The clean hydrogen sector in Europe has suffered a major blow. McPhy Energy, a French company lauded for its advances in both proton exchange membrane (PEM) and alkaline electrolysis, has announced it is entering judicial liquidation. After 16 years of development, McPhy was unable to secure a buyer, and its stock price nosedived by 77% on its final day of trading.
The fall of McPhy is more than the demise of a single company – it prompts serious questions about the long-term viability of Europe’s electrolyser industry and the region’s role in the global hydrogen economy.
A Symptom of a Broader Crisis?
McPhy’s collapse underscores the mounting pressure faced by European electrolyser manufacturers. It is not an isolated event. From Germany to the UK, Europe’s hydrogen innovators are facing a common challenge: how to remain competitive in a market increasingly dominated by China.
Chinese manufacturers now offer electrolysers at a fraction of the price of their European counterparts – between $480 and $720 per kilowatt, compared to more than $2,000/kW in the West. This cost gap, largely the result of robust state subsidies, including free land and zero-interest loans, threatens to edge out European firms from their own market.
Concerns about this were voiced in a joint letter to European Commission President Ursula von der Leyen by major European players, including Thyssenkrupp Nucera, Siemens Energy, and Norway’s Nel Hydrogen. They warned that fewer than half of EU hydrogen projects plan to use European-made electrolysis equipment – and that figure could fall further if action isn’t taken.
European Players: Resilient, but Under Pressure
Despite the hostile market conditions, some European companies continue to innovate.
UK-based ITM Power recently unveiled its containerised 5MW NEPTUNE V electrolyser plant and is involved in projects across Germany, Japan, and Norway, including Yara’s 24MW hydrogen facility.
Norway’s HydrogenPro has delivered Northern Europe’s largest electrolyser system and secured a 220MW order in the United States. The company has partnered with Austrian firm ANDRITZ to industrialise electrolyser production.
Ceres Power, also based in the UK, is taking a different tack with solid oxide electrolyser technology. While the firm posted £51.9 million in revenue in 2024, it also reported a £31.3 million operating loss – a reminder of the financial strain this sector is under, even for innovators.
The Chinese Advantage – and Europe’s Strategic Response
China’s surge into the global electrolyser market is drawing comparisons to its earlier move into solar PV – a strategy that left European manufacturers reeling. To avoid a repeat, the European Union is planning tougher rules on subsidy eligibility.
New EU guidelines will cap the use of Chinese-made electrolyser stacks at 25% for projects seeking public support. Funding criteria will also consider factors beyond price – such as environmental performance, cybersecurity, and European job creation – to give local suppliers a fairer chance.
But critics argue this may not be enough. Without deeper structural support – through public procurement guarantees, direct subsidies, and investment in local supply chains – European electrolysis may remain vulnerable.
Infrastructure Bottlenecks: Another Stumbling Block
Even if Europe can manufacture competitive electrolysers, green hydrogen still faces an enormous barrier: infrastructure.
In the UK, major investments like the £3.4 billion Eastern Green Links project are attempting to address this. These undersea HVDC (high-voltage direct current) cables will help balance the electricity grid and improve the transport of renewable energy. But hydrogen faces its own transmission challenges.
Blending hydrogen into existing gas pipelines or developing dedicated hydrogen networks involves costly retrofitting and rigorous safety testing. National Gas, for example, is piloting hydrogen-only trials in the UK – but large-scale adoption awaits further regulatory support and funding.
And with green hydrogen production dependent on surplus renewable electricity, the lack of a highly flexible, interconnected European grid continues to limit both supply and scalability.
What Does the Future Hold for Green Hydrogen in Europe?
McPhy’s failure may be the first major casualty of Europe’s electrolyser challenge, but without swift and strategic intervention, it may not be the last.
The clean hydrogen sector remains critical to Europe’s net-zero ambitions, with applications across energy storage, heavy industry, and transport. But to realise this vision, the region must close the cost gap with China, scale infrastructure, and protect its homegrown technology base.
Without bold action, Europe risks becoming a customer, not a creator, in the global hydrogen economy.
The post McPhy’s Collapse and the European Electrolyser Dilemma: Can Europe Compete in the Hydrogen Race? first appeared on Haush.