Green Hydrogen Market

Introduction

The Green Hydrogen Market is rapidly growing, expected to soar from USD 0.7 billion in 2022 to USD 62.9 billion by 2032, with a staggering compound annual growth rate (CAGR) of 58.6% during this period. This explosive growth is driven by the increasing focus on carbon reduction, supportive government initiatives, and advancements in electrolysis technology. Green hydrogen, produced using renewable energy sources like wind and solar power, offers a sustainable alternative to traditional hydrogen production methods that rely on fossil fuels.

A major growth factor for this market is the declining cost of renewable energy, making green hydrogen production more economically viable. Additionally, technological improvements in electrolysis, which splits water into hydrogen and oxygen, have enhanced efficiency and reduced costs. These advancements are crucial as the production of green hydrogen is energy-intensive and previously faced high production costs.

Despite these promising developments, the green hydrogen market faces significant challenges. High initial infrastructure costs and limited existing infrastructure for production and distribution hinder widespread adoption. Furthermore, the storage and transportation of hydrogen pose technical and safety challenges due to its low volumetric energy density.

Recent developments in the industry highlight the growing investment and interest in green hydrogen. For instance, Air Liquide announced plans to invest $433 million in a large-scale electrolyzer project to decarbonize the Normandy industrial basin. Additionally, companies like Linde and Air Products have entered long-term agreements to supply green hydrogen for various industrial applications.

Solena Group, through its subsidiary SGH2 Energy, is advancing green hydrogen production with its innovative Solena Plasma Enhanced Gasification (SPEG) technology. This method converts waste, such as recycled paper, into hydrogen, significantly reducing carbon emissions. SGH2’s Lancaster plant in California, the largest of its kind globally, will produce up to 12,000 kilograms of hydrogen daily, offering a cost-effective and environmentally friendly alternative to traditional hydrogen production methods.

Air Products Inc. is a leading player in the green hydrogen sector, focusing on large-scale projects and infrastructure development. The company is investing in hydrogen production facilities worldwide, including a $5 billion green hydrogen project in Saudi Arabia, which will use renewable energy to produce 650 tons of hydrogen per day. This project is part of Air Products’ broader strategy to support the global energy transition by providing clean hydrogen for various applications, from transportation to industrial processes.

Statistics

According to the International Energy Agency’s hydrogen projects database, these are the top 15 countries with the most green hydrogen capacity that’s operational or under construction or has secured committed financing.
A joint venture between ACWA Power, Air Products, and Neom, the huge facility will include “up to 4 gigawatts of solar and wind energy to produce up to 600 tonnes of green hydrogen per day.
For context, the largest existing green-hydrogen facility, in China’s Xinjiang region, has a capacity of just over 44 kilotonnes per year.
Sweden, which opened its largest electrolyzer facility last year, is up next, and fellow European Union members Germany and France also make the top 10. The EU has plans to “produce 10 million tonnes and import 10 million tonnes” of “renewable hydrogen” by 2030.
In total, the world produces just 180 kilotonnes of electrolysis-based hydrogen per year right now. But that number could reach more than 14,000 kilotonnes by 2030 if all projects currently under construction become operational — and that’s not even counting the hundreds more that have been announced but don’t have investment or permitting yet.
The base case of a renewable energy source of 100 MW capacity coupled with a 20 MW hydrogen production system and 20 MW transmission to the grid shows an LCOH of 5.9 USD/kg with a capacity factor of 25%.
The Ministry of New and Renewable Energy has been steering the National Green Hydrogen Mission, to decarbonize the economy, reduce dependence on fossil fuel imports, and enable India to assume technology and market leadership in green hydrogen.
For this mission, the government announced an outlay of Rs 19,744 crore. Of the total, Rs 17,490 crore has been allocated to the Strategic Interventions for Green Hydrogen Transition (SIGHT) program, Rs 1,466 crore to pilot projects, Rs 400 crore to R&D, and Rs 388 crore to other components.
The mission aims for the development of a green hydrogen production capacity of at least 5 Million Metric tonnes (MMT) per annum with an associated renewable energy capacity addition of about 125 GW in the country. While it should abate nearly 50 MMT of annual greenhouse gas emissions, this should also help in reducing fossil fuel imports by Rs one lakh crore.
GAIL Limited has started India’s maiden project of blending hydrogen in the city gas distribution grid. Hydrogen, 2% by volume, is being blended into the compressed natural gas (CNG) network and 5% is being blended into the piped natural gas (PNG) network at the city gas station of Avantika Gas Limited (AGL), in Indore.
NTPC Limited has initiated the blending of green hydrogen of up to 8% (vol/vol) in the PNG network at NTPC Kawas Township, Surat, from January 2023.
Hydrogen has a low boiling point (-252.87°C or -423.17°F) and a low melting point (-259.14°C or -434.45°F), which are the lowest among all elements.
The demand for hydrogen is projected to experience a remarkable surge of approximately 700 percent in the next three decades.
Hydrogen can also be deployed in a fuel cell. These electrochemical devices which combine hydrogen gas with oxygen to produce a current can operate with efficiencies in the 50% – low-60% range, significantly better than most combustion technologies.
Hydrogen is not something new. It is the most abundant element in the universe and the world already uses it widely as a commodity. The United States alone annually produces ~10 million metric tons of hydrogen from steam methane reforming. In short, the world already knows how to handle, move, and store hydrogen.

