emerging as a near-term alternative to reduce their fossil-fuel dependency. Water splitting electrolysis to produce hydrogen requires only water and electricity as inputs, eliminating the use of natural gas in steam methane reforming, which is the conventional hydrogen production pathway. When powered by low-carbon electricity, electrolysis represents an important pathway towards cross-sectoral decarbonization. Proton exchange membrane (PEM) electrolyzers are a near-term technology for hydrogen production that could integrate with future grids that have a high clean power penetration. As of 2023, the cost of hydrogen produced from PEM electrolyzers is higher than fossil-based production due to high costs of capital equipment and electricity. Previous work (Badgett, Ruth, and Pivovar 2022) has found that PEM electrolyzers that operate dispatchably at low capacity factors to take advantage of times of low-cost electricity can produce hydrogen at lower costs if the capital cost of these systems is low. This report presents a bottom-up manufactured cost analysis for a PEM electrolyzer stack and associated balance of plant (BOP) equipment. The electrolyzer design is intended to represent current state of the art (2022) stacks with respect to catalyst loadings (3 mg/cm2 total PGM loading) and material specifications. Near-term stack designs target significant reductions in loadings and the incorporation of advanced materials, to both reduce manufactured cost and increase efficiency. The cost reduction opportunities outlined in this analysis underscore the relevance of these advances and their potential impact on electrolyzer stack costs. For example, this analysis estimates manufactured costs for 1-MW electrolyzer systems of around $890/kW (2020 dollar year basis) at manufacturing rates of 10 MW/yr, with potential cost reductions to $540/kW possible with gigawatt scale manufacturing systems, not including manufacturer markup. This analysis focuses on pathways towards lowering the capital costs of PEM electrolyzers through avenues such as manufacturing economies of scale, advanced manufacturing techniques, and advanced system and materials engineering. Achieving manufacturing economies of scale requires high utilization rates of manufacturing lines, reducing the manufactured cost per component across components of the electrolyzer stack, while bulk purchasing and high manufacturing throughput decrease the cost of BOP subsystems. The combination could result in a total system manufactured cost reduction of approximately 50%. Opportunities exist for reducing the manufactured cost of stack and balance of plant equipment. Advanced stack manufacturing techniques such as slot die roll-to-roll production of the catalyst-coated membrane enable high throughput of these parts relative to slower batch coating production methods. System and material engineering can drive manufactured costs lower through reduced dependency on expensive materials such as iridium and platinum. Opportunities also exist for reducing the cost of BOP equipment through manufacturing economies of scale and potential cost reductions over time (e.g., learning). While any one of these strategies can yield reductions in the manufactured costs of PEM electrolyzers, achieving cost targets requires the incorporation of all these strategies (Figure ES-1c). We show that advances in stack design, reductions in catalyst loadings, and BOP cost improvements at higher manufacturing rates could yield significant reductions in the cost of manufacturing a PEM electrolyzer. There are important connections between system design, manufacturing methods, and electrolyzer performance; achieving cost reductions requires consideration of the interplay between these factors.