Hydrogen Insights 2023
The state of the global hydrogen economy,
with a deep dive into renewable hydrogencost evolution
December 2023

Published in December 2023 by the Hydrogen Council. Copies of this document
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Hydrogen Insights December 2023
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2

The Hydrogen Council has 145+ members and is a global CEO-led initiativewith a united vision and long-term ambition for hydrogen to foster the clean energy transition
Steering members

Supporting members

Investors

Hydrogen Insights is the Hydrogen Council’s perspective on the hydrogen industry’s evolution. It summarizes the current state of the global hydrogen sector and actual hydrogen deployment. The Hydrogen Council and
McKinsey & Company co-author this publication. It represents a collaborative effort to share an objective, holistic, and quantitative perspective on the status of the global hydrogen ecosystem.1

1.

Detailed methodology explained in Hydrogen Insights 2021

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

3

Executive summary
Hydrogen will play a crucial role in decarbonizing hard-to-abate
sectors, enable the at-scale transport of energy to resourceconstrained regions, and enable a clean and resilient energy
system. Its deployment is at an inflection point – on one hand there are
tailwinds such as a growing and gradually maturing pipeline of projects
and supportive decarbonization regulation. On the other hand, there
are headwinds: cost increases, project delays, continued regulatory
uncertainty, and higher financing costs.

The clean hydrogen industry is facing headwinds. Costs andcost expectations have risen substantially, particularly forrenewable hydrogen. The estimated levelized cost of producing
renewable hydrogen (LCOH) is about 4.5 to 6.5 USD per kilogram (USD/kg) if built today,4 up by 30% to 65%. Multiple factors have caused thisincrease - higher labor and material costs, higher cost for building thebalance of electrolyzer plants, 3 to 5 percentage points higher costof capital, and an increase of renewable power cost by more than 30%.
However, the cost of producing renewable hydrogen is expected to
decline to 2.5 to 4.0 USD/kg towards 2030, driven by advancements
in electrolyzer technology, manufacturing economies of scale, design
improvements, and reduction in renewable power cost.

1

4

The project pipeline is growing, with over 1,400 projects
announced across all regions (up from about 1,040 in theprevious publication), equaling USD 570 billion investments(previously USD 435 billion2) and 45 million tons per annum (Mt p. a.)of clean hydrogen3 supply announced through 2030 (previously
38 Mt p. a.). Europe shows the largest number of projects (540),
followed by North America (248). A quarter of projects with known
commissioning date has progressed past final investment decision(FID), representing 7% of the total announced investments. Investments
are maturing, with USD 110 billion in front-end engineering and design(FEED) and beyond (up from USD 75 billion), with 60% growth ininvestments undergoing FEED. Electrolysis deployment globally has
shown similar growth, passing the 1 gigawatt (GW) mark (up from
0.7 GW previously), with about 12 GW capacity having passed FID.

The headwinds have caused a slower development of the
global hydrogen industry than had been previously expected.
Such hurdles are reflected in, for instance, a 10% drop inannounced clean hydrogen supply through 2025. Concerted actionof industries and governments will likely be needed to further global
clean hydrogen growth, facilitating additional decarbonization.

2

5

The regulatory landscape overall is evolving. For instance,
support is materializing via production tax credits (PTC) andfinancial support for hydrogen hubs in the US, renewablehydrogen mandates in the Renewable Energy Directive (RED III) in
Europe, or contracts for difference (CfD) in Japan. However, regulatory
uncertainties remain, such as the definition of requirements to receive
the US Inflation Reduction Act (IRA) PTC and the implementationof RED III in EU member states, implying these policies have not yet fully
impacted the market.

3

2.
3.
4.

An increase in total direct investment reflects refined estimates of capital expenditures required (primarily for renewable hydrogen supply) resulting in the previously estimated USD 320 billion
increasing to USD 435 billion.
See clean hydrogen definition in ‘Hydrogen for Net-Zero’ report on page 52.
Example from the US Gulf Coast.

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

4

01

Hydrogen momentum
continues to accelerate,
but investment decisions
are lagging
1,418hydrogen projects announced globally,
1,011 of which plan full or partial deployment by 2030

USD 570 billion
direct investments in hydrogen projects announced
through 2030 (+30%) – USD 39 billion (+26%) havepassed FID

45 Mt p. a.
of clean hydrogen supply announced by 2030,
of which 70% is renewable and 30% is low-carbon

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

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Exhibit 1

166

Hydrogen momentum is strong: 1,418
projects have been announced globally –USD 570 billion investments announced

Giga-scale production

719

Globally, the industry has announced 1,418 cleanhydrogen projects as of October 2023. Since theprevious publication,5 372 new projects have beenannounced. of the total, more than 1,000 aim to be fullyor partially commissioned through 2030, representing
investments of about USD 570 billion in hydrogen value
chains (up from USD 435 billion). Giga-scale projects(over 1 GW of electrolysis for renewable hydrogen
supply or more than 200,000 Mt p.a. of low-carbonhydrogen) account for over USD 330 billion.
Growth is apparent across most regions in termsof both investments and the number of projects. Europe
continues to have the largest number of projects (540),
followed by North America (248). Europe also has thehighest total investments announced (USD 193 billion)
as well as the highest absolute investment growth(USD 32 billion). Latin America has the second largest
volume of investments announced (USD 85 billion), eventhough it has announced fewer than half the numberof projects of North America (120), due to larger projectsizes and a higher share of giga-scale renewablehydrogen projects. Growth in announcements in North
America was USD 12 billion, an increase of about
20%, indicating continued momentum following theannouncement of the IRA. India shows the highest
relative growth in investments of about 140%,
corresponding to about 40 projects. The Middle East
and China follow with about 80% and 50% growth ininvestments, respectively.

