Hydrogen Electrolyzer Market Report

Recently, government of many countries have taken initiatives for development of green hydrogen as a fuel to support day-to-day activities. For instance, in February 2024, Gensol Engineering, in partnership with Matrix Gas, secured PLI (Production/Performance Linked Incentive) project to manufacture hydrogen electrolyser, supporting India's Green Hydrogen Mission and with a capacity of 63 MW annually, the venture aims to bolster India's target of 5 million metric tons of green hydrogen by 2030. Similarly, in 2022, the US government ratified a key piece of legislation, the Inflation Reduction Act (IRA), which has been the greatest step forward policy-wise in addressing this issue of high hydrogen costs by creating a tax credit for up to US$ 3/ kg of green hydrogen with an inflation adjustment of 2% per year for the first 10 years of operation with their lifetimes are typically up to 30 years. The tax cuts run only through 2032, so projects starting up in 2023 would benefit from the full 10-years’ worth of credits, while plants opening later would receive progressively less.

The main factor driving up the cost of producing hydrogen via electrolysis is the price of electricity. Generating electricity from renewable sources, which a key element in electrolysis, is very expensive making hydrogen electrolysis also very expensive. Producing hydrogen in general and green hydrogen specifically requires a higher amount of energy compared to other fuels, resulting in higher costs for the development process. In addition, hydrogen is a highly explosive element, even small sparks can lead to uncontrolled combustion causing fires and explosion. For instance, in June 2024, a brand-new hydrogen refuelling station (HRS) in southern Germany has been severely damaged after an explosion caused a fire at the facility just days after it was opened to the public. Similarly, in July 2023, a US$ 1.1 million hydrogen fuel cell bus caught fire after explosion in the city of Bakersfield in California. Hence, storing and transporting of hydrogen is very difficult which can hinder the growth of the hydrogen electrolyser market.

The growing global awareness of environmental issues is driving the increased use of eco-friendly hydrogen electrolysers. To cater the growing need of electrolysers, many companies are introducing new technologies and setting up their own plant to manufacture them. For instance, in January 2023, NewHydrogen, a company based in U.S., introduced its prototype for a green hydrogen generator. The prototype would act as a base for incorporating future improvements in electrolyser components of the company. Similarly, in March 2022, Siemens announced to begin its production of hydrogen electrolysers in Berlin plant which in November 2023, was converted into smart manufacturing facility implementing modern robots and digitalization for automated production of hydrogen electrolyser on giga-watt scale for renewable hydrogen economy.

To provide competitive edge within the market, companies opt mergers and acquisitions and taking over the companies in the market. For instance, in June 2022, Rolls-Royce revealed its plan to manufacture MTU hydrogen electrolysers, entering the industry by purchasing a 54% majority share in Hoeller Electrolyser, a company known for their electrolysis stack technology. Similarly, in February 2024, this H-TEC SYSTEMS which was fully acquired by Man Energy Solutions in June 2021 and invested 500 million euros to transform it into a mass producer of PEM electrolyser, announced to deliver PEM Electrolysers to SailH2 by September 2024 for comprehensive management of green hydrogen project which would be the first commercial hub of green hydrogen in Andalucia and will be located at the industrial site in the district of Sevilla.

North America accounted for the majority share in value and volume in 2023, 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 fuelling for FCEVs (Fuel Cell Electric Vehicles) 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.

In recent years, Asia-Pacific is expected to grow tremendously as governments of many countries are trying to focus on hydrogen so as to cater to the growing need of energy. For instance, in June 2023, Mainland China installed an electrolyzer cumulative 1 GW of capacity and by the end of 2024, China would be installing approximately 2.5 GW of hydrogen electrolyser capacity with Rystad Energy, leading global independent research and energy intelligence company, for decarbonization. Similarly, in August 2023, Bharat Petroleum Co. Ltd. (BPCL) and Bhabha Atomic Research Centre (BARC) announced partnership towards developing cost-effective, megawatt scale electrolyser solutions, fostering self-reliance in sustainable energy production.