In a spotless, hushed factory near Hamburg in northern Germany, industrial robots stand ready to assemble the components of electrolysers.
These devices split water into oxygen and hydrogen. The ones manufactured by Quest One use proton exchange membranes to accomplish this.
The robotic arms crafting Quest One’s electrolysers are faster and more reliable than the humans they’ve replaced.
But that speed and efficiency is not fully needed yet, as the order volume for electrolysers is far below the facility’s capacity.
The mismatch between supply and demand is evident from Quest One’s own staffing.
This Hamburg plant can support almost double the current staff. But earlier this year, the company had to lay off 20% of its workforce in Germany.
“The market itself is not picking up organically,” acknowledges Nima Pegemanyfar, Quest One’s executive vice president for customer operations. “Demand is the problem. It’s not supply.”
Demand is sluggish in part because green hydrogen – hydrogen produced via electrolysis, using renewable electricity – remains pricey compared to the fossil fuels used to make other types of hydrogen.
Low-emissions hydrogen production makes up less than 1% of hydrogen production globally. This includes both green hydrogen and blue hydrogen, which is produced from natural gas with the resulting carbon dioxide captured and stored.
Scaling up would help bring down the costs of green hydrogen, but many projects remain small-scale.
Quest One is hoping that production of green hydrogen will eventually cost €4 ($4.60; £3.50) per kilogram – about half of the current price in Germany, according to the company.
The gap is not only between supply and demand.
There may also be a disconnect between the sectors where green hydrogen is most badly needed (for instance, for high-temperature uses in the chemical, steel and shipping industries) and the use cases that are less competitive, but still generate chatter.
Christian Stöcker, a communication professor at the Hamburg University of Applied Sciences, is frustrated at the attention paid to hydrogen for heating buildings and powering cars. These would be extremely inefficient, he points out, in comparison to heat pumps and electrification.
Prof Stöcker is also concerned about green hydrogen’s links to fossil fuel companies and automakers. Some critics argue that these companies have an interest in finding uses for, or justifying, fossil fuel infrastructure.
Quest One is part of the Volkswagen Group, which reportedly is considering selling the company it owns (Everllence) that in turn owns Quest One.
Volkswagen would not confirm or deny this to the BBC, or specify whether it had any other plans related to green hydrogen. A spokesperson states, “We are currently reviewing strategic options for Everllence.”