Electrolyzer Market SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024 - 2031)

Electrolyzer Market Size - Analysis

Electrolyzer Market Trends

With the rapidly rising focus on developing cleaner and greener fuel alternatives, hydrogen is emerging as one of the most promising options to reduce emissions from transportation and various industries. Even though hydrogen is still in a nascent stage of adoption, global efforts to cut carbon pollution are driving significant capital towards building the necessary infrastructure for a future hydrogen economy. Electrolyzers play a pivotal role in this ecosystem as they split water into hydrogen and oxygen through an electrochemical reaction.

With an increasing push for electrification of personal transportation to reduce urban air pollution, zero-emission fuel cell vehicles are garnering significant attention from governments and consumers alike. Several global automakers have unveiled ambitious plans to introduce FCEVs in key markets over the next 5 years backed by supportive policies. For example, Korea and Japan have set aggressive targets to massively enhance the number of hydrogen refueling stations and fuel cell vehicles by the end of this decade. Similarly, in Europe various nations have launched purchase incentives and initiatives to strengthen the surrounding infrastructure. This rapid policy progress and model introduction timeframe is raising hopes of FCEVs finally reaching mainstream adoption.

Market Challenge - High Cost of Electricity Required for Electrolysis

With current industrial electricity prices in many regions, the cost of producing hydrogen through electrolysis far exceeds delivery via traditional production methods such as steam methane reforming. For electrolyzer market players to make their products economically viable in the long run, the cost of electricity needs to come down substantially.

The transition occurring in the automotive industry away from traditional gasoline vehicles towards electric vehicles provides huge opportunities in the electrolyzer market. As electric vehicles become more mainstream, there will be a growing need for infrastructure to produce and deliver hydrogen as a transportation fuel.

Electrolyzer manufacturers that can deliver efficient products on a commercial scale stand to greatly benefit. The demand is likely to ramp up substantially in the coming years as governments introduce supportive policies and more automakers launch FCEV models. By positioning themselves to supply this emerging demand, electrolyzer market players have a major opportunity to enjoy high growth.

Key winning strategies adopted by key players of Electrolyzer Market

Focus on reducing costs through technological advancements - Nel Hydrogen developed their PulseLoad electrolyzer technology that significantly reduces the capital costs and footprint of the electrolyzer system.

Form strategic partnerships along the hydrogen value chain - ITM Power partnered with Shell in 2020 on green hydrogen projects in the Netherlands and UK. This allowed them to leverage Shell's retail network and customer base.

Segmental Analysis of Electrolyzer Market

In terms of type, alkaline electrolyzer contributes 40% share of the electrolyzer market owing to its cost-efficiency. Alkaline electrolyzers offer a more economically viable option for large-scale hydrogen production compared to other technologies. Their simple and robust alkaline electrolyte system allows for reduced manufacturing costs.

Overall energy efficiency is marginally lower for alkaline electrolyzers compared to other types. However, the gap in energy efficiency is more than compensated by their substantially lower upfront and operating costs. These cost benefits have made alkaline electrolyzers the top choice for large industrial hydrogen applications that prioritize affordable supply over marginal efficiency gains.

In terms of capacity, the above 2 MW segment contributes 93.7% share of the electrolyzer market in 2024. This is owing to increasing needs for bulk hydrogen generation. Massive industrial consumers and green hydrogen projects require electrolyzers with output capacities exceeding 2 MW.

Grid interconnection and logistical requirements are optimized for higher capacities. This makes above 2 MW electrolyzers highly suited for the refining, chemical and emerging green ammonia industries and their need for bulk hydrogen on an industrial scale. Their ability to produce hydrogen at a massive scale in a cost-efficient manner drives their adoption.

Insights, By Application: Steel Industry's Heavy Reliance on Hydrogen Drives Adoption in Steel Plants

Additionally, steel plants have access to waste heat streams which can help improve the efficiency and economics of on-site electrolyzers. Waste heat can be utilized to generate steam for electrolysis, coupling two energy-intensive industrial processes synergistically. This significantly boosts the business case for investing in electrolyzer capacity at steelworks and ensures steel remains the dominant application segment in the electrolyzer market.

Additional Insights of Electrolyzer Market

• Hydrogen City in Wuhan, China: A significant development aiming to showcase the utilization of clean hydrogen energy as part of China's environmental goals.
• Electric Vehicles Shift: The rising demand for hydrogen-powered vehicles, shifting from traditional gasoline-based vehicles, as part of global efforts to reduce carbon emissions.
• North America's Role: North America is the largest electrolyzer market, driven by a high demand for hydrogen in power industries, refining, and manufacturing sectors.
• Asia-Pacific's Growth: With its increasing demand for clean energy, especially in countries like China and India, Asia-Pacific is expected to witness the highest growth in the global electrolyzer market.

Competitive overview of Electrolyzer Market

The major players operating in the electrolyzer market include Nel Hydrogen, Asahi Kasei Corporation, Hydrogenics Corporation, Shandong Saikesaisi Hydrogen Energy Co., Ltd., Teledyne Energy Systems, Siemens AG, Kobelco Eco-Solutions, Green Hydrogen Systems, Next Hydrogen, and H-Tec Systems.

Recent Developments in Electrolyzer Market

Electrolyzer Market Segmentation

• By Type
  • Alkaline Electrolyzer
  • PEM Electrolyzer
  • Solid Oxide Electrolyzer
• By Capacity
  • Above 2 MW
  • ≤ 500 kW
  • 500 kW - 2 MW
• By Application
  • Steel Plant
  • Power Plants
  • Electronics and Photovoltaics
  • Energy Storage for Fuel Cells
  • Industrial Gases
  • Power to Gas
  • Others