Growing Demand for the Green Hydrogen Market Industry
The key transformations taking place in the Green Hydrogen Market With the increasing demand for non-polluting sources of energy, green hydrogen is a viable solution, gaining mass acceptance, as it offers high efficiency in conversion and is capable of storage for a longer period. The major challenge green hydrogen faces are its cost. The average global cost of green hydrogen per kg is nearly USD 5.3, which is much higher than other forms of hydrogen that average at around USD 1/ kg. Download PDF Brochure at https://www.marketsandmarkets.com/pdfdownloadNew.asp?id=92444177 With technical advancement over the past decade, the cost of technologies involved in the production of green hydrogen has gone down drastically by a margin of nearly 40% - 80%. These reductions were seen in solar panels cost (nearly 90%) and electrolyzers cost (nearly 40% - 50%). As these two factors contribute to the majority of the cost component of green hydrogen, a reduction in the manufacturing cost will directly impact the hydrogen market growth The key processes used for manufacturing green hydrogen involve water electrolysis using electricity produced from renewable energy sources. The electrolysis process is carried in electrolyzers, and these are mainly of three types: o Polymer Electrolyte Membrane (PEM) electrolyzers, o Alkaline electrolyzers, o Solid Oxide electrolyzers. Solid Oxide electrolyzers are the latest development in electrolysis technology, it is capable of producing nearly 100% conversion efficiency. It can utilize any form of waste heat as well. However, this technology has not been commercialized yet. Polymer Electrolyte Membrane electrolyzers offer a sustainable substitute to alkaline electrolyzers. They offer nearly 80% energy to hydrogen conversion efficiency in their present state. The technology is still under development and is expected to reach 82–86% efficiency by 2030. Alkaline electrolyzers are the oldest process to manufacture green hydrogen. It offers efficiency in the range of 56–73% of energy to hydrogen conversion. The majority of the big current operational and announced projects use alkaline electrolysis due to cost efficiency. The prices of green hydrogen depend majorly on renewable energy cost, electrolyzer cost, and transportation costs. Energy cost contributes to nearly 50%-75% of the final price of green hydrogen, while electrolyzer contributes 20%-40% of the final cost. The green hydrogen market is projected to reach USD 7,314.8 million by 2027, at a CAGR of 61.0% during the forecast period. Europe accounted for the largest share of 58.6% of the global green hydrogen market in 2021 and is expected to record the highest CAGR of 63.5% during the forecast period. Major Driving Factors: Technology, Consumer demand, Policy. Green hydrogen is among the cleanest fuels that are available in the market, it has vast potential to decarbonize the existing energy system. It is a clean fuel that offers a chance to transport renewable energy. As most of the investments are done on a long-term basis and supported by governments. Increasing government support through favorable fiscal policies for green hydrogen, especially in the European countries, is expected to dive the green hydrogen market in the mobility end-use segment. The green hydrogen market is still developing, with not too many players present in the ecosystem. However, MnM tracks every technology, trends and benefits in green hydrogen production that drives the change like Low variable electricity cost o In green hydrogen production, the major cost factor is energy input. The cost of producing renewable energy across all sources has greatly decreased. The most significant decline has been observed for solar energy, which has dropped by nearly 25%. This is due to technical advancement, raw material cost, production advancement, and higher product efficiency. o Solar and wind energy costs are continuously decreasing due to the development of new composite materials. The costs associated with renewable energy are mainly associated with the installation and maintenance of renewable energy projects. Therefore, the cost of producing green hydrogen will also decrease with continuous operations. The following table shows the decline in power generation costs from various renewable sources of energy: Source Price decline in 2021 compared to 2011 Photovoltaic solar cells 85% Concentrated solar energy 68% Onshore wind plant 35% Offshore wind plant 41% Technological advancements o With the development of electrolysis technologies, the efficiencies of producing hydrogen have increased. With the decline of more than 60% production cost, green hydrogen is now more economical. Continuous investments in the research and development of green hydrogen production processes are expected to reduce the cost even further. o The application technology has also developed for the past years, with fuel cells now achieving 90% efficiency. It has caused the prices to fall nearly by 70% since 2006. This will result in increasing demand and a better ecosystem for green hydrogen Global plans for net zero emissions by 2050 o According to MnM, nearly 7 countries have adopted net-zero emission in their legislation, while more than 120 countries have pledged to adopt the same. This pledge taken by the countries will prove to be a turning point in the development of green hydrogen. While most industries can switch directly to alternate sources, some sectors such as power plants and transportation industries will find green hydrogen a viable substitute. The following table lists the zero emission targets for some major economies by years. Country 50% 100% United States 2030 2050 Germany 2030 2045 Japan 2030 2050 China 2035 2060 Netherlands 2030 2050 Norway 2030 2050 Canada 2030 (40%–45%) 2050 South Korea 2030 (40%) 2050 High demand from FCEVs and power industry o Hydrogen has developed multiple applications compared to the previous image of fuel cells in electric cars. It is now used to make alternative fuels, also known as energy carriers, such as ammonia, methanol, and synthetic liquids. These energy carriers show potential to grow future demand and acceptance in countries