Global clean energy deployment scaled new heights in 2023, while water electrolyser capacity for dedicated hydrogen production exceeded 1GW. However, wind additions in the EU increased by only just under 10%, while electrolyser capacity additions barely surpassed 70MW. This shows the level of supply bottleneck faced by the EU’s aspiring low-emission steel industry.

According to a new International Energy Agency (IEA) report, 2023 saw global solar PV and wind energy capacity grow 85% and 60% respectively, with China accounting for the majority of both.

Wind power has been touted as supplying the electricity needed for future green hydrogen production by electrolysers in the EU, which would be used as the reductant for an array of new direct reduced iron plants. Amid fears of insufficient renewables capacity buildout, the import of low-emission metallics from abroad has been identified as an alternative.

While China almost doubled its wind capacity additions in 2023, EU growth fell short of 10%, with onshore wind deployment slowing down.

“Developers have been facing multiple challenges, including rising equipment costs, inflation, and supply chain constraints, which have made them less eager to participate in competitive auctions,” IEA says in the report seen by Kallanish.

“Most countries in Europe have introduced policies to address the challenges posed by slow and complex permitting procedures for wind projects. In fact, more policies and regulatory changes have been instituted in the last two years to ease permitting than over the previous decade. However, the impact of these policies will only be visible in the coming years considering project development timelines,” it adds.

US wind additions declined over 25% in 2023 mainly due to uncertainty over the tax credit extension before the adoption of the Inflation Reduction Act (IRA). However, they are expected to increase significantly in the coming years.

As for water electrolysers, from accounting for less than 10% of the global installed capacity in 2020, China reached installed capacity of 650MW by end-2023, almost half the global share of 1.3GW.

The EU accounted for around one-third of global installed capacity in 2020, but has now ceded its leading position. The US meanwhile came third behind the EU in 2023 with additions exceeding 30MW.

For electrolyser capacity outside China, “demand uncertainty and lack of regulatory clarity, coupled with recent challenges such as inflation, the fall in fossil fuel prices, and slow implementation of support mechanisms have hindered faster adoption,” IEA concludes.