Large-scale industrial use

256
Mobility

144
Integrated H2 economy

126
1,418 projects1
Jan 2023²

1,046 in May 2023

Oct 2023

Europe193

Latin America

85

Oceania75

North America

68

Middle East

54

China

35

Africa

32

India

5.

Hydrogen Insights 2023, published in May 2023; comparisons in thisreport are relative to this publication unless stated otherwise.

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

Infrastructure projects

22

Rest of Asia

5Japan and South Korea³

4

1.
2.
3.

$570 B

investments required to develop
projects announced through 2030

Project announcements below 1 MW excluded; includes 7 projects without specified typeJan 2023 values have been updated to most recent capex estimations to keep values comparable
Restatement of Jan 2023 data for Japan and South Korea prevents comparison to Oct 2023 data

Source: Project & Investment tracker, as of Oct 2023

6

Exhibit 2

Direct hydrogen investments until 2030, $B$570 BThe project funnel is growing across projectstages, with most growth occurring in theadvanced planning stage
The total announced investments through 2030 have increasedby 30% in the past nine months – from about USD 435 billion tomore than USD 570 billion. The increase is unevenly distributed
across project maturity stages with the strongest growth inadvanced planning (FEED) of about 60%, followed by announced(about 30%), planning (about 25%), and committed (about 25%).
The growth in investments at the advanced planning stage wasstrongest in North America (about USD 11 billion), followed by
Europe (about USD 9 billion) and Oceania (about USD 5 billion).
The pipeline is maturing but remains tilted toward announced
and planning stage (about 75%), with only 7% of the announced
investments into clean hydrogen having passed FID.
Of the committed investment volumes, China leads with about
USD 12.5 billion (adding about USD 6 billion) due to several large
projects located in central and northern China that account for
the largest share of investment. North America reached about
USD 10 billion in committed investments (adding about USD 0.5
billion), followed by Europe at about USD 7.5 billion (adding about
USD 1 billion). This implies that only 4% of announced investments
in Europe have passed FID, even though the region has the most
total investment volumes. In contrast, the share of investments
past FID stands at 35% and 15% in China and North America,
respectively. The lowest project pipeline maturity is found in Latin
America and Oceania where less than 1% of investments havepassed FID.

total announced
investments

259$310 B

203

200

matureinvestments

End useand offtake
160
Infrastructure

Production
and supply

71
44
31

Jan
2023

The investment pipeline continues to lean toward clean hydrogen
supply (about 75%), whereas investments in infrastructure andend use account only for about 10% and 15%, respectively.
Looking only at mature investments, regions differ significantlyin the sectoral composition. Africa shows the strongest
concentration with about 95% of mature investments focused on
supply, followed by China (about 80%) and Latin America (about80%). Reflecting their strong focus on imported clean hydrogen,Japan and South Korea show a share of only 3% of supplyfocused investments.

Oct
2023

Jan
2023

Announced

When looking at end use investments, China has the highest shareof investments past FID, followed by North America and Europe.
The focus varies across regions – ammonia and industrial usage
lead in China and North America, whilst Europe is more prominent
in mobility and refining.
1.

Oct
2023

Jan
2023

Oct
2023

Planning
stage

Advancedplanning

Feasibility
studies

FEED
studies

Jan
2023

39

Oct
2023

Committed
FID, underconstruction,
operational

+30%

75%

investment growth in 9 months¹of investments focus on supply

Jan 2023 values have been updated to most recent capex estimations to keep values comparable

Source: Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

7

Exhibit 3
Europe, North America and China havethe largest number of projects withcommitted capital
Considering projects with partial or full commissioningby 2030, more projects (by number of projects) havepassed FID stage (about 35%) than the announced
stage (about 30%). However, about 45% of the projects
past FID are not yet operational. The projects thathave passed FID are centered in Europe, Asia, andNorth America. This implies markets with an earlier
focus on clean hydrogen as a decarbonization vector
have already built early experience in deploying cleanhydrogen projects.
Generally, clean hydrogen projects in earlier stagesof development tend to be larger. 166 giga-scale
projects have been announced, 121 of these withcommissioning date through 2030. However, theseare mostly still in early stages of development. Only
71 projects surpassing USD 100 million announced
investments have passed FID, 7 of these withannounced investment of more than USD 1 billion.
Projects that have passed FID have an average
investment size of about USD 160 million. However,as pilot projects continue to represent a large shareof projects past FID, the median investment volume
for such projects is considerably lower at USD 20
million. Projects in the earlier stages of development(announced to FEED) have a significantly larger average
investment size of about USD 890 million (median about
USD 280 million), which reflects over 110 projects withannounced investments exceeding USD 1 billion.

