Hydrogen electrolyzer factories are running under capacity, and the companies that built them are losing money

Why hydrogen electrolyzer companies are losing money

Hydrogen electrolyzer companies are losing money because the factories built to make hydrogen machines are running under capacity, able to build far more machines than anyone is currently buying. An electrolyzer is a machine that splits water into hydrogen using electricity, the basic piece of equipment behind every plan to make hydrogen without burning fossil fuels. The International Energy Agency states that electrolyzer manufacturing is entering a consolidation phase, meaning weaker manufacturers are shutting down or merging because there is not enough demand to keep them all running. In China, which alone holds nearly 60% of global electrolyzer manufacturing capacity, the agency states some manufacturers are already pricing machines below what it costs to make them, a sign of how much unused capacity sits on factory floors. GCN, in its coverage of the International Energy Agency Global Hydrogen Review 2025, states that factories in China alone can build about 20 gigawatts of electrolyzers a year, while the whole world only installed about 2 gigawatts of new capacity in 2024.

Factories built ahead of financed demand

The newest edition of the report, published in 2026, shows the mismatch has not closed even as the market grows. Installed electrolyzer capacity worldwide doubled in 2025 to exceed 4 gigawatts, the agency states, and China accounted for nearly three quarters of that new installation. Another 2.5 gigawatts is under construction and is expected to start running in 2026. But more than 100 gigawatts of capacity that companies have already announced still needs a final decision to pay for building it by the end of 2027, the agency states, or it will likely never be built at all.

One factory shows the mismatch inside a real company

ITM Power, a British electrolyzer maker, shows what that mismatch looks like inside one company. Its existing factory line can already assemble more than 2 gigawatts of electrolyzer stacks a year, but its most recent half year revenue, reported for the 6 months to 31 October 2025, was only 18 million pounds, up from 15.5 million pounds a year earlier. In April 2026, the company took 86.5 million pounds from the British government, a 40 million pound investment from Great British Energy and a 46.5 million pound grant from the Department for Energy Security and Net Zero, to build a second factory line, called Chronos, capable of another 1 gigawatt a year. The government money funds a second line while the existing, larger line already outruns the revenue it earns, a gap visible only by setting the company own funding announcement beside its own half year results.

Dennis Schulz, chief executive officer of ITM Power, described the half year results.

We have yet again delivered our strongest six-month revenue performance to date while maintaining strict cash and operational discipline.

Dennis Schulz, chief executive officer of ITM Power. Source 5.

Ed Miliband, the United Kingdom energy secretary, explained why the government is funding more capacity.

This investment is the Government's clean energy mission in action - rebuilding our energy security with clean homegrown power and good industrial jobs for South Yorkshire.

Ed Miliband, the United Kingdom energy secretary. Source 4.

Orders are growing too, just not fast enough yet

The company plans to add about 250 jobs over 5 years as part of the buildout, with total planned investment reaching up to 120 million pounds over 3 years once matched with its own money. Its order book, the value of contracts already signed but not yet completed, has grown to 152 million pounds, up from 43.7 million pounds 2 years earlier. Real orders are increasing, but the factory capacity being added still runs ahead of the revenue it has produced so far, the same pattern the International Energy Agency describes across the whole industry.