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The global electrolyzer market size was valued at USD 390.4 million in 2021. The market is projected to grow from USD 416.8 million in 2022 to USD 619.6 million by 2029, exhibiting a CAGR of 5.8% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with electrolyzer experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 13.40 % in 2020 as compared to 2019.
Hydrogen gas is a highly proficient, clean-burning fuel mainly used to produce chemicals such as ammonia and methanol. Ammonia (NH3) is a quintessential part of fertilizers used in agriculture industries. In contrast, hydrogen is used in the hydrocracking process to produce gasoline, diesel, and other petroleum products in the petroleum industry. Newly commercialized hydrogen applications, such as fuel cells, are opening new opportunities in transportation and other energy-related industries. The gas has already been utilized as a fuel for cooling power plant generators and provides a promising means for electrical grid stabilization. Hydrogen gas is mainly created from the coal gasification process, the steam methane reforming process, or electrolyzers, which involve water electrolysis.
These systems utilize electricity to split the water molecule into hydrogen and oxygen in a process called electrolysis. An external voltage is applied to the electrolysis cell electrodes, which is usually in the range of 1.6 V - 2 V. Accelerated by the catalytic effect of the metal electrodes, water supplied to the anode is split through which oxygen, free electrons, and positively charged hydrogen ions are produced.
Supply Chains Disruptions amid COVID-19 Pandemic to Hamper Market Growth
The worldwide health emergency caused by the sudden outbreak of COVID-19 has significantly affected numerous verticals. Nearly all the countries have witnessed a huge expansion in the number of affected cases since 2020. The pandemic's outcome has also hampered the economies of many fast-growing developing countries. This market was also immediately affected accordingly by the COVID-19 outbreak. The oil refining industry, chemical sector, and steel manufacturing industry currently have witnessed huge hydrogen demand, which the COVID-19 outbreak has significantly impacted.
Different emerging economies that largely focus on integrating clean power energy generation technologies have also witnessed a setback by the outbreak of deadly diseases. For example, China and India are among the major countries participating in clean energy installation worldwide. Renewable energy sources such as hydrogen generation are rising, and many manufacturers will continue to invest in them. Additionally, economic stimulus packages supported by many state governments combined with industry players' insistent activities are anticipated to boost the deployment of such electrolysis systems capacity.
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Growing Utilization of Hydrogen as a Green Fuel to Propel Market Growth
Decarbonizing and fulfilling the requirements of the energy sector can be achieved by adopting hydrogen energy as an alternative to fossil fuels. Hydrogen as a gas is considered a green fuel due to its negligible amount of carbon emissions, which has led to several governments worldwide focusing on creating a sustainable hydrogen economy. Through research & development activities, manufacturers operating in the market are trying to increase the devices' efficiency and catalyst & membrane effectiveness. These development activities could be a major step toward rendering the electrolysis process more cost-effective. Furthermore, demand for hydrogen is rising in chemical, glass, mining, food & beverage, and semiconductor industries, which are projected to drive the global industry in the analyzed timeframe.
Growing Peak Energy Demand Coupled with Favorable Policy Framework to Compliment Industry Outlook
The growing population worldwide combined with growing initiatives to expand rural electrification has given rise to the peak energy demand. Additionally, the increased rate of urbanization and the coming up of new big valued infrastructure projects have increased the power supply-demand from utilities. Encouraging regulatory policies introduced by different authorities to promote low carbon technologies have positively propelled the market size. For instance, on April 3rd, 2020, the Japanese company, Asahi Kasei installed an alkaline water electrolysis system at the Fukushima Hydrogen Energy Research Field (FH2R), Japan. While hydrogen supply operation continues, the system’s performance in response to fluctuating power input was evaluated successfully, and its full-fledged operation at the core of FH2R was commenced in September 2020.
Increasing Investments for Power Generation in Asia Pacific to Favor Overall Market Growth
In Asia Pacific, India, Singapore, and Malaysia have begun putting resources into hydrogen production and its storage technologies. Hydrogen is being utilized in the region's power generation and transportation industry. Besides, China started the construction of a hydrogen city in Wuhan, contributing around USD 290 million to the project. The government is focused on technological advancements of large-scale on-site hydrogen production for environment-friendly power storage, grid balancing, power to gas, and Hydrogen Refueling Stations (HRS). Many central participants are letting organizations to upgrade their industry presence to drive the business situation. For example, in June 2020, Plug Power finished the acquisition of United Hydrogen and GINER ELX.
Growing Demand for Hydrogen in Fuel Cell-based Automobile Sector to Promote Market Growth
The surging demand for fuel cell-based automobiles, such as electric vehicles and buses, in North America and Asia Pacific has already been witnessed. Additionally, China, Japan, and South Korea have proposed strong commitments to reduce the growing dependency on gasoline fuel by investing in fuel cell-based vehicle programs. According to recent studies, it is reported that a 72% reduction in total GHG emissions can be obtained by switching from gasoline vehicles to FCEVs in the transportation industry and that they are becoming both technologically and economically viable compared with incumbent vehicles. These factors are expected to contribute to the electrolyzer market growth in the forthcoming years.
High Cost of Electricity Required for Electrolysis to Impede Market Growth
The cost of electricity is the most significant factor, which increases the cost of producing hydrogen through the electrolytic process. Furthermore, recent sharp declines in solar and wind power costs have reduced the real and expected prices of renewable hydrogen. For example, utility-scale solar photovoltaic (PV) capital costs are 75% lower than in 2010, and electricity from onshore wind is around one-quarter cheaper today than 10 years ago. This has led more potential end-users to look closely at whether renewable hydrogen is becoming a competitive way to meet their needs and reduce their environmental impact.