Giga-scale production

Large-scale industrial use

310 projects1 announced

Mobility

Integrated H2 economy

Infrastructure projects

214 projects in feasibility studies

Preliminary studies or press announcement stage

42

171

46

20

31

117 projects in FEED studies

48

112

22

21

11

48

33

370 projects committed
FID taken, under construction or operational

24

45

29

1,011
1.

12

7

projects with full or partial
commissioning (COD) by 2030

7

173

+407

109

projects without specified COD
or COD post-2030 (not shown)

For multiphase projects, phase 1 decides the project maturity

Source: Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

8

Exhibit 4
Announced production volumes
increased to 45 Mt p. a.
Companies have announced 45 Mt p. a. of cleanhydrogen production capacity globally through2030 across low-carbon and renewable hydrogen(previously 38 Mt p. a.), of which about 50% of volume
is in the planning stage and 7% is committed. Morethan 70% of the 45 Mt p. a. is renewable hydrogencapacity (about 32 Mt p. a.), the remainder being lowcarbon (about 13 Mt p. a.). Of the 7 Mt p. a. capacity
announced in the past nine months, more than 90%
is for renewable hydrogen driven by the high growth inannouncements coming from renewables-rich regionsin the global south.
However, deployment is not moving as fast as previously
expected by developers. Although announcements
in 2021 indicated 6 GW of the electrolysis would be
operational by the end of 2022, operational deployment
as of October 2023 stands at 1.1 GW, or about 20%of that number. Scaling up is a considerable challenge:
about 860 kt p. a. of capacity is operational with about
3 Mt p. a. past FID (slight growth compared with previous
publication). About 60% of committed capacity is
located in North America, followed by China (about20%), and Europe as well as the Middle East (about 8%each).
Considering the share of low-carbon and renewablehydrogen, low-carbon hydrogen accounts for morethan 75% of today’s operational clean hydrogenvolume, potentially due to its lower cost. Announced
investments suggest the balance may start to shift
towards a higher share of renewable hydrogen before
2025 - if announced volumes are deployed according
to the planned timeline. Changes in compositionof clean hydrogen over time will likely reflect a wide
range of factors such as regulatory developments andinput cost.

Cumulative production capacity announced, Mt p. a.

Announced asof Oct 2023

45

Jan 2023

Low-carbonhydrogenAnnounced1

Planning2

Committed3
Renewablehydrogen
May 2022

Announced1

2021

Planning2
2020

2019

Committed3

2020

1.
2.
3.

21

22

23

24

25

26

27

28

29

2030

70%

+15 Mtshare of capacity in top 3 markets(Europe, North America, Latin America)

additional capacity (low-carbon andrenewable) announced for post-2030

Preliminary studies or at press announcement stage
Feasibility studies or at front-end engineering and design stage
Final investment decision has been made, under construction, commissioned or operational

Source: Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

9

Exhibit 5

Clean hydrogen volumes announced, Mt p. a.

Europe is the largest region in termsof announced supply, followed by theAmericas and Oceania
Globally announced clean hydrogen capacity by 2030
continues to grow across most regions, with Europe,
the Americas and Oceania together accounting forover 80% of the total of about 45 Mt p. a. of announced
volumes. China, India and the Middle East show thehighest relative growth in announced clean hydrogenproduction by 2030, with growth between 50%(in China) and 150% (in India) in the past nine months.
The highest absolute growth in announced cleanhydrogen production is in Latin America and the Middle
East (about 1.4 Mt p. a. each). Notably, relative growthin Europe and North America, the two largest regions,is about 5% and 10% respectively – lower than their
growth in investment volumes (about 20% each).
This could indicate companies are focusing more on
maturing existing announced projects or on developing
other parts of the hydrogen value chain.
Announced capacity by 2025 has declined from
8.4 Mt p. a. by 10% overall, indicating delays in project
deployment. China is a notable exception with about
40% growth in 2025 volumes. The greatest reduction
is seen in the Middle East and Europe (about a 30%
reduction), pointing to project delays which may be due
to delayed funding or challenges in securing offtakeagreements. Further project progress in all regions
will likely be impacted by the development of thecorresponding regulatory and economic environments.
Global growth in renewable hydrogen announcements
by 2030 (more than 6.5 Mt p. a.) substantially outpaced
low-carbon hydrogen announcements (about
0.4 Mt p. a.). The stronger growth in renewable hydrogenannouncements could be linked to, for instance, astronger regulatory focus on renewable hydrogen or thelarger number of regions with attractive resources forrenewable hydrogen production.

