Water Electrolysis Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Alkaline Electrolyzer, Proton Exchange Membrane (PEM) Electrolyzer, Solid Oxide Electrolyzer Cell (SOEC), Anion Exchange Membrane (AEM) Electrolyzers), By Application (Refining Industry, Power and Energy Storage, Ammonia Production, Methanol Production, Transportation/Mobility Industry, O
Published Date: December - 2024 | Publisher: MIR | No of Pages: 320 | Industry: Chemicals | Format: Report available in PDF / Excel Format
View Details Buy Now 2890 Download Sample Ask for Discount Request CustomizationWater Electrolysis Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Alkaline Electrolyzer, Proton Exchange Membrane (PEM) Electrolyzer, Solid Oxide Electrolyzer Cell (SOEC), Anion Exchange Membrane (AEM) Electrolyzers), By Application (Refining Industry, Power and Energy Storage, Ammonia Production, Methanol Production, Transportation/Mobility Industry, O
| Forecast Period | 2025-2029 |
| Market Size (2023) | USD 4.42 billion |
| CAGR (2024-2029) | 4.31% |
| Fastest Growing Segment | Alkaline Electrolyzer |
| Largest Market | Europe |
| Market Size (2029) | USD 5.63 billion |
Market Overview
Global Water Electrolysis Market was valued at USD 4.42 billion in 2023 and is anticipated to project robust growth in the forecast period with a CAGR of 4.31% through 2029.
The growing focus on decarbonization and the transition to low-carbon energy systems is fueling demand for green hydrogen generated via water electrolysis. Green hydrogen, produced using renewable electricity, offers a carbon-neutral alternative to conventional methods like steam methane reforming. With governments and industries globally setting ambitious carbon reduction goals and addressing climate change, the demand for green hydrogen is anticipated to escalate, driving the expansion of the global water electrolysis market.
Advancements in electrolyzer technologies and the decreasing costs of renewable energy are bolstering the commercial feasibility of water electrolysis systems. Manufacturers are investing in research and development to enhance the efficiency, reliability, and scalability of electrolysis technologies, making them more competitive against traditional fossil fuel-based processes. The declining costs of renewable energy sources such as solar and wind power are lowering the overall hydrogen production costs through electrolysis, further stimulating market growth.
Supportive government policies and incentives aimed at promoting renewable energy and hydrogen technologies are also contributing to the growth of the global water electrolysis market. Governments worldwide are implementing various measures like subsidies, tax incentives, and regulatory frameworks to facilitate the development and deployment of electrolysis systems and green hydrogen infrastructure. These policies are fostering investments in electrolysis projects and encouraging collaboration among governments, industries, and research institutions to expedite the adoption of water electrolysis technology.
Key Market Drivers
Growth in Power Industry
The rapid expansion of renewable energy sources like wind and solar power stands as a primary catalyst propelling the global water electrolysis market forward. With nations worldwide committing to ambitious targets for reducing greenhouse gas emissions and addressing climate change, the deployment of renewable energy technologies has surged. Wind and solar power, in particular, have experienced exponential growth, fueled by declining costs, technological advancements, and supportive governmental policies.
Water electrolysis plays a pivotal role in facilitating the integration of renewable energy into the power grid. Electrolyzers can harness surplus electricity generated by wind and solar farms during periods of low demand to produce hydrogen via electrolysis. This green hydrogen can then be stored and utilized as a clean energy carrier for diverse applications, spanning power generation, transportation, and industrial processes. As the proportion of renewable energy in the energy mix continues to rise, the demand for water electrolysis systems to yield green hydrogen is poised to skyrocket, propelling market expansion.
The burgeoning power sector is fueling investments in electrolysis projects and infrastructure development. Power firms are increasingly investing in electrolysis facilities and hydrogen production plants to leverage surplus renewable energy and facilitate grid stabilization. Partnerships between power entities, electrolyzer manufacturers, and research institutions are fostering innovation in electrolysis technologies, driving the creation of more efficient and economically viable electrolysis systems.
The transition toward decarbonizing the power sector is generating fresh avenues for water electrolysis. As power entities aim to shrink their carbon footprint and adhere to stringent environmental regulations, hydrogen generated through electrolysis emerges as a clean and sustainable substitute for traditional fossil fuel-based power generation. The escalating adoption of hydrogen as a power generation fuel, coupled with advancements in electrolysis technologies, is steering the expansion of the global water electrolysis market.
Surge in Technological Advancements
Technological progress has spurred the emergence of advanced electrolysis technologies like proton exchange membrane (PEM) electrolysis and solid oxide electrolysis cells (SOECs). These innovations boast heightened energy efficiency, swifter response times, and enhanced durability compared to conventional alkaline electrolysis methods, rendering them more appealing for commercial use. PEM electrolysis is gaining momentum due to its capability to operate at elevated current densities and lower temperatures, resulting in diminished energy consumption and augmented rates of hydrogen production.
Innovations in materials science and engineering have yielded more resilient and enduring electrolysis components, encompassing catalysts, membranes, and electrodes. These breakthroughs have elongated the lifespan of electrolysis systems, reducing maintenance expenses and downtime while enhancing overall system dependability. Enhanced durability is indispensable for commercial electrolysis applications, where uninterrupted operation and minimal upkeep are imperative.
