Hydrogen Generation Market

The global market for hydrogen generation is expected to grow at steady rate during the forecast period. The growth can be primarily attributed to the increasing share of renewable energy in the power generation mix and the increasing demand for hydrogen in transportation. The measures to promote hydrogen production technologies is expected to create opportunities for the market players during the forecast period. However, the high initial costs are expected to form a restraint in the growth of the market during the forecast period.

The global electricity demand is expected to grow at a significant rate in the next few years owing to rapid urbanization, increasing population, rise in infrastructure development, and enhanced access to electricity. The power generation sources such as thermal energy, gas, and diesel contribute primarily to carbon emission. As stakeholders in the energy generation industry seek opportunities to reduce carbon footprint, they have been focusing on raising the share of renewable energy sources in the total power generation mix. Renewable energy sources, especially solar and wind are used for electricity generation. Moreover, the increasing concerns regarding global warming and reduced dependence on fossil fuel-based power generation have increased the adoption of solar and wind energy sources to meet the growing energy demand. According to the Energy Transition Outlook 2018 by DNV GL (Norway), the share of solar PV energy sources is expected to contribute nearly 39% in the total energy generation source by 2050 in the Middle East & North Africa. Such developments are expected to increase the share of renewable energy in the power generation mix.

Furthermore, the rising concerns about the growing carbon emissions and the efforts to curb them result in the need to increase the share of renewable energy in the power generation mix. Wind, solar, biomass, and other renewable energy sources witness growth in demand as they help reduce carbon emissions. Renewable energy sources generate electricity without any polluting emissions while non-renewable energy sources, such as coal and natural gas, emit harmful gases and wastes. Therefore, the awareness regarding environmental safety and security has fueled the market growth for renewable energy, globally. Furthermore, countries across the world such as India, Germany, Saudi Arabia, and the UAE, have set the target to increase the number of renewable energy generation sources to increase the share of renewable energy in the power generation mix. For instance, in 2019, the Saudi Arabian government has set a target to generate 60GW of energy form renewables by 2030. In the UAE, in 2017, the UAE government launched Energy Strategy 2050 so as to increase the share of renewable energy to 50% by 2050 out of the country’s total energy mix. Similarly, in the same year, the German government set a target to achieve 98 GW of solar electricity generation capacity by 2030. Additionally, in 2019, the Indian government set a goal to reach 100 GW solar power installation capacity by 2022. Such developments are expected to increase the share of the solar energy capacity in the total power generation mix globally. Moreover, the energy generated form the renewable energy sources are used to generate hydrogen through power-to-gas, electrolysis, and other processes. Hydrogen is used for applications in various sectors including power generation, transportation, and refineries. Such factors are expected to increase the demand for hydrogen generation. Thus, the increasing share of renewable energy in the power generation mix is expected to drive the growth of the global hydrogen generation market during the forecast period.

Many government bodies and companies across the world are focusing on introducing several initiatives such as programs, policies, measures, and incentives for the development of hydrogen production technology. Some of the ways for the generation of hydrogen are electrolysis, gasification, and fermentation. Hydrogen as a fuel source offers several advantages such as high efficiency, lightweight, and zero-emission. Hydrogen is used for various applications including ammonia production, refineries, transportation, and power generation. The US Department of Energy (DOE) launched H2@Scale in 2018 to promote the production, transportation, and storage of hydrogen. Moreover, in January 2020, the department announced to provide up to USD 64 billion for the H2@Scale initiative to boost the research & development of production and storage of hydrogen. The Indian government as per the National Hydrogen Energy Road Map planned to have one billion hydrogen-fueled vehicles in the country by 2020. Similarly, in the UK, in February 2020, the British government announced funding initiatives to boost the production of hydrogen in the country. The Canadian government along with the Canadian Hydrogen and Fuel Cell Association (CHFCA) is focusing on the development of hydrogen technologies. Such initiatives encourage consumers to boost the development of hydrogen production. Therefore, the measures to promote hydrogen power technologies are expected to create an opportunity for the players in the global hydrogen generation market during the forecast period.

The process of hydrogen generation is expensive and has complex operations as it features a larger number of components such as pipes, valves, gauges, and other accessories that are used for the generation of hydrogen. The cost of hydrogen generation systems depends on various factors such as the type of energy source, technology, and generating plant size. Moreover, hydrogen production is expensive owing to the high investment and operation & maintenance costs involved in the hydrogen generation technology. Moreover, the production and safety concerns regarding hydrogen also hinder the growth of the hydrogen generation. As hydrogen is flammable and consumes lower ignition energy than natural gas and gasoline, it ignites easily. As per the BMW AG (Germany), the cost per mile of running hydrogen-powered cars is nearly twice as compared to the battery-powered vehicles charged at home. Furthermore, the components and materials used in the hydrogen generation technology must be selected as per international standards such as the American Society of Mechanical Engineers (ASME) and the Canadian Standards Association (CSA). This leads to an increase in the cost of high-quality raw materials and components used in the construction of hydrogen generation systems. Further, factors such as proper safety during production and storage of hydrogen and high investments are expected to add to the cost of hydrogen generation technology. Therefore, high initial costs form a restraint in the growth of the global hydrogen generation market during the forecast period.