The cost landscape in 2026
Electrolyser costs depend on three variables: technology (PEM vs. alkaline vs. solid oxide), geography of manufacture (China vs. Europe/US), and scale (MW vs. GW).
| Technology | Origin | CAPEX ($/kW installed) | Trend |
|---|---|---|---|
| Alkaline | China | $700-1,300 | Stable, massive overcapacity |
| Alkaline | Europe/US | $1,800-2,300 | Down ~30% from 2022 |
| PEM | China | $900-1,500 | Falling fast |
| PEM | Europe/US | $2,000-2,550 | Down ~25% from 2022 |
| SOEC (Solid Oxide) | Europe | $3,000-5,000 | Early commercial, falling |
Chinese manufacturers (LONGi, Peric, Sungrow) have driven alkaline costs below $1,000/kW at scale. Western manufacturers (ITM Power, Nel, Plug Power, Siemens Energy) remain 2-3x more expensive but offer advantages in PEM efficiency, ramp speed, and project-finance bankability.
Why electrolyser cost matters for SAF
In a Power-to-Liquid (PtL) plant, the electrolyser is the single largest capital item. It produces the green hydrogen that reacts with captured CO2 to synthesize jet fuel via Fischer-Tropsch or methanol-to-jet pathways.
The electrolyser's contribution to final SAF cost breaks down as:
- CAPEX: electrolyser hardware + installation = 30-40% of total PtL plant cost
- OPEX: electricity consumption = 50-65% of hydrogen production cost
- Efficiency: kWh per kg H2 determines how much renewable electricity you need
Halving electrolyser CAPEX from $2,000/kW to $1,000/kW reduces green hydrogen cost by ~$1/kg and PtL-SAF cost by roughly $500-800/tonne.
Green hydrogen production cost by region
| Region | H2 cost ($/kg) | Key driver |
|---|---|---|
| Middle East (Saudi, UAE) | $2.50-4.00 | Cheap solar ($13/MWh), low CAPEX |
| Chile, Australia | $3.00-5.00 | Excellent wind/solar, export-oriented |
| China | $3.50-5.50 | Cheap electrolysers, mixed grid |
| US (with 45V credit) | $3.00-5.00 | $3/kg production tax credit |
| Europe | $5.00-7.50 | Higher electricity + CAPEX |
The Middle East and Chile are approaching the $3/kg threshold where PtL-SAF starts to compete with HEFA on a lifecycle cost basis (assuming DAC CO2 at $500/tonne, which is the trajectory for next-generation plants).
The path to $2/kg hydrogen
$2/kg is the widely cited target for competitive green hydrogen. Getting there requires simultaneous progress on three fronts:
- Electrolyser CAPEX below $500/kW. The DOE targets $250/kW uninstalled by 2026. Real-world installed costs lag by 2-3x, but Chinese manufacturers are already approaching this range for alkaline systems. PEM needs another 40-50% reduction.
- Electricity below $20/MWh. Solar PPAs in the Middle East ($13/MWh) and parts of Chile/Australia are already there. Europe and the US need $30-40/MWh wind/solar to reach $3/kg, not $2/kg.
- Utilisation above 4,000 hours/year. Electrolysers running on intermittent renewables without storage achieve 2,000-3,000 hours. Hybrid solar+wind or battery-buffered configurations push toward 4,000-5,000 hours, improving CAPEX amortisation.
What this means for PtL-SAF cost
| Scenario | H2 cost | CO2 cost | PtL-SAF cost |
|---|---|---|---|
| Current (Europe) | $7.16/kg | $750/t (DAC) | $5,000-8,000/t |
| Near-term (ME/Chile, biogenic CO2) | $3.50/kg | $100/t | $2,500-3,500/t |
| Target (2030, optimistic) | $2.00/kg | $300/t (next-gen DAC) | $1,500-2,500/t |
The current European PtL-SAF cost of $5,000-8,000/tonne is roughly 5-8x conventional jet fuel. At $2/kg hydrogen and $300/tonne DAC, PtL-SAF could reach $1,500-2,500/tonne, or 2-3x conventional jet. That's within the range where mandates (ReFuelEU's e-fuel sub-quota) and carbon pricing make it economically viable.
Key takeaways
- Electrolyser costs have fallen 25-30% since 2022 but remain 2-3x the DOE target for Western manufacturers
- Chinese alkaline systems are approaching the target range but face bankability and trade policy risks
- Green hydrogen at $3-4/kg (achievable in ME/Chile today) makes PtL-SAF competitive with HEFA at $2,500-3,500/tonne
- The $2/kg target requires sub-$500/kW electrolysers + sub-$20/MWh electricity + high utilisation
- For PtL project developers: electrolyser selection is the highest-leverage cost decision after site selection
Track electrolyser CAPEX and 21 other feedstock commodities in real-time on our feedstock pricing dashboard.