In-Depth Interview: ITM CEO on Alkaline and PEM Electrolysers
Dennis Schulz, CEO of UK-based electrolyser manufacturer ITM Power, argues that once total project economics are taken into account, alkaline electrolysers do not offer a clear cost advantage over proton exchange membrane (PEM) systems. Although alkaline electrolysis has been in use for decades and is often perceived as the lower-cost option, Schulz notes that integration requirements, performance considerations, and additional project costs at scale frequently favor PEM solutions.
Perceived Advantages of Alkaline Electrolysis
Alkaline electrolysis is widely deployed in industrial hydrogen production and is commonly viewed as more economical due to lower capital expenditure (CAPEX). Chinese manufacturers in particular have driven down prices through large-scale production of alkaline stacks.
However, Schulz emphasizes that focusing solely on stack pricing can be misleading. Project developers must also account for installation, compression, cooling, water treatment, and other balance-of-plant components. When these factors are included, the cost differential between alkaline and PEM electrolysers narrows—and in some cases, PEM systems can be more cost-effective overall.
The Case for PEM
PEM electrolysers are widely recognized for higher efficiency, faster response times, and superior compatibility with intermittent renewable energy sources such as wind and solar. Schulz stresses that for grid-connected projects, maximizing operating hours and efficiency is paramount, and the advantages offered by PEM more than offset any perceived premium in stack pricing.
He also highlights durability: PEM stacks are advancing rapidly, with improving lifetimes and declining operating costs. From ITM’s perspective, this trajectory undermines the assumption that alkaline systems are always more economical over time.
Market Context
China’s dominance in alkaline electrolyser manufacturing has kept global prices low. However, Schulz argues that this does not tell the full story. Projects in Western markets face increasing scrutiny around financing, safety, and system integration.
According to Schulz, banks and investors are seeking predictability in operational performance—an area where PEM technology is particularly attractive. Meanwhile, European manufacturers such as ITM are expanding PEM production capacity, aiming to establish gigawatt-scale factories capable of delivering economies of scale. Once achieved, this could further erode the apparent price advantage of alkaline electrolysers.
A Project-Level Perspective
For Schulz, the critical point is that cost advantages must be assessed at the full project level, not merely by comparing electrolyser stack prices. Cooling systems, deoxygenation units, footprint requirements, and compatibility with grid-balancing all influence final project economics.
“When you add all of these elements together, alkaline electrolysis is not cheap,” he asserts. In fact, for renewable energy projects requiring flexibility and rapid start-stop capability, PEM systems may deliver higher overall returns despite higher upfront equipment costs.
Looking Ahead
ITM’s strategy is clear: position PEM as the preferred technology for green hydrogen projects in Europe and beyond. Schulz believes that both technologies will coexist, but predicts that as renewable energy penetration increases and lifecycle economics take precedence, the market will increasingly recognize the advantages of PEM.
The debate is far from settled, but ITM’s message is unambiguous: electrolysers should not be judged solely on headline pricing. At the full project level, PEM may well prove to be the more financially sound choice.