Technological advancements have facilitated the integration of water electrolysis systems with renewable energy sources like solar and wind power. These systems can now dynamically adapt their operations to match the fluctuating output of renewable energy sources, optimizing energy utilization and bolstering grid stability. The fusion of water electrolysis with renewable energy sources enables the generation of "green hydrogen," characterized by minimal carbon footprint, which can aid in decarbonizing diverse sectors such as transportation, industry, and power generation.
Key Market Challenges
Availability of Renewable Energy
One of the primary hurdles related to utilizing renewable energy for water electrolysis lies in the intermittent nature of renewable energy sources such as solar and wind power. Unlike conventional power sources like coal or natural gas, which offer a consistent and dependable electricity supply, renewable energy sources are subject to external factors like weather conditions and time of day. This intermittency can result in fluctuations in power generation, posing challenges in maintaining steady electrolysis operations and hydrogen production.
Another challenge stems from the disparity between the availability of renewable energy and the demand for hydrogen. In numerous regions, renewable energy generation may surpass demand at certain times, leading to energy curtailment or wastage. There may be instances where renewable energy supply falls short of meeting demand, thereby limiting the availability of clean electricity for water electrolysis. Achieving a balance between renewable energy supply and hydrogen demand to optimize the utilization of electrolysis systems presents a logistical and technical obstacle for stakeholders across the hydrogen value chain.
The integration of renewable energy sources into existing electrical grids and infrastructure introduces further complexities for the water electrolysis market. Grid integration necessitates the implementation of smart grid technologies, energy storage solutions, and grid stabilization mechanisms to manage fluctuations in renewable energy output and ensure grid reliability. The availability of infrastructure for transporting renewable energy from generation sites to electrolysis facilities may be constrained, particularly in remote or underserved areas.
Key Market Trends
Growing Focus on Green Hydrogen
The electrolyzer technology market is experiencing rapid evolution, characterized by efforts to boost efficiency, trim costs, and enhance scalability. Innovative designs like proton exchange membrane (PEM) and alkaline electrolyzers are gaining traction, particularly for their capacity to operate effectively alongside renewable energy sources.
The increasing emphasis on green hydrogen as a sustainable energy carrier is poised to drive substantial growth in the global water electrolysis market in the foreseeable future. Critical factors such as technological breakthroughs, supportive governmental policies, market incentives, and collaborative ventures are set to fuel market expansion, accelerating the shift towards a hydrogen-centric economy.
The amalgamation of electrolysis with renewable energy sources, coupled with advancements in hydrogen storage and distribution infrastructure, will bolster the feasibility and competitiveness of green hydrogen as a clean energy alternative. As the world endeavors to meet ambitious climate targets and transition to a low-carbon trajectory, the significance of green hydrogen and water electrolysis in facilitating decarbonization and fostering energy sustainability will become increasingly indispensable.
Segmental Insights
Type Insights
Based on the category of type, the alkaline electrolyzer emerged as the fastest growing segment in the global market for water electrolysis in 2023.
Operating at elevated efficiencies, alkaline electrolyzers excel in converting electrical energy into hydrogen while minimizing energy losses. This heightened efficiency is instrumental in optimizing the utilization of renewable energy sources and facilitating cost-efficient hydrogen production, rendering alkaline electrolyzers particularly appealing for the generation of green hydrogen.
Application Insights
The power and energy storage segment is projected to experience rapid growth during the forecast period.
In power and energy storage applications, water electrolysis aids in grid balancing and peak shaving by absorbing excess electricity during periods of low demand or high renewable energy generation, and releasing it during periods of high demand or low renewable energy availability. Integrating electrolyzers into the electricity grid infrastructure allows for grid-scale energy storage, supporting grid stability and mitigating issues such as grid congestion, voltage fluctuations, and frequency regulation.
Regional Insights
Europe emerged as the dominant player in the Global Water Electrolysis Market in 2023, holding the largest market share in terms of value.
The integration of renewable energy sources such as wind and solar power into Europe's energy portfolio has been notably successful. This has resulted in ample availability of renewable energy resources for utilization in water electrolysis, rendering it an appealing option for hydrogen generation.
Europe benefits from a robust research and innovation landscape focused on clean energy technologies, including electrolysis. Research institutions, universities, and technology firms in Europe lead the charge in developing cutting-edge electrolysis technologies, materials, and manufacturing processes. Their efforts drive innovation and enhance global competitiveness in the market.
Recent Development
- In March 2023, HIF Global and Siemens Energy finalized a deal enabling Siemens Energy to extend its electrolyzer manufacturing capacity beyond its initial projections. This arrangement is crucial for HIF Global's plans to secure ample capacity for the HIF Matagorda eFuels Facility. The electrolyzers are projected to have a combined capacity of around 1.8 gigawatts (GW), facilitating the production of approximately 300,000 tons per year (tpy) of green hydrogen.
Key Market Players
- Asahi Kasei Corporation
- Nel ASA
- thyssenkrupp
AG
- Cummins
Inc.
- Toshiba
Energy Systems & Solutions Corporation
- Teledyne
Technologies Incorporated
- Suzhou
Green Hydrogen Energy Co., Ltd.
- ITM Power
PLC
- Clean
Power Hydrogen plc
- Plug
Power Inc.
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