Renewable

Region2025

Low-carbon

Change in 2030
announcementsfrom Jan to Oct
2023
%

2030

Europe13.9

1.5

North America

2.6

Latin America

0.8

Oceania

0.7

Middle East

0.7

China

1.0

Total announced, Mt

10.1

6.6

5.6

5

10

30

20

3.3

70

1.6

50

India

0.1

1.6

150

Africa

0.1

1.5

-

Japan and Korea

0.1

0.3

-

Rest of Asia

0.1

0.3

45

Total

4.2

3.3

32.1

12.7

Source: Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

10

Exhibit 6

Cumulative electrolysis capacity (announced),¹ GWOver 300 GW of electrolysis capacity has
been announced through 2030, up from232 GW previously

305 GWOct 2023

305 GW of electrolysis deployment has beenannounced through 2030,6 73 GW more than previously
announced. Half this capacity (about 150 GW) is
past the ‘announced only’ stage. Nearly 140 GW are
undergoing feasibility or FEED studies, and another
12 GW have passed FID. The volumes of electrolysis
capacity past FID increased from 9 GW to 12 GW, withmost of the capacity in China (about 55% of the 12 GW)
followed by the Middle East (about 15%), Europe (about15%), and North America (about 5%). Previously, China
accounted for about 40% of committed electrolyzer
volumes, implying that deployment in China is outpacing
the rest of the world.

232 GWJan 2023

175 GWMay 2022

Of the European renewable hydrogen investment
pipeline, 40 GW (about 45%) has entered at least theplanning stage. Despite support schemes through the
IRA, the North American renewable hydrogen pipeline
stands at about 20 GW through 2030. Latin America ishome to 20% of all announced volumes through 2030.

115 GW
Dec 2021

Despite the large volume, less than 5% of renewablehydrogen supply investments are committed. To realize
the pipeline of 305 GW, significant acceleration in the
coming seven years is needed to grow today’s 1.1 GW
installed electrolysis capacity by a factor of more than250. For announced projects to deploy, those planned
to become operational in the coming three to five years
would need to reach financial close in the next one to
two years. This implies not only that project developers
across regions and sectors need to mature projects, butalso that original equipment manufacturers (OEMs) needto scale up supply chains and manufacturing capacity.

6.

Note that announced electrolyzer capacity cannot be directlytranslated to renewable hydrogen volumes. Hydrogen output
depends on the capacity factor of a given electrolyzer, determinedby individual technical setup.

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

55 GW
Dec 2020

2020

21

22

23

24

25

26

27

28

29

2030

+73 GW >60%

>90 GW

increase in announced electrolysis
capacity by 2030 in the past 9 months

announced electrolysis capacity
by 2030 in Europe

1.

capacity announcements foundin 3 regions, i.e., Europe, Latin
America, and Oceania

For projects without known deployment timeline, capacity additions were interpolated between known milestones

Source: Project & Investment tracker, as of Oct 2023

11

Exhibit 7

Announced and required direct investments into hydrogen until 2030, $B

An investment gap of USD 430 billion
remains to be in line with the 2030 ambition
Announced investments through 2030 surpassed USD
570 billion (previously about USD 435 billion). However,more projects need to emerge across the clean hydrogenvalue chain to be in line with a net-zero scenario.7
The remaining total investment gap of about USD 430
billion through 2030 stands at about 45% of the total
need. The gap narrowed by about 10% of the total needcompared with the previous publication.
The largest absolute gap remains within hydrogen
infrastructure (about USD 210 billion) where only about
20% of required investments have been announced.
It is followed by gaps in end use and offtake (about
USD 160 billion), and production and supply (about 60
billion), representing gaps of about 65% and about 10%,respectively. The slower rate of announced investments
into hydrogen infrastructure could stem from uncertainty
as to the timeline of hydrogen supply and end use
deployment in some regions. At the same time, largescale infrastructure initiatives such as the European
Hydrogen Backbone are focusing on deploying acomprehensive hydrogen infrastructure.
Growth in announced hydrogen supply projects continues
to outpace end use and infrastructure investments,
accounting for about 75% of total announced investments,
and growing by about USD 120 billion in the pastnine months. Announced investments in hydrogen
infrastructure grew only by USD 3 billion (about 5% relative
to the previous publication) reaching USD 50 billion,
whereas announcements of end use investments grewby about USD 15 billion (approximately 25% relative to theprevious publication), reaching about USD 80 billion.
Although over half the needed investments have beenannounced, more are needed. The current announced
projects need to be matured and deployed to close thegap from USD 39 billion past FID today to more than
USD 1 trillion deployed through 2030. More projects arelikely needed beyond the USD 1 trillion mark, as not all
currently announced projects are likely to be realized.
As the industry is focusing on maturing the existing projectpipeline, it should also continue developing new projects.

7.

