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The global electrolyzer market size was USD 321.65 million in 2019. The global impact of COVID-19 has been unprecedented and staggering, with the product type witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the market will exhibit a decline of -5.31% in 2020. The market is projected to grow from USD 304.57 million in 2020 to USD 467.39 million in 2027 at a CAGR of 6.3% during the 2020-2027 period. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
It is a device that utilizes electricity to break water into oxygen and hydrogen in a process known as electrolysis. It comprises a cathode, an anode, and a membrane. Through electrolysis, the system creates hydrogen gas. Electricity is applied to the anode and cathode across the device, leading to the splitting of water into hydrogen and oxygen.
These devices are primarily used in stationary, portable, and transportation power generation systems such as fuel cell-powered vehicles and portable electronics. The hydrogen produced from the device can be used for many different applications and integrated into different system architectures. The applications include hydrogen for vehicle fueling, industrial processes, power generation, and injection into the natural gas pipeline.
COVID-19: Players Focus on Investment in Hydrogen Generation Projects to Negate Sluggish Growth
Global health emergencies caused by the sudden outbreak of the COVID-19 have significantly affected numerous industrial verticals. The pandemic has put a halt on global production and trade activities. Nearly all the countries worldwide have witnessed a huge rise in the number of affected cases since the start of 2020. Besides, the unavailability of any cure or vaccine for the infection has led many industry players to introduce combat measures to mitigate its impact on businesses. For instance, as per the Our World in Data database operated by the Global Change Data Lab, an associate of the University of Oxford, the total confirmed cases of COVID-19 across the U.S. were about 1.79 million on 1st June 2020, and it reached over 5.99 million by 31st August 2020. The total affected population reported a boost of over 4.20 million or 235% in just three months, expressing a great deal of danger for people and industrial operations.
Accordingly, the electrolyzer market has been intermediately affected by the outbreak of this global health problem. The growing demand for renewable energy sources is driving the demand for hydrogen generation globally. Moreover, several manufacturers are likely to invest in developing sustainable sources that will boost the market growth in the forthcoming years. For instance, corporate power purchase agreements for clean energy reached a record high in 2019 and have fallen off pace only slightly so far in 2020.
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Rising Demand for Hydrogen as a Green Fuel to Propel Market Growth
Hydrogen is primarily used across various industrial applications such as chemicals, electronics, and glass. Today, more than 90% of hydrogen is produced from fossil fuel resources, only a small fraction of hydrogen is manufactured by water electrolysis. As hydrogen is considered a green fuel, several governments worldwide are highly focused on creating a sustainable hydrogen economy, which, in turn, is expected to drive the global electrolyzer market during the forecast period.
According to the Hydrogen Council, the world currently produces 56 million tons of hydrogen and will need 550 million tons by 2050, a significant ten-fold increase in 35 years. Many Governments and renewable energy associations are promoting hydrogen as an automotive fuel and energy carrier.
Manufacturers operating in the market are trying to increase the efficiency and catalyst & membrane effectiveness of the devices. These development activities are expected to render the electrolysis process more cost-effective. Furthermore, demand for hydrogen is rising from chemical, glass, mining, food & beverage, and semiconductor industries. These factors are likely to drive the global market during the forecast period.
Increasing Investments in the Asia Pacific for Power Generation to Favor Growth
In Asia Pacific, several countries such as India, Singapore, and Malaysia have started investing in hydrogen production and its storage technologies. Furthermore, China commenced the construction of a hydrogen city in Wuhan, investing around 290 million. The government focuses on promoting research & development of large scale on-site hydrogen production for renewable energy storage, grid balancing, and power to gas stations, building hydrogen stations, hydrogen refueling stations (HRS), and fuel cell vehicles.
Many key players are acquiring companies to enhance their industry presence that will drive the business scenario. For instance, In June 2020, Plug Power completed the acquisition of United Hydrogen and GINER ELX.
Manufactures in the Asia Pacific region started investing in hydrogen production. For instance, on April 03, 2020, Asahi Kasei installed an alkaline water electrolysis system at the Fukushima Hydrogen Energy Research Field (FH2R), Japan. This factor is anticipated to drive the global market growth during the forecast period.
Growing Demand for Fuel Cell-Based Automotive to Promote Growth
The surging demand for fuel cell-based automotive such as electric vehicles and buses in North America and Asia Pacific is expected to boost the demand for electrolyzers. Moreover, countries such as China, Japan, and South Korea have proposed strong fuel cell-based vehicle implementation commitments to reduce the growing dependency on gasoline fuel. This is expected to contribute to the growth of this market in the forthcoming years.
Hydrogen can store large amounts of energy and release it when needed for industrial use, such as electricity generation and transport applications. Electrolysis is the most popular option today for the production of hydrogen. Several automotive manufactures across the globe have started developing hydrogen-based vehicles. For example, in June 2018, Hyundai collaborated with Audi to develop hydrogen car technology.
The automotive manufacturers aim to increase the uptake of hydrogen cars. Fuel cell electric vehicles help decrease the average carbon intensity of primary energy over time, thereby reducing greenhouse gas emissions and other pollutants. This factor is likely to drive the market growth during the forecast period.
High Electricity Cost of Device to Impede Market Growth
Electrolyzers are widely used to produce hydrogen, but it faces more challenges due to its high price and mechanical properties such as low current density, limited ability to operate at low loads, and the inability to operate at high pressure.
Presently, hydrogen is more expensive than gasoline fuel. Globally, the cost of gasoline is approximately USD 4.80 per gallon compared to hydrogen, which is worth USD 12 per kilogram. In large electrolysis plants, most of the hydrogen production cost comes from the consumption of electricity.
