France’s McPhy Energy plans new gigafactory to make green hydrogen production gear

A supply port on Toyota's Mirai, a hydrogen fuel cell vehicle. France plans to spend $8.5 billion this decade to boost clean production of hydrogen, which uses electricity to split hydrogen from water. ReutersShow less

McPhy Energy is set to build a “gigafactory” in eastern France to make equipment for hydrogen production – an industry at the forefront of Europe’s plans to slash carbon emissions.

The plant in Belfort will be able to produce 1 gigawatt of electrolysers a year, McPhy said on Thursday. That puts it on par with large industrial players like Siemens Energy and Thyssenkrupp, and will help to further the country’s ambitions for a massive expansion of hydrogen made from renewable energy.

“This future factory will play a major role in the transition to industrial-scale electrolysis, an essential condition for green hydrogen to achieve the decarbonation objectives set by the French government and the European authorities,” McPhy chairman Pascal Mauberger said in a statement.

Governments and businesses in Europe are pushing the development of hydrogen to replace fossil fuels in industries such as chemicals manufacturing, steelmaking and potentially aviation.

France plans to spend €7 billion ($8.5bn) this decade to boost clean production of the fuel, which uses electricity to split hydrogen from water. The process is currently costlier than extracting the fuel from natural gas and companies need state funding for it.

As a French business, McPhy stands to gain from the government’s planned support. Its Belfort facility, costing as much as €40 million, will help create around 400 jobs in France and start production in early 2024. The company intends to make a final investment decision by the end of this year as long as it gets government backing.

Today, if you linked up one of McPhy’s electrolysing machines to a wind farm in France, the hydrogen produced would cost about $5 per kilogramme, compared with about $1 for hydrogen made from fossil fuels, according to BloombergNEF. But as companies scale up, the cost of green hydrogen in France is seen falling to about $1.62 per kilogramme by 2030 and even less by mid-century.