For a detailed explanation of the applied net-zero scenario see‘Hydrogen for Net-Zero’

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

430

1,000
End useand offtake

Infrastructure
570

Production
and supply

Announced direct
investments

Investment gap

Total need$160 B $210 B $60 B
investment gap in end use
applications

investment gap in infrastructure

investment gap in production
and supply

Source: Project & Investment tracker, as of Oct 2023

12

02

Clean hydrogen
deployment
steadily continues>1.1 GW
of electrolysis capacity deployed globally by October
2023 (additional 400 MW), with about 12 GW having
passed FID globally (additional 3 GW)

860 kt p. a.
operational clean hydrogen supply capacity deployed
today – about 1% of the grey hydrogen market today>1,100hydrogen refueling stations deployed globally,
with more than 60% growth over the last two years

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

13

Exhibit 8
Deployment is steadily growing across thevalue chain
Supply: About 860 kt p. a. of clean hydrogen supply is
operational globally, up from 800 kt p. a. previously. About
710 kt p. a. is low-carbon hydrogen (primarily in North
America), and the remainder is renewable hydrogen.
About 3 Mt p. a. have passed FID, of which 55% is lowcarbon hydrogen.8
Infrastructure: The deployment of hydrogen infrastructureis slowly progressing towards ensuring that low-costand clean hydrogen supply meets demand. Committed
investments in hydrogen infrastructure have grown toabout USD 6.5 billion, of which 45% are in Middle East.
This has not yet translated into a substantial increase in,for instance, hydrogen pipeline capacity. Today, there areabout 5,000 km9 of hydrogen pipelines, primarily in existing
grey hydrogen hubs and industrial areas. The deployment
of infrastructure for hydrogen-fueled mobility is gradually
growing, with more than 1,100 hydrogen refueling stations
deployed globally, concentrated in China, South Korea,
and Japan.

1,100 MW

Manufacturing capacity: Electrolyzers and fuel cellmanufacturers are preparing to scale up. Electrolyzer
manufacturing capacity has reached nearly 11 GW (up from
9 GW previously) according to OEM statements. For fuel cellmanufacturing, the total global capacity stands at 15 GW(up from 12 GW), with South Korea, China, and Japan as
the largest supply markets.

3 Mt p.a.
clean hydrogen capacity
has passed FID,
majority of which isin North America

Hydrogen end use: Committed investments in hydrogenend uses have reached more than USD 7.5 billion, withthe largest investment amount in Europe (total committed
investments of USD 4.5 billion). By sector, mobility has thehighest committed investments (USD 4.5 billion) followedby the power sector (USD 1.2 billion). Within mobility,
cumulative fuel cell electric vehicle (FCEV) sales as of June
2023 stood at about 79,000 vehicles,10 up 10% from end-ofyear 2022. Vehicle OEMs have announced over 130 FCEV
models expected to be assembled in 2023, of which the
majority consist of commercial vehicles (trucks and buses)
in China.

Due to restatements of underlying data, net growth appears smaller
compared to previous reports
9. IEA, Global Hydrogen Review, 2023
10. Cumulative fuel cell electric bus sales in China were adjusted downward
compared to the previous report due to an error in the underlying data.

Transmission

Manufacturing capacity

End use370

6

Projects have passed FID,
majority are in Europe

methanol-ready ships
in service+81 from previous
publication+163 orderedElectrolysis capacity operational
2023; >600 MW in China+400 MW from previous
publication

Supply710 kt p.a.
low-carbon hydrogencapacity operational in 2023
in addition to 25 kt p.a.
under construction¹

11 GW

>130

electrolysis mfg. capacity
according to OEM
announcements

fuel cell vehicle models
to be assembled byOEMs in 2023

+2 GW

79,000fuel cell vehicles
on the road in 2023
+20% from 2022²

15 GW>1,100fuel cell mfg. capacity
today according to OEMs

hydrogen refueling station
deployment: >350 in
China, >350 in South
Korea, >240 in Europe,>160 in Japan

+3 GW

12 GW

5,000

electrolysis capacity at FID+

km of hydrogen pipeline
operational~7 GW in China,~2 GW in the Middle East,~2 GW in the US
and Europe+20% from 2022

+600 in FID+

8.

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

1.
2.

Low-carbon hydrogen capacity was adjusted downwards compared to the May 2023 report due to a restatement of the underlying data
FC electric bus sales in China were adjusted downwards compared to the May 2023 report due to an error in the underlying data

Source: Hydrogen Council; McKinsey

14

Exhibit 9

Global cumulative installed electrolysis capacity, MW

400 MW electrolysis has been deployedsince January, bringing the total to 1.1
GW, with most capacity added in China

Technology

The deployment of electrolysis capacity grewby around 60% in 2023 versus 2022, reaching
1.1 GW, up from 700 MW. The installed capacity
equals about 150 kt p. a. of renewable hydrogen
supply, meaning renewable hydrogen accounts forabout 15% of installed clean hydrogen production
capacity globally. Growth rate has almost doubled
over the last two years. Much of the growth in thepast year has been driven by a single large projectof 260 MW in China, which accounted for 65%
of the growth.

PEM

1,100

Alkaline

700

Other/unknown

530

240

Today, the largest deployed electrolyzer capacity
is in China (610 MW), where the world’s two largest
operational projects with capacities of 260 MW and
150 MW are located. China is followed by the UnitedStates and Germany (60 MW each), as well as Spain,
Taiwan, Sweden, and Canada (each with about 25
MW). In the past year, the largest volumes added
outside China were in the United States and Sweden(about 50 MW and 20 MW, respectively).