with leadership and industries that plan to have a low carbon future. It can prove to be a no-carbon fuel for marine transportation, hydrogen fuel cells in an electric vehicle (EV), backup power in industries. o These wide ranges of applications make the venture of green hydrogen lucrative and show potential to grow in the time to come. Green hydrogen in the fuel cells of vehicles is a fast-developing market, as it offers the convenience of fossil fuels without emissions entailed with them. o Major sector that are leading the transformation o In terms of value, the wind energy-based green hydrogen accounted for a 47.9% market share in 2021. It is most extensively used due to the continuous power-producing capacity of wind plants compared to solar plants. Green hydrogen based on solar energy is the second-largest renewable source due to its lower cost. The cost of solar photovoltaics has gone down drastically and hence gaining market share at a faster rate. o The alkaline electrolysis segment led the market in terms of value in 2021, contributing to ~62% of the market share globally. These involve low initial investments and are suitable for forming large plants offering long life spans. The major disadvantages of alkaline electrolyzers are the purity of hydrogen produced and high maintenance costs. o Mobility has been the largest and fastest-growing end-use industry for green hydrogen, growing at a CAGR of ~63% during 2022-27. This is because decarbonizing the mobility industry with conventional methods is not viable. Green hydrogen offers higher energy storage capacity than any other source, including fossil fuels or electric batteries. o In terms of regions, Europe is the largest and fastest-growing market for green hydrogen, accounting for an overall share of 58.6% in 2021. The aggressive net-zero targets, several planned and in-process projects for green hydrogen, and heavy government investments and policies are supporting high market growth rate in the region. Competitive manufacturing costs, high economic growth rates, and investments from global players and local government are boosting market growth in APAC. There is a significant demand for green hydrogen in the US, and this trend is expected to continue due to increasing investments in the mobility and power sectors. o The size and scope of growth According to MnM estimates, the global green hydrogen market is projected to reach 2,536 kilotons by 2027, at a CAGR of 79%. The market growth is attributed to the rising demand for green hydrogen from mobility, chemical, power generation, grid injection, industrials, and other industries (CHP + Domestic heat). Globally, the market for green hydrogen is expected to grow with increasing opportunities from the automobile, transportation, and industrial sectors. The major countries for import and export are China, the US, Germany, the UK, France, and Japan, among others. o China is a growing market for green hydrogen. Along with the development of green hydrogen, it is also targeting nearly 1 million fuel-cell-based vehicles by 2030. China has huge potential for renewable energy and is planning to gain dominance in the hydrogen market. China is investing in a complete hydrogen value chain to develop it sustainably. o Canada launched the world's largest hydro energy-based electrolyzer plant in association with Germany. It is planning a price range between USD 1.2-2.8/kg (CA$ 1.5-3.5/kg) depending on the development of distribution infrastructure. By 2030, Canada is planning to increase its green hydrogen capacity to 100GW. The country is already in agreement with Germany to export the produced hydrogen. o Australia is a rapidly developing market for green hydrogen in the APAC region. With the launch of its strategy “H2 under 2,” it is targeting a production cost of H2 under USD 1.5/kg (AU$2/kg). This has triggered support of USD 272 million (AU$370 million) in the form of state funding. Currently, Australia has 3 projects to develop and produce green hydrogen. The projects are aiming to capture the market of ammonia to industry, utility, and shipping industries. o South Korea is rapidly moving toward a green economy. To achieve this, it has set up its hydrogen economy roadmap that outlines goals of producing 2.97 million electric fuel cell vehicles along with 1,200 filling stations and 10.1 GW stationary FC plants. Korea will depend on imports of hydrogen from other countries to make its hydrogen economy dream come true. South Korea has planned to invest nearly USD 37 billion to boost green hydrogen divided among production (USD 10 billion), storage & supply (USD 7 billion), and applications (USD 20 billion). Alkaline electrolyzers are the oldest yet efficient method of producing green hydrogen. These involve low initial investments and are suitable for forming large plants offering long life spans. The major disadvantages of alkaline electrolyzers are the purity of hydrogen produced and high maintenance costs The electrolysis process is carried in electrolyzers, and these are mainly of three types: · Polymer Electrolyte Membrane (PEM) electrolyzers : this technology is still under development and is expected to reach 82–86% efficiency by 2030. Now its offer nearly 80% efficiency. · Alkaline electrolyzers - oldest process to manufacture green hydrogen. It offers efficiency in the range of 56–73% of energy to hydrogen conversion, as its efficiency is less its cost is also less. · Solid Oxide electrolyzers - latest development in electrolysis technology and capable of 100% conversion efficiency but this method is not commercial yet. This change in technology with its competitive cost will bring change in business model as hydrogen production will shift to new technologies that indirectly saves cost and increase productivity. The green hydrogen market is consolidated, with top players dominating the market. Players in this market have adopted various strategies, such as acquisitions, expansions, partnerships and collaborations to expand their presence in different regions. For instance, in September 2022, Linde announced plans to construct a 35-megawatt PEM (Proton Exchange Membrane) electrolyzer in Niagara Falls, New York, to produce green