Currently, alkaline devices consume approximately 4 kWh/Nm³ of electricity, translating into 45 kWh per kg of hydrogen. They consume more electricity than other available substitutes, which is likely to hamper the market during the forecast period. However, the latest technologies like proton exchange membrane (PEM) devices aim at improving the efficiency of the electrolysis process, which will likely drive the market during the forecast period.
Traditional Alkaline Electrolyzer Segment Accounted for Largest Market Share
Based on type, the market is categorized into traditional alkaline electrolyzer and proton exchange membrane (PEM).
The traditional alkaline segment accounted for the major electrolyzer market share in 2019. These types of devices are the oldest technology across the world, commonly used for large-scale systems. The advantage of this technology is its long lifespan and lower capital cost due to the cheaper catalysts based on nickel material.
Alkaline devices usually use an aqueous solution of potassium hydroxide, sulfuric acid, potassium hydroxide, sodium chloride, sodium hydroxide, and water as the electrolyte. The typical concentration of an electrolyzing solution is 20 – 30 weight % to provide a balance between ionic conductivity and corrosion resistance. Moreover, they have lower current and power densities and do not use noble metals.
The proton exchange membrane (PEM) segment involves a solid polymer electrolyte. These devices have a bipolar design and can be made to operate at high differential pressures across the membrane. They are very popular as hydrogen produced is of high purity. Additionally, the key advantage of PEM is that the efficiencies can be higher, especially at high current densities, which is due to the ionic conductivity advantages of such devices.
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Power Plants Segment to Hold Highest Position
Based on application, the global market is categorized into power plants, steel plants, electronics & photovoltaics, industrial gases, energy storage or fueling for FCEVs, power to gas, and others.
The power plants segment held a major share of the market in 2019. Electrolyzers are mainly used for the production of hydrogen with the help of electrolysis of water. They are widely used in the automotive industry for fuel cell electric vehicles as hydrogen can store large amounts of energy and release it when needed for industrial use.
The industrial gases segment is anticipated to experience considerable growth as electrolyzers decrease the average carbon intensity of primary energy over time. Hydrogen is a clean energy fuel and is expected to reduce oil dependence in the long term, thereby reducing the emission of greenhouse gases and other pollutants.
In steel plants, these devices are used for fossil-free steelmaking via the direct reduction of iron ore. Hydrogen production via low or high-temperature electrolysis is considered for the production of carbon-free direct reduced iron. The growing global population and expanding urbanization are expected to trigger a rise in the global steel demand.
North America Electrolyzer Market Size, 2019 (USD Million)
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The market has been analyzed across five key regions, comprising North America, Asia Pacific, the Middle East & Africa, Europe, and Latin America.
North America stood at USD 155.1 million in 2019. The U.S. accounts for the largest market share in the region as it is a hub for petrochemicals, refining, glass purification, and fertilizers. Moreover, hydrogen is widely used in these industries as a fuel that is likely to favor market growth in the region.
Europe is the fastest-growing region due to the rising demand for hydrogen as a fuel from the automotive industry. Furthermore, many European Union countries are implementing rules on zero-emissions across the transport, power, transport, and heating industries.
In Asia Pacific, developing economies such as India and China are constantly focusing on deploying sustainable energy technologies. Furthermore, the development of smart cities and efficient establishments and shifting market trends toward sustainable energy from fossil fuels will drive the electrolyzer market during the forecast period.
The market in Latin America is expected to create significant growth opportunities owing to the increasing use of hydrogen across various end-use industries such as glass, electronics, welding & metal fabrication, etc.
The Middle East & Africa is expected to hold a significant share in the market due to renewable energy and electric mobility gaining immense traction in the forthcoming years.
Nel (Proton On-Site) to Focus on Expanding its Product Line and Utilize its Channels to Market New Products
The market comprises small and large players delivering scale products for numerous applications shaping the competitive landscape. Key Players operating in the market are Nel (Proton On-Site), Asahi Kasei, Hydrogenics, and Shandong Saikesaisi Hydrogen Energy Co., Ltd working on technological advancement and significant integration with local sales partners to hold a substantial presence globally.
Nel (Proton On-Site) is a global dedicated hydrogen company, providing the best solution for producing, storing, and distributing hydrogen from renewable energy. Nel's hydrogen solution covers the whole value chain from hydrogen production technology to the hydrogen refueling station. This enables the industry to transition from green hydrogen and provide all fuel cell electric vehicles with the same fast fuel and long-distance driving fossil fuel vehicles-without emission. The company has installed more than 3,500 reliable and cost-effective devices worldwide and is recognized as a leader in the alkaline and proton exchange membrane (PEM) water electrolysis category.
An Infographic Representation of Electrolyzer Market
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The market research report presents a comprehensive assessment of the industry by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the market research report. Furthermore, the report covers a detailed global industry analysis and information as per market segments, including type, application, and regions, helping our readers to get a comprehensive overview of the global industry.
Value (USD Million) & Volume (MW)
Fortune Business Insights says that the global industry size was USD 321.65 million in 2019 and is projected to surpass USD 467.39 million by 2027.
In 2019, North America stood at USD 155.1 million.
Growing at a CAGR of 6.3%, the market will exhibit a steady growth rate during the forecast period (2020-2027).
The traditional alkaline segment is anticipated to dominate during the forecast period.
The increasing focus on adopting hydrogen-based fuel cell vehicles for the transport sector is driving the market growth.
Nel (Proton On-Site), Asahi Kasei, Hydrogenics, and Areva H2gen, among others, are the key players operating across the industry.
North America dominated the market in terms of share in 2019.
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