2019

300

20

21¹

22

Oct 2023

150

Of the 12 GW of electrolyzer volumes that passed
FID globally, about 40% have a stated technology around 80% is alkaline and 20% proton-exchange
membrane (PEM); implying that the share of PEM
remains stable. Within China, 90% of the deployedelectrolysis capacity is based on alkaline technology,
whereas PEM technology is more prevalent inEurope and North America, accounting for 80%of the total installed capacity.

120
China
EuropeNorth
AmericaRest of
world

1.

610

220

Growth from 2020 to 2021 driven by 150 MW Ningxia Project

Source: IEA Global Hydrogen Review 2021 and 2022; Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

15

Exhibit 10

Committed¹ production capacity until 2030, %Currently, over 3 Mt p. a. of cleanhydrogen capacity has passed FID,
with North America and China leading
In addition to the 860 kt p. a. of operational capacity,
about 2.2 Mt p. a. of clean hydrogen has passed
FID. Most committed and operational capacity is
low-carbon hydrogen (1.7 Mt p. a.), and the rest isrenewable. Net committed capacity has grown by
about 0.1 Mt p. a. since the previous publication
driven by an increase in committed renewablehydrogen capacity, but held back by a reduction incapacity due to delayed projects.

2%

North America
Low-carbon hydrogen accounts foraround 90% of committed production
capacity in North America (of which~670 kton is already operational), withdemand driven by hydrogen for ammonia production and refining

2%

8%
1%

North America is the largest market in termsof committed clean hydrogen capacity with volumesof about 1.8 Mt p. a. About two-thirds of this capacity
is in the United States, and one-third in Canada.
Around 90% of these volumes are low-carbonhydrogen, potentially due to higher maturity anddriven by the early deployment of carbon captureand storage (CCS) technology in grey hydrogenproduction. Of the North American low-carbonhydrogen volumes past FID, about 65% havestated technology. About 40% of this is autothermal
reforming (ATR), and about 30% each of steam
methane reforming (SMR) and coal gasification
coupled with CCS. Renewable hydrogen capacity(about 1.3 Mt p. a.) is concentrated in China(about 0.6 Mt p. a.), followed by the Middle East
(0.25 Mt p. a., of which a large majority comes from asingle giga-scale project).

China
Several large-scale renewable hydrogenprojects (>100 MW) already operational

8%

Over

3 Mt

p.a.

clean hydrogen production
capacity committed until 2030

58%

EuropeRenewable hydrogen accounts for close
to all committed production capacity(>75%) in Europe, with industry feedstock sectors (e.g., refining) driving
demand22%
Middle East
Committed production capacity driven
by giga-scale renewable hydrogen project in Saudi Arabia

By region, China has the largest share of committed
clean hydrogen volumes at about 40% of its
announced hydrogen supply. North America follows,with about 20% of its announced 10 Mt p. a. having
passed FID. The Middle East has committed 7%of its announced supply volumes of 3.3 Mt p. a.,followed by Africa (4%) and Europe (2%). Less than
1% of the announced capacities in Latin America andOceania have passed FID.

AfricaIndia
OtherJapan, South Korea, Oceania
and Latin America

1.

Final investment decision has been made, under construction, or operational

Source: Project & Investment tracker, as of Oct 2023

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

16

Exhibit 11

Hydrogen refueling stations

Hydrogen refueling infrastructure
deployment continues to accelerate
in China and South Korea with slower
growth in Europe and North America

Americasstations in Europe and Middle East

787
stations in Asia-Pacific

The number of hydrogen refueling stations could
grow significantly if ambitious government targets are
realized. South Korea and Japan plan to expand their
networks to more than 600 stations each by 2030,
which could double the number of stations in Asia. In theEU, the recently adopted Alternative Fuels Infrastructure
Regulation (AFIR) will require the deployment of ahydrogen refueling station every 200 km along theTrans-European Transport Network (TEN-T). In addition,over the last six months, more than 10 countries (mostly
in Europe) have installed or have announced plans to
install their first hydrogen refueling stations.

While most hydrogen-fueled vehicles continue tobe FCEVs, some developers are also working onhydrogen combustion powertrains for new and existingvehicle models.

Total number of
HRS¹ in operation

Asia-Pacific

246

More than 1,100 hydrogen refueling stations are now
operational globally, with deployment growing by 60%
from 2021 to October 2023. Most of these stations arein Asia. China, Japan, and South Korea are the largest
markets with nearly 800 stations in total, followed by
Europe with around 250 stations.

Sales of hydrogen-powered vehicles correlate
geographically with the roll-out of hydrogen refuelinginfrastructure. South Korea continues to lead in lighthydrogen-fueled vehicles (about 50% of current lightvehicle fleet), and China in the global hydrogen truck
and bus market (about 80% and 90% of each respective
market). Heavy hydrogen-fueled vehicles, especiallytrucks, are gaining momentum. This is reflected in thenumber of hydrogen-fueled bus and truck models
exceeding one hundred. As the hydrogen-fueled vehicle
park could potentially transition toward heavier vehicles,
requiring higher refueling station capacities, existingstations might require expansion and adaptation.
Additional hydrogen refueling infrastructure might
be needed for off-road mobility such as rail andinland shipping.