hydrogen. Linde's new plant will have the world's largest electrolyzer installed and will more than double Linde's green liquid hydrogen production capacity in the US. In October 2022, Air Products, the world leader in hydrogen production and a first mover in developing and executing low carbon hydrogen megaprojects driving the energy transition, announced plans to invest approximately $500 million in a 35 metric ton per day facility to produce green liquid hydrogen at a greenfield site in Massena, New York, as well as liquid hydrogen distribution and dispensing operations. This facility's commercial operation is scheduled to begin in 2026-2027. In June 2022, Air Liquide and Siemens Energy have formed a joint venture in Europe to produce industrial scale renewable hydrogen electrolyzers in series. This Franco-German collaboration will enable the emergence of a sustainable hydrogen economy in Europe and foster a European ecosystem for electrolysis and hydrogen technology by combining the expertise of two of the world's leading companies in their respective fields. Production is expected to begin in the second half of 2023, with a capacity of three gigatonnes per year by 2025. Further, in May 2022, Fusion Fuel Green PLC and Toshiba Energy Systems and Solutions Corporation have signed a Memorandum of Understanding to pursue technical and commercial opportunities in the rapidly growing green hydrogen sector. Fusion Fuel will evaluate the use of Toshiba ESS membrane electrode assemblies (MEAs) in its proprietary Proton-Exchange Membrane (PEM) eletrolyzers as part of this collaboration. In December 2021, ENGIE and Masdar, one of the world's fastest-growing renewable energy companies, announced the signing of a strategic alliance agreement to investigate the co-development of a green hydrogen hub in the UAE. The two companies hope to develop projects with at least 2 GW of capacity by 2030, with a total investment of around $5 billion. o Disruptions are creating new revenue opportunities or threats for companies · Green Hydrogen Opportunities: Decreasing costs of electrolyzers o The cost of electrolyzers dropped to nearly half its valve five years ago. This fall is expected to continue in the current decade and a level of 60–90%. Another factor affecting the final cost is reducing the cost of renewable energy sources. The recent development of solid oxide electrolyzers that can give 100% efficiency at a high-temperature range shows the potential in the technology. Increasing government investments o The governments of many developed countries are coming forward in developing infrastructure for green hydrogen. This is majorly seen in Asia and European Union with some American and middle east countries. Currently, Asia and European Union are investing nearly USD 2 billion per year while America lags at USD 100 million to USD 280 million per year. o The government’s involvement is crucial for developing an ecosystem that accepts green hydrogen as an alternate fuel; hence, these investments from governments will prove to be the pathways on which the green hydrogen industry may thrive. Announcement of large capacity green hydrogen projects o The announcement of large-scale hydrogen projects has had a significant impact on the acceptance of green hydrogen. As more projects are set up, companies plan to accommodate and utilize green hydrogen in their value chain. More private players would venture into the field with such projects and attract new and innovative companies to advance the technologies. Asia, Europe, and Australia are at the forefront in developing green hydrogen and associated technologies Favorable policies for green hydrogen o The governments are forming alliances to promote the production of green hydrogen. This involves financial support instruments to existing hydrogen producers to motivate them towards green hydrogen production. It would also include the development of green hydrogen transportation infrastructure. Currently, the major sectors of the green hydrogen value chain that receive incentives to promote green hydrogen adoption are electrolysis, refueling, industries, transportation, buildings, and power. Some countries such as India have imposed minimum green hydrogen purchase regulations to increase the demand for green hydrogen. o Japan, on the other hand, is providing subsidies to fuel cell vehicles and filling stations. It is also making international research collaborations and pilot projects to develop a green hydrogen supply chain in the country. China is planning to develop its mobility sector to adopt green hydrogen using fuel cells. The government is investing and promoting partnerships to develop fuel cells. With these policies and continued government support, green hydrogen could prove to be a sustainable energy source in the coming time. · Green Hydrogen Threats High initial investments o The biggest challenge faced by green hydrogen manufacturers is the initial investment required to set up a production plant and the transportation costs associated with its postproduction. The development of renewable energy power plants and the setting up of electrolysis technology to provide efficient energy conversion are the biggest challenges. They require high R&D costs to develop technologies, this adds up to the total initial investment for the hydrogen plant. Postproduction, the transportation infrastructure is also developed to transport the produced hydrogen efficiently and economically, further increasing the green hydrogen plant cost. Disclaimer: MarketsandMarkets™ provides strategic analysis services to a select group of customers in response to orders. Our customers acknowledge when ordering that these strategic analysis services are solely for internal use and not for general publication or disclosure to any third party. MarketsandMarkets™ does not endorse any vendor, product, or service profiled in its publications. MarketsandMarkets’™ strategic analysis constitutes estimations and projections based on secondary and primary research and are therefore subject to variations. MarketsandMarkets™ disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness, for any particular purpose. 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