Danish manufacturer Topsoe has signed a €94m grant agreement with the EU’s Innovation Fund for its SOEC electrolysis technology to produce green hydrogen. 

The funds will finance the development of Topsoe’s SOEC factory in Herning, Denmark. Expected to be operational by 2024, the factory will have 500MW of capacity with the option to upscale.  

Roeland Baan, CEO of Topsoe, said: "I am very proud that the Innovation Fund acknowledges our technology leadership and our decision to take the first steps in increasing European electrolyser manufacturing capacity. 

"EU funding is key in supporting the industry’s endeavours to back the green hydrogen economy and contribute to EU’s 2050 climate neutrality target… This grant from the EU demonstrates how public incentives and private innovation can bring us closer to net zero." 

The agreement aligns with the EU’s hydrogen strategy to develop 40GW of hydrogen electrolyser capacity along with 10 million tonnes of green hydrogen production by 2030. Earlier this month, the EU also made an informal deal to promote low-carbon or green hydrogen to meet the EU’s decarbonisation targets as part of the ‘Fit for 55’ climate legislation. 

SOECs are known to be key in the production of green hydrogen and its derivatives. They have gained recognition for their potential to decarbonise energy-intensive industries like steel, mining and long-distance transportation that cannot easily be electrified. 

According to Power Technology’s parent company GlobalData’s 2022 Hydrogen Electrolyzers Market Report, global electrolyser capacity stood at 3.97GW in 2022 – a significant 3.61GW jump from the previous year – and is expected to reach 8.52GW by 2026. Additionally, hydrogen has the potential to generate 2,250 terawatt-hours of energy in the EU by 2050. 

In August this year, however, analysts from research houses BNEF and Citigroup warned that the global electrolyser market will be oversaturated by 2025, estimating an oversupply of 61GW compared with the expected 10GW of electrolyser demand. 

“A green hydrogen electrolyser oversupply does not keep me up at night — there isn’t going to be one,” Baan responded. “A lot of the capacity they are talking about is Chinese capacity, which is… pretty poor, as we have heard from people who have actually installed it. The reliability is not that great. The... capacity that is being built up in China is not necessarily a good indication of what the market will absorb.” 

In 2022, Topsoe signed a deal to provide 5GW of its solid-oxide electrolysers for the world’s first commercial-scale green ammonia plants in the US and Germany. With funding secured for its new SOEC facility, Topsoe continues to expand its electrolyser and hydrogen ambitions.