Europe and Middle East

SwedenNorway64Netherlands
Luxemburg 20
1
Iceland 2
Belgium 8

8Canada70

United Kingdom 14
France47

USA
Portugal 1
7
Spain

80

2

Germany

LatviaPoland3 Czech Republic
2 Slovakia
1 Hungary
1
Slovenia
1
Croatia
1 Israel
10

Japan

1

2

1

Italy Austria
Saudi Arabia
Switzerland

1

Costa Rica

17

94

1

351

167

China

258

2

India

South Korea

1

1

Malaysia

Colombia

stations in the Americas

1

7

New Caledonia

Australia

+60%
2021

2023

1.

691

1,113

350 and 700 bar HRS included as well as public and non-open HRS

Source: h2stations.org

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

17

03

Clean hydrogen production
costs have increased
30–65%
increase in LCOH driven by capital expenditure,
financing, and cost of renewable power

2.5–4.0 USD/kg
cost estimate for LCOH by 2030, down fromcurrent costs of about 4.5–6.5 USD/kg

30–45%
capital expenditure decrease by 2030
compared with current levels

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

18

Exhibit 12

Development of levelized cost of hydrogen

Near-term levelized costs for renewable hydrogen
have increased by 30% to 65%
Renewable levelized costs of hydrogen are facing global headwinds thatare driving up near-term renewable LCOH estimates by 30% to 65%,
to 4.5 to 6.5 USD/kg. As renewable hydrogen production technology
and the supporting renewable power supply is highly capital intensive,
renewable LCOH is sensitive to the global hike in interest rates whichhave significantly increased the cost of capital. Other factors driving up
costs include a global supply constrained by renewable power and pain
points such as rare earth metals as well as (in some jurisdictions) skilledlabor shortages and interrupted supply chains. The hydrogen sector is
not unique in this, with cost increases seen in other sectors.
While these cost drivers may increase LCOH up in the near-term,
unsubsidized renewable LCOH could still decline to 2.5-4.0 USD/kg11
by the end of the decade, depending on the region,12 declining further
to 1 to 2 USD/kg by 2050. Near-term decline in renewable LCOH would
require the normalization of renewable power capital expenditure(capex), lowered financing costs, and the rapid scale-up of global
electrolyzer manufacturing capacity.
Despite the recent hike in costs, electrolyzer costs could fall as muchas 45% by 2030 and 70% by 2050 compared with today. While hyperscaling global electrolyzer production could result in a steeper systemcost decline before 2030, continued learning could drive further costdeclines through 2050.
The LCOH of low-carbon hydrogen produced via SMR or ATR
technology coupled with CCS could be lower than renewable hydrogennear-term, and could be competitive with grey hydrogen in jurisdictions
with adequate carbon prices. Low-carbon hydrogen costs will likely lie
below renewable hydrogen costs through 2030, except in a few selectregions with very attractive renewable power resources.

+30–65%$2.5–4.0

increase¹ in LCOH driven by capex,
ﬁnancing and renewables costs

cost target by 2030

USD/kg H2
987Electrolyzer cost
2023 = 100%

5

50
4
3
Renewable H2

25

2

2020

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

75

6

1

11. Displaying as nominal USD of 2023
12. Actual LCOH for renewable hydrogen will depend on individual geographies‘ specificphysical, economic and regulatory conditions.

100%

Prior renewable H2
2025

Low-carbon H2
2030

2035

2040

2045

2050

1. Midpoint to midpoint increase
Low-carbon hydrogen production costs prior to 2023 have been excluded due to strong natural gas price volatilities impeding meaningful comparison.
Natural gas prices continue to drive up costs of low-carbon hydrogen
Core assumptions: Yearly production of 1 Mt of hydrogen; Dedicated solar PV and wind capacity “behind the meter” feeding into the electrolyzer
Source: McKinsey Capital Analytics; Survey of Hydrogen Council Member FEED studies

19

Exhibit 13

Levelized cost of hydrogen (US Gulf Coast example), 2023, USD/kg
0.7

Higher plant, financing and electricity costs
are driving increased renewable LCOH
The impact of recent cost increases is illustrated with an
example from the US Gulf Coast, where renewable LCOH
today increased by about 2 USD/kg versus previous costestimates. Increased near-term capital expenditures had
the largest absolute impact on the rise in the renewable
LCOH (about 40%), followed by higher financing costs (about30%) and the cost of renewable electricity (about 25%).
Higher operation and maintenance costs have only a minor
impact on the renewable LCOH (about 5%). Absolute cost
increases and the impact of the contributing factors may varysignificantly across regions as e.g., financing cost and supply
chain constraints dynamics differ. Renewable power costs
remain the largest contributor to overall renewable LCOH
across regions.
As risk-free rates have increased by up to 5 percentage
points, the cost of financing has grown in kind. While thecost of capital has risen globally, rates vary significantly
across regions with country risk premiums ranging fromnone to about 25%. Differences in the maturity of regulatory
frameworks as well as country-specific political andmacroeconomic conditions drive variations in cost of capitalfor renewable hydrogen projects between different countries.
Cost increases apply largely independently from thequality of available renewable power resources. In ‘behindthe-meter’ setups where net new renewable capacity is
purpose-built as part of an integrated project, renewable
power capex carries the same cost of capital as the overall
renewable hydrogen project. ‘Behind-the-meter’ renewable
power capex is therefore often higher than what independent
power producers might be able to attain for grid-connected
renewable power assets.

