Assessment of electrolysers: report

5. Conclusion and Next Steps

Scotland has significant potential to create a supply chain hub to support the manufacture of electrolysers. It has strong demand for electrolyser deployment, existing technical capability, existing transferable skills and ambitious targets. However, electrolyser manufacturers are already developing plans for their manufacturing out to 2030. The Scottish supply chain, as a result, needs development support now to allow it to integrate into this competitive market. Table 9 gives a summary of the key opportunities and challenges for Scotland in the development of electrolyser supply chains.

Scotland's strengths include its strong hydrogen ambitions that give confidence to project developers and the electrolyser market. Scotland's availability of renewable generation to power electrolytic projects and good engineering and manufacturing capability are further assets. In addition, the early experience of the hydrogen market through demonstrator projects improves commercial readiness for Scotland to develop an electrolyser manufacturing industry.

Table 9: SWOT analysis for Scotland's electrolyser supply chain

Opportunities

• Substantial availability of renewables can provide cost-effective and low carbon electricity.
• Scotland, and the wider European market, will likely be hubs for green hydrogen demand.
• The electrolyser market is growing, and the demand is expected to increase soon.
• Attractive market conditions to encourage electrolyser manufacturers to locate in Scotland.

Strengths

• A strong oil and gas and offshore industry, which includes manufacturers, a skilled workforce and established supply chains.
• Many of the common components needed for electrolysers, such as process equipment, have pre-existing supply chains.
• The Scottish Government is very supportive of the hydrogen sector and wants to promote growth.
• Several companies have started to transition to the hydrogen sector.

Weaknesses

• At present there are no commercial-scale electrolyser manufacturers in the Scottish market.
• The majority of materials required for electrolyser manufacture will likely have to be imported.

Threats

• Close geographical neighbours, such as Germany, have more mature markets and investment.
• A large number of electrolyser manufacturers have existing and planned manufacturing facilities within Europe.
• Electrolyser manufacturers often have trusted suppliers, meaning it is hard for new entrants to the supply chain.

Suggested next steps include:

• Publish supply chain component analysis to facilitate engagement throughout Scotland and attract companies with capabilities that could be transitioned to the hydrogen sector.
• Conduct further in-depth analysis of Scotland's company base and potential gaps including an investigation into establishing supply chain hubs in key areas.
• Further investigation of potential sites to develop hydrogen electrolyser manufacturing and opportunities to link with hydrogen deployment hubs.
• Continue supportive policy to ensure Scotland's hydrogen market develops early, thereby enabling eventual export of skills and components.
• Attract OEMs to locate in Scotland through supportive policy, available funding/support mechanisms, development the earlier tiers of the supply chain and a strong project pipeline.
• Encourage Scotland's academic and research base to increase its focus on hydrogen and electrolysers to attract industry that can take advantage of collaboration and to develop skills for the future

In addition to these suggestions, some supportive policy options that may help the development of electrolyser supply chain in Scotland include:

• Financial support either through grants or loans for companies with the potential to transition.
• Location support through the development of a supply chain hub with planning, access and facility packages.
• Work with UK government to develop the proposed revenue support packages to increase the potential deployment of electrolysers.
• Provide support to training for the supply chain, deployment and maintenance aspects of electrolyser deployment. This could take the shape of supporting apprenticeships or through higher education courses.