China unlikely to repeat dominance in solar and EV batteries with green hydrogen technology: IEA
6 October 2025
China is not expected to dominate the global green hydrogen sector in the same way it has with solar panels and electric vehicle (EV) batteries, according to the International Energy Agency (IEA).
The Paris-based agency explained that while Chinese-made electrolysers are significantly cheaper than those produced in Europe or the US, their deployment in European projects would only deliver modest reductions in the levelized cost of hydrogen (LCOH).
“Electrolyser equipment is only one component of overall project costs,” the IEA noted. “Transport, installation, grid connections, and local balance-of-plant expenses can quickly erode cost advantages from imported units.”
The report contrasts the hydrogen sector with solar and EV batteries, where China’s massive manufacturing capacity, global supply chains, and aggressive domestic subsidies enabled it to dominate. For hydrogen, local conditions and regulatory environments play a much larger role.
The agency added that in markets like Europe, even if developers were to import low-cost Chinese equipment, other high local costs such as labor, land, and permitting would continue to drive overall hydrogen prices.
This means that European and American electrolyser manufacturers may still remain competitive, especially if they focus on efficiency improvements, integration with renewable projects, and system optimization.
“Unlike solar panels, where equipment costs account for most of the investment, in hydrogen projects, the cost of electricity, infrastructure, and logistics matter just as much,” the IEA stated.
The analysis underscores the need for governments to support local electrolyser industries, not only to reduce costs but also to strengthen supply chain security and resilience.
The IEA concluded that while China will remain a major player in electrolyser manufacturing, it is unlikely to achieve the same level of market dominance as it has in solar and EV batteries.
