The electrolyzer market is anticipated to grow as the investments in low-emission hydrogen accelerate. The market growth is estimated at a significant CAGR of 22.7% by 2031. According to IEA’s Global Hydrogen Review 2024, the total electrolyzer capacity to reach the final investment decision totaled 20 gigawatts (GW) globally. China accounts for more than 40% of the total electrolyzer capacity to reach the final investment decision in the past year, which accounted for 6 GW. The country homes 60% of global electrolyzer manufacturing capacity, at a 25 GW per year average deployment rate globally. The market growth is driven by the growing utilization of hydrogen as a green fuel, owing to the rising support for reducing the carbon footprint in different sectors such as transportation, electricity, chemical manufacturing, and others.
Additionally, governments globally, are contributing significantly to the growth of the eletrolyzer market, by establishing stringent regulations and policies to adopt sustainability. For instance, in January 2024, the Union Minister for New and Renewable Energy and Power, India, announced the tender for the selection of green hydrogen producers for setting up production facilities under the Strategic Interventions for Green Hydrogen Transition (SIGHT) Scheme (Mode-1-Tranche-I). The tender has been awarded to 10 companies for a total capacity of 4,12,000 tons per annum, of green hydrogen production, and 1,500 MW per annum of electrolyzer manufacturing.
However, the installed capacity for electrolyzers remains low due to the lack of clarity and government support among the developers. There is a need for a defined regulatory framework in the sector to achieve credibility among the developers and drive significant investments. Another major challenge is the lack of buyers of low-emissions hydrogen. Thus, policymakers and developers must strive for demand creation while also reducing costs. For instance, the government production target is 43 million tons per year, while the demand is just at 11 million tons by 2030. Thus, Latin America is anticipated to be a potential hub for low-emissions hydrogen production in the future, as the region is focusing on hydrogen strategies with a strong focus on export opportunities.
Recent Developments
- In October 2024, AM Green placed an order for its first one-million-ton green ammonia project (1.3 GW of advanced pressurized alkaline electrolyzers), with John Cockerill Hydrogen. John Cockerill Hydrogen will supply 640 MW capacity in phase 1 guaranteeing low-cost green hydrogen. The same is sourced from 24-hour renewable energy generated from a combination of wind and solar power with pumped hydro storage.
- In September 2024, Asahi Kasei signed a Memorandum Of Understanding (MOU) with De Nora, to jointly develop, study, evaluate, and sell small-scale pressurized alkaline water electrolyzers, in the range of 1 to 7.5 MW.
- In June 2024, Nordex Electrolyzers presented its first in-house-developed prototype of a 500-kW pressurized alkaline electrolyzer prototype. The prototype can produce more than 10 kg/h of hydrogen with an energy consumption of less than 50 kWh/kg.
- In May 2024, GAIL (India) Ltd. installed its first Green Hydrogen Plant at GAIL Vijaipur in Madhya Pradesh. The plant features a production capacity of installed its first Green Hydrogen Plant at GAIL Vijaipur in Madhya Pradesh. Additionally, GAIL is also setting up around 20 MW Solar power plants at Vijaipur, to support green power generation of 10 MW PEM Electrolyzer.
- In March 2024, Larsen & Toubro commissioned its first indigenously manufactured electrolyzer at the Green Hydrogen Plant at A M Naik Heavy Engineering Complex in Hazira, Gujarat. The electrolyzer features a rated power capacity of 1 MW (expandable to 2 MW) and can produce 200 Nm3/Hr of hydrogen. The electrolyzer offers flexibility and thermal stability. It is equipped with two stacks and an Electrolyser Processing Unit (EPU) ML-400, adhering to the latest international standards.
- In November 2023, Siemens Energy opened a new electrolyzer production facility in Berlin with its partner Air Liquide. The companies plans to install at least three gigawatts of electrolysis capacity per year by 2025.
- In November 2023, BASF received funding approval for a 54-megawatt water electrolysis plant, from the German Federal Ministry for Economic Affairs and Climate Action and the State of Rhineland-Palatinate, €124.3 million ($134.5 million). In partnership with Siemens Energy, the company will manufacture a PEM electrolyzer, offering an output of 54 megawatts (MW) and a capacity of up to 8,000 metric tons of hydrogen per year. The electrolyzer is anticipated to reduce annual CO2 emissions reduction of up to 72,000 metric tons.
- In September 2023, Electric Hydrogen Co. and New Fortress Energy Inc. entered into a definitive agreement for the supply of EH2’s flagship 100-megawatt (MW) electrolyzer system to NFE’s green hydrogen project in Texas. The technology is capable of producing nearly 50 tons per day of green hydrogen. The full commercial operations are expected to start by 2025. The site and facility are scalable to 200 MW.
- In July 2023, Plug Power Inc. secured an order for 100 megawatts (MW) of Proton Exchange Membrane (PEM) electrolyzers. It marks the largest project in the oil and gas sector in Europe. The electrolyzers will be powered by 100% renewable energy and will generate approximately 43 tons of green hydrogen per day to replace gray hydrogen in the oil refining process, eliminating approximately 516 tons per day of CO2 (carbon dioxide). The PEM stacks will be manufactured at Plug's 155,000-square-foot gigafactory in Rochester, New York, which has a capacity of 100 MW per month of electrolyzer stacks.
- In April 2023, Plug Power Inc. manufactured 122MW of Plug’s 1MW electrolyzer stack platform, an all-time high for the Company and the industry for PEM electrolyzers. Additionally, Plug shipped nearly 1,000 stacks for specialty applications, ranging from a few hundred watts to 150kW, totaling 5.7MW.
- In March 2023, Larsen & Toubro entered into an electrolyzer manufacturing binding agreement with McPhy Energy. Under this partnership, McPhy will grant an exclusive license of its pressurized alkaline electrolyzer technology to L&T for the manufacturing of electrolyzers, including future product upgrades.
Encapsulating, the electrolyzer market is anticipated to grow attributed to the rising demand for hydrogen fuel and growing government regulations about sustainability. However, sectors such as heavy industry, refining, and long-distance transport are needed to speed up deployment, to contribute to the market anticipated target of the IEA. Additionally, governments across the globe need to set up a regulatory framework to build credibility among the developers. Furthermore, the governments and developers need to focus on cost reduction to bolster the market growth.