European electrolyser manufacturers have enough capacity to meet expected near-term hydrogen orders; however, a shortage of investable projects is leaving plants underused and putting 2030 production targets beyond reach, according to a report by the Energy Industries Council (EIC)
The EIC’s report on Europe’s hydrogen market found that the maximum electrolyser capacity is currently 8.49GW a year; this number includes a hibernated 500MW/year Topsoe plant in Denmark and does not include smaller electrolyser manufacturers with undisclosed capacity.
The report also discovered that of the 31 gigawatts of green hydrogen capacity planned by 2030, only 3GW have reached a final investment decision (FID).
This gap highlights an issue the hydrogen industry has faced for years. Developers have to manage high production costs, uncertain demand, shifting regulations, and a lack of long-term offtake agreements. Without contracted buyers, projects are unable to give lenders and investors the revenue certainty they need to move forward. Insufficient demand and demand infrastructure are also deterring further investment in electrolyser capacity.
The report concluded that electrolyser production is unlikely to constrain European hydrogen development in the short term, with manufacturers expected to fulfil anticipated orders in 2027 and 2028, when the market is projected to remain oversupplied. A shortage could emerge from 2029 if more proposed projects secure investment approval, but that is dependent on an increase in FIDs.
ITM Power, John Cockerill, Nel, Sunfire, Thyssenkrupp, and Topsoe formed the Electrolysers4Europe coalition in February to push for creating hydrogen demand, clearer regulation, and more targeted funding, according to the report.
Europe’s overall hydrogen project pipeline is large on paper, with EICDataStream recording 624 hydrogen projects announced since 2020. 59 projects are up and running, and 74 have already been cancelled. Of the remaining projects, almost half are still at the feasibility stage, and another 15% are on hold.
Of the proposals, green hydrogen has 395 developments, while pipelines account for 57. Many projects remain at the feasibility stage, raising the risk that production plants and the infrastructure needed to move hydrogen will not be ready at the same time.
Rebecca Groundwater, EIC’s global head of External Affairs, said, “Europe has already invested in electrolyser manufacturing capacity, and policy now needs to turn project pipelines into firm demand. That means faster decisions on support schemes, clearer long-term rules for offtake and coordinated investment in transport and storage. Without that certainty, projects will keep slipping, factories will remain underused, and the 2030 targets will become harder to reach.”
Despite the UK having Europe’s largest national pipeline with 130 proposed projects, only 8% are underway or awaiting construction, and 21% are on hold. The report projects 3.66GW of electrolytic capacity by 2030, more than 1GW short of the government’s 5GW target. The EIC shared that delays to the second Hydrogen Allocation Round and the absence of a revised hydrogen strategy are weakening visibility for developers and suppliers.
Germany has 23% of its 87 proposed projects underway or awaiting construction, the highest share among the principal markets covered. Its planned 9,000km Hydrogen Core Network and import links could make it Europe’s central demand hub, although the report found that imports may not develop fast enough to meet expected consumption.
Spain has 54 proposed projects and strong renewable resources, but 60% remain at the feasibility stage. Scandinavia has 76 projects, with 18% underway or awaiting construction, and 17& on hold. Across both regions, export plans are heavily dependent on pipelines to Germany and other European industrial centres.
The EIC estimates that projects representing about 72GW of electrolyser capacity and $269bn in capital expenditure are proposed across Europe. Those figures measure the full pipeline rather than committed spending or equipment orders. Unless FIDs increase sharply, manufacturers face weak order books in the near term; if they do accelerate, the report says manufacturing constraints could begin to emerge from 2029.
