The global electrolyser manufacturing industry is entering a consolidation phase as overcapacity, weak demand and financial strain force a shake-out, Paris-based energy watchdog the IEA said.
Global electrolyser manufacturing capacity rose to nearly 58 GW/yr at the end of 2025 from 46 GW/yr a year earlier, the IEA estimated in its Global Hydrogen Review 2026.
But actual electrolyser output in 2025 was less than 5GW, the IEA said. This means that the 58 GW/yr had a utilisation rate of around 9pc in 2025, similar to the 10pc the IEA estimated in last year's review.
Early signs of consolidation include the purchase of assets from bankrupt firms and firms reassessing strategies, the IEA said.
Significant manufacturing overcapacity is expected to persist towards 2030, the watchdog said. It expects an average of 9 GW/yr of deployments based on projects that have reached a final investment decision or show strong potential to be realised.
Manufacturing capacity could climb to nearly 95 GW/yr by 2030 if announced expansions go ahead, but that is about 90 GW/yr lower than the IEA projected a year earlier. Committed capacity — covering factories under construction or past FID — totals 64 GW/yr.
Tight financial liquidity has become a growing concern for electrolyser makers, as many report widening losses because of revenues lagging upfront spending on building factories, the IEA said. Firms are also reassessing their business strategies, showcased by US engine maker Cummins halting electrolyser sales after filling existing orders, the watchdog said.
Firms with diversified income are better placed to ride out the downturn, the IEA said. Of the 58 GW/yr of capacity, about 64pc of capacity sits with large, broad-based companies, while the rest belongs to specialised firms more exposed to market swings.
The strain on electrolyser firms also poses a risk to reducing the cost of renewable hydrogen production, as firms leaving the sector could weaken the sector's innovation pipeline, the IEA said.
China has 60pc of global manufacturing capacity, ahead of Europe at 20pc and the US at 10pc. Installing a Chinese-made electrolyser in China cost $500-1,100/kW in 2025, against $1,900-2,500/kW for systems made outside China. The gap narrows sharply for Chinese kit installed abroad, where engineering, procurement and construction and contingency costs make up much of the total, the watchdog said.
Costs outside China could fall to $1,500-1,900/kW by 2030 on FID-backed and strong-potential projects, approaching China's 2025 range, the IEA said. But that hinges on more orders to lift factory use, and projects are still struggling to secure FIDs.
