- China holds 86% of global alkaline electrolyser manufacturing capacity.
- Chinese systems cost as little as one fifth of comparable European units.
- Annual production capacity of 39 to 40 GW far exceeds projected global demand of 10 GW.
A new report published by the World Bank Group on 25 February 2026 confirms China’s dominant position in the global alkaline electrolyser manufacturing sector and highlights its rapid progress in Proton Exchange Membrane technology.
The 183 page technical paper titled Electrolysers for Hydrogen Production Technical and Economic Characteristics details the scale of China’s market share, cost competitiveness and expansion strategy at a time when global hydrogen markets are entering a new phase of industrial competition.
According to the report, China accounts for 86% of global alkaline electrolyser manufacturing capacity. This segment remains the backbone of large-scale hydrogen production due to its maturity and lower capital cost.
At the same time, Chinese manufacturers are rapidly expanding into PEM technology, a segment historically led by Western companies. PEM systems are better suited to intermittent renewable energy applications such as solar and wind. The report notes that Chinese firms are closing the technological gap while scaling up production volumes.
Cost competitiveness remains China’s most disruptive advantage. Electrolysis systems produced in China are manufactured at a fraction of Western costs, with some estimates indicating pricing as low as one fifth of comparable European units at similar efficiency levels. This cost differential is reshaping procurement decisions across emerging hydrogen markets.
In less than a decade, China’s share of total global electrolyser manufacturing capacity has risen from 5% to 60%, underscoring the speed of industrial scaling supported by state backed firms and large private renewable energy companies.
By the end of 2024, China’s annual electrolyser manufacturing capacity reached between 39 GW and 40 GW. This significantly exceeds projected global demand of around 10 GW for 2025 and 2026, creating clear overcapacity risks and intensifying international competition.
The report indicates that PEM installations in China are expected to account for 18% of total new water electrolysis capacity by the end of 2026. Growth is being driven by improvements in core components and falling renewable energy costs, strengthening the business case for flexible hydrogen production aligned with variable power generation.
With domestic demand increasingly saturated, Chinese manufacturers are targeting export markets. Strategic focus areas include the Arab Gulf States, where large scale green hydrogen projects are under development and cost competitiveness is a decisive factor.
Cost comparisons between 2024 and 2026 further illustrate the pricing gap. Chinese electrolysers installed outside China are estimated at between US$1,500 and US$2,400 per kW. Comparable non-Chinese systems range from US$2,000 to US$2,600 per kW.
For African energy developers and policymakers, the implications are significant. Lower electrolyser costs could accelerate green hydrogen feasibility across the continent, particularly in markets with strong solar and wind resources. However, the rapid consolidation of manufacturing power within a single geography also raises strategic questions around supply chain resilience, localisation and long-term technology sovereignty.
As global hydrogen ambitions transition from pilot phase to industrial scale deployment, cost leadership and manufacturing capacity are emerging as the decisive battleground. China has clearly positioned itself at the centre of that shift.
Link to the full report HERE
Author: Bryan Groenendaal