5.0

0.7
0.1
0.5
increase in O&M
driven by capex
and labor costs

0.8
increase inrenewable electricity prices

increase in costof capital driven by
3-5 percentage
point increase inrisk free rate

0.3

2.9
0.2

2.2

increase in capex
driven by ﬁnancing, labor, andmaterials

1.7

1.7
0.9

Prior
estimate

H2 plant
capexElectricity
cost

H2 plant
O&M

Additional H2
ﬁnancing cost

UpdatedestimateCore assumptions: Yearly production of 1 Mt of hydrogen; Dedicated solar PV and wind capacity “behind the meter” feeding into the electrolyzer
Source: McKinsey

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

20

Exhibit 14
Electrolyzer plant capital expenditure
costs could decline by about 45%
through 2030

Renewable H2 capex (US Gulf Coast 1 GW alkaline facility example), USD/kW, for fully installed system
Electrolyzer

Balance of plant

Freight

1,600–2,300

Near-term renewable hydrogen capex is higher thanprior public consensus estimates have suggested.
In depth analysis breaking down the electrolyzer,
material components, and installation costs suggeststhat costs could still fall by as much as 35% to 45%
through 2030. Multiple factors have increased nearterm capex estimates: inflation rates on materials,
equipment, and labor, together with a moresophisticated understanding of the developer costs.
Balance of plant and indirect costs (e.g., contractor fees,
owner’s costs) account for the largest differential versus
prior estimates.
Lower electrolyzer system costs are likely the primary
drivers for cost-down efforts through 2030. Achieving
this projected system cost-down would be contingent
on successfully ramping up electrolyzer manufacturing
capacity to meet giga-scale mid to late-decadedemand. Electrolyzer cost reductions could also result
from designing-to-cost, including minimizing precious
metal content in core components and streamlining
system designs. In parallel, increases in electrolyzer
power density and efficiency could serve both to
reduce overall system footprint and decrease thenominal electrolyzer capacity needed to achieve similarhydrogen output.

Owner’s costs and contractor fees

1,800–2,200

1,200–1,500

1,100–1,200

1,000–1,200 900–1,200

Capital cost decreases
Reduced footprint drives balanceof plant quantity reductions (e.g.,concrete, piping, electrical)

Technological advancements in electrolyzer systems
could have knock-on effects that reduce both thebalance of plant and indirect costs. More efficient andstreamlined plant design with smaller footprint requireless materials (e.g., concrete, steel, piping, electricalconduits) and fewer construction labor hours, as wellas marginally lower unit shipping costs. Indirect costs
like overhead, contractor fees, and owner’s costs thatare calculated as a factor of direct costs decreasecommensurately with total direct capex.

Electrolyzer costs, power density, and efficiency improve overtime, reducing system footprint

2023

2023

Previous
perspective

2023

2030

2040

2050

Updated engineering-based
perspective

Total cost estimate
from member survey
Source: McKinsey Capital Analytics; Survey of Hydrogen Council Member FEED studies

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21

Exhibit 15
Fully optimized systems could reduce
capital expenditure by as much as 25%
Advances in electrolyzer technology and manufacturing,
improvements in the balance of plant, and knock-on
effects will likely drive down electrolyzer plant capex
for most projects. Additional actions could further
accelerate the cost-down trajectory, if project delivery
is substantially redesigned. Three such measures tofully optimize and accelerate the cost-down trajectoryof projects include:

Renewable H2 capex (US Gulf Coast 1 GW alkaline facility example), USD/kW, for fully installed system
Average

Fully optimized

1,800–2,200-30–45%
Potential cost reduction drivers through 2030
• Electrolyzer technology and manufacturing
advancements• Balance of plant improvements• Knock-on effects to indirect costs— Building successive projects to maximize
learning rates— Procuring at scale across multiple projects to achieve
volume discounts

1,200–1,500— Implementing rigorous design simplificationand standardization-10–25%

Implementing all these measures to reduce electrolyzer
plant capex could further reduce renewable LCOH byan additional 0.2 - 0.4 USD/kg by 2030. However – only
the best-in-class developers who will radically challengebase assumptions in design, installation, and scale-up
will be able to attain these fully optimized costs.

900–1,200

Additional actions that could be taken to fully
optimize projects to reduce costs further• Build successive projects to maximize
learning rates• Procure at scale across projects
to achieve volume discounts• Implement design standardizationand simpliﬁcation

2023

2030

Source: McKinsey Capital Analytics; Survey of Hydrogen Council Member FEED studies

Hydrogen Insights December 2023
Hydrogen Council, McKinsey & Company

22