Electrolysis, Efficiency, and the Real Cost of Hydrogen
Two figures, one takeaway: don’t pick a technology on CAPEX alone—pick it on delivered €/kg.
When we talk about green hydrogen, one question comes up again and again: which electrolysis technology will dominate? Developers today mainly rely on alkaline and PEM systems, simply because they are available at scale. But when you look closely at the data, the race is much more interesting.
In the first figure above you can see the four main contenders: Alkaline, AEM, PEM, and SOEC. Each has its strengths. Alkaline is the workhorse—cheap, proven, and widely available—but it struggles on efficiency. AEM is the newcomer, with the promise of cheaper materials, but it still has to prove durability and scale. PEM brings flexibility, compact design, and dynamic operation, which is invaluable for projects tied to variable renewables, though it comes with high costs and dependence on scarce materials. And then there is SOEC: the efficiency champion, operating with steam to deliver hydrogen at just 40 kWh/kg. If it scales, it could reduce hydrogen costs by as much as 40% compared to alkaline.
But efficiency on paper is not enough. Today, the largest SOEC systems in operation are still only a few megawatts in size. Heat integration, which is essential to unlock those high efficiencies, has not yet been proven at an industrial scale. Europe has one of the strongest SOEC value chains in the world, yet without large demonstrators—and strong government support—the technology risks being stuck in the “promising” category rather than the “dominant” one.
This is why looking at LCOH, not just CAPEX, is so important. The second figure shifts the perspective: instead of asking how cheap a stack is, we ask what it delivers in terms of hydrogen cost per kilogram. Here, efficiency becomes the real driver. Moving from 56 kWh/kg to 40 kWh/kg saves almost one euro per kilogram in electricity costs alone. Throughput matters too: SOEC can produce up to 25–26 kg/h per MW, compared to ~18 for low-temperature systems. That difference reshapes how projects size their plants and balance of system.
And yet, no single technology has the field to itself. SOEC looks unbeatable where steam and heat are readily available, but low-temperature technologies could still leapfrog if they manage to combine cheap, abundant raw materials with meaningful efficiency gains. Alkaline could stay relevant in steady, baseload operations where low CAPEX counts most. PEM will hold ground where footprint and flexibility are decisive. And AEM could surprise us all if it scales fast enough.
For policymakers and developers alike, the lesson is clear: the focus must shift from brochure prices to delivered €/kg, and from isolated performance claims to transparent, standardised data. Europe, with its strong R&D base, can lead—but only if we turn that science into industrial reality through coordinated public–private demonstrators.
Bottom line
SOEC is the efficiency leader, but still needs scale and integration.
Low-temperature technologies can leapfrog if they bring SOEC-level efficiency.
Transparency and standardisation are essential for faster learning.
Public institutions must go beyond subsidies and drive coordinated R&D roadmaps.
The good news is that so many questions are still open. For people like me working in this field, that means the next decade will be full of opportunities to make a real impact. The key is simple: choose your electrolyzer not by its CAPEX, but by the hydrogen it truly delivers.