Traditional Alkaline Segment to Dominate Market
Based on type, the global market is classified into traditional alkaline electrolyzer and Polymer Electrolyte Membrane (PEM) electrolyzer. The traditional alkaline electrolyzer segment accounted for the major electrolyzer market share in 2021. These systems use nickel-based catalysts in an alkaline electrolyte solution such as potassium hydroxide and a diaphragm to separate electrodes and transport hydroxide ions. Demand for these systems is rapidly increasing due to their longer durability. It is extensively used in many industrial applications, including electronics and photovoltaics of plastics, power-producing plants, steel manufacturing units, and others.
PEM type held a significant portion of the global market in 2021. When used with intermittent renewable power sources (wind and solar), these systems are the most common hydrogen generators due to their high efficiencies and ability to cycle rapidly.
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Power Plants Segment is Aided by Growing Demand for Hydrogen to Produce Electricity
Based on application, the global market is categorized into power plants, steel plants, electronics & photovoltaics, industrial gases, energy storage or fueling for FCEVs, power to gas, and others.
The power plants segment accounted for the major share of 26.71% in the global market in 2021. Hydrogen production and storage are combined with power generation equipment, including fuel cells, reciprocating engines, combustion turbines, and steam turbines, resulting in a storage device to time-shift delivery of electricity for electric grid applications.
The electronics & photovoltaics segment occupied a significant portion of the market in 2021, as electrolysis systems are primarily used in photovoltaic (PV), solar thermal (STC), and hybrid photovoltaic/thermal (PV/T) systems. The steel manufacturing industry is also a key market segment. The increasing utilization of hydrogen fuel as a solution to decarbonize the industry has been receiving an increasing amount of attention.
North America Electrolyzer Market Size, 2021 (USD Million)
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Based on geography, the market is analyzed across Europe, North America, Asia Pacific, and the Rest of the World.
The North America region accounted for the majority share in value and volume in 2021, owing to the increasing demand for hydrogen in various applications in the manufacturing sector, power industry, and others. North America has established manufacturing infrastructures for various global brands and is witnessing a growing interest in energy storage or fueling for FCEVs operations. Additionally, the region has witnessed noticeable investment in the production, exploration, and refining sector, which is anticipated to propel the demand for hydrogen gas extensively in the coming years.
Furthermore, Europe's market size is favored by increasing investments. It plans to expand and fortify the grid infrastructure networks to support the increasing renewable energy installation, which is anticipated to further propel the industry. Besides, a positive outlook with a supporting regulatory structure to mandate energy security across establishments is set to add to the market growth. For example, in November 2019, the government of Germany approved the National Innovation Programme for Hydrogen and Fuel Cell Technologies for another 10 years with USD 1.54 billion of funding, including subsidies for publicly accessible hydrogen refueling stations, fuel cell vehicles, and micro co-generation purchases, complemented by USD 3.4 billion of private investment.
In Asia Pacific, the rising awareness of clean energy, government-aided financial support, and the need to fulfill demand & supply mismatch will complement the industry outlook. Continuous building of new domestic & commercial spaces and the setup of new industrial gas facilities augmented the adoption of these systems in the region.
Siemens Focuses on Attaining New Contracts through its Subsidiaries to Strengthen its Position
The global market for these systems has observed many manufacturers fortifying their position by providing a wide range of systems & their services to customers. The industry also witnessed intense involvement of key regional and global players alomg with many small & medium-scale system integrators.
A German company, Siemens, dominates the current global market with its solid electrolysis products & solutions assortment for many hydrogen utilizing sectors across the globe. For example, in March 2022, Siemens Energy announced that it secured an order from European Energy to deliver a 50MW electrolyzer plant for a large-scale commercial e-methanol production facility. Also, in September 2019, Cummins Inc. announced the acquisition of fuel cell and hydrogen production technologies provider, Hydrogenics Corporation. The acquisition was completed for USD 15.00 per share, representing an enterprise value of approximately USD 290 million, and follows the approval of hydrogenics shareholders.
Other major players also include Nel Hydrogen, Asahi Kasei, and Hydrogenics, among others, leading in delivering various types of advanced systems & solutions. The demand for such electrolytic systems is increasing sharply in food & beverage, power generation, water & wastewater, chemical & petrochemical industries, and other sectors.
An Infographic Representation of Electrolyzer Market
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The market research report offers a qualitative and quantitative in-depth industry analysis of the global market. It further provides details on the adoption of these systems across several regions. The report provides a detailed competitive landscape by presenting information on key players and their strategies in the market. Information on electrolyzer market trends, drivers, opportunities, threats, and market restraints can further help stakeholders gain valuable insights into the market.
Volume (MW) and Value (USD Million)
By Type, Application, and Region
Fortune Business Insights says that the global market size was USD 390.4 million in 2021 and is projected to reach USD 619.6 million by 2029.
In 2021, the region stood at USD 209.54 million.
Registering a CAGR of 5.8%, the market is projected to exhibit staggering growth during the forecast period (2022-2029).
The traditional alkaline electrolyzer segment is anticipated to hold the leading share in this market during the forecast period.
The growing demand for hydrogen in the fuel cell-based automobile sector and rising peak energy demand coupled with a favorable policy framework are some of the major factors driving the market growth.
Siemens Energy, Nel Hydrogen, Asahi Kasei, and Hydrogenics are the key players operating across the industry.
North America dominated the market in terms of share in 2021.
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