Topsoe puts hydrogen technology rollout on hold amid weak market outlook

Topsoe has scaled back a commercial rollout of its solid oxide electrolyser cells (SOECs), citing weak green hydrogen market growth and uncertainty about the energy transition.

IMAGE: Topsoe's SOEC production facility in Denmark. Topsoe

The Danish energy technology company said it will “hibernate” its SOEC manufacturing facility in Herning, Denmark, and keep it idle until market demand improves. It has already tested commercial-scale production at the plant.

It will also not proceed with a planned second SOEC manufacturing facility in the US.

“The slower than expected development in targeted clean hydrogen markets, combined with global market uncertainty and general hesitation in the markets we serve, means that we must respond actively to stay profitable and competitive,” chief executive Elena Scaltritti said.

Topsoe’s SOEC technology is relevant to shipping because the company aims to produce green hydrogen more efficiently than other electrolysers. Topsoe claims the technology can deliver 30% more hydrogen from the same renewable energy input.

Cloudy outlook for cheaper e-fuels

Green hydrogen is one of the main feedstocks used to produce e-methanol and e-ammonia, two fuels being explored by the shipping industry to reduce emissions.

Lower green hydrogen production costs can reduce the cost of these fuels.

For instance, a 2022 study by the Global Maritime Forum notes that producing 1 mt of e-methanol typically requires around 200 kg (0.2 mt) of green hydrogen and 1.5 mt of CO2.

Assuming green hydrogen is priced at around $6/kg ($6,000/mt), the hydrogen component alone costs $1,200/mt of e-methanol produced. If CO2 is priced at $600/mt, the CO2 component adds $900/mt, bringing total feedstock costs to $2,100/mt.

If green hydrogen costs fall to around $2/kg, the hydrogen component drops to roughly $400/mt.

Even if CO2 costs remain unchanged, total feedstock costs would fall to around $1,300/mt, reducing the cost premium of e-methanol over conventional marine fuels.

Topsoe said it will continue developing the SOEC technology through partnerships and demonstration projects and maintains that e-fuels will remain essential for a sustainable future.

But a global firm’s decision to pause a large-scale manufacturing expansion reflects a more cautious near-term outlook for green hydrogen markets.

Topsoe’s decision follows marine electrolyser company TECO 2030 filing for bankruptcy last year after citing a lack of “realistic opportunities to raise sufficient capital to continue operations”, as well as regulatory uncertainty in the market.

By Konica Bhatt

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