Emerging Trends

Cost Reductions: Advancements in electrolyzer technology and reductions in renewable energy costs are driving down the cost of green hydrogen production, making it more competitive with traditional fuels.
Policy Support: Governments worldwide are introducing policies and subsidies to support green hydrogen projects. This includes funding for infrastructure, research, and development to accelerate the transition to a hydrogen economy.
Industrial Applications: Green hydrogen is increasingly being adopted in hard-to-abate sectors such as steel production, chemical manufacturing, and heavy transport. These sectors are crucial for reducing industrial emissions and meeting climate goals.
Energy Storage: Hydrogen is gaining traction as a viable solution for energy storage. It can store excess renewable energy and provide grid stability, addressing the intermittency of solar and wind power.
Global Market Growth: The green hydrogen market is expanding globally, with significant investments in new projects and collaborations. Countries like Australia, Japan, and European nations are leading the way with large-scale hydrogen initiatives.

Use Cases

Transportation: Green hydrogen is used in fuel cell vehicles (FCVs) such as cars, buses, and trucks, offering a clean alternative to traditional internal combustion engines. Hydrogen-powered trains are also emerging, with the potential to reduce emissions in rail transport.
Industrial Applications: Industries like steel and cement production can use green hydrogen to replace fossil fuels, significantly reducing carbon emissions. For instance, green hydrogen is crucial in producing “green steel,” which is emissions-free.
Energy Storage: Green hydrogen can store excess renewable energy, providing a stable energy supply during periods of low renewable generation. It helps address the intermittent nature of solar and wind energy.
Power Generation: Green hydrogen can be used in gas turbines for electricity generation, providing a clean energy source that complements other renewable technologies. It also offers backup power solutions for grids.
Ammonia Production: Green hydrogen is a key component in producing green ammonia, which is used in fertilizers. This process helps decarbonize the agricultural sector and supports sustainable farming practices.
Refineries: Refineries use hydrogen for desulfurization processes. Green hydrogen provides a cleaner alternative, reducing the environmental impact of refinery operations.

Key Players

Siemens Energy is significantly contributing to the green hydrogen sector by supplying advanced electrolysis systems. For instance, they are providing 12 electrolyzers with a combined capacity of 200 megawatts for the Normand’Hy project in France, which will produce 28,000 tons of renewable hydrogen annually starting in 2026. This project is expected to save up to 250,000 tons of CO2 each year. Siemens Energy is also involved in Germany’s “Clean Hydrogen Coastline” project, where they are delivering a 280-megawatt electrolyzer to produce up to 26,000 tons of green hydrogen annually starting in 2027.

Cummins Inc. is actively advancing the green hydrogen sector through its electrolyzer technology and partnerships. The company has developed and supplied hydrogen production solutions globally, including the deployment of its PEM electrolyzers in various large-scale projects. Cummins’ commitment to green hydrogen is evident in its collaboration with companies like Iberdrola to develop a 230-megawatt hydrogen plant in Spain, aiming to produce green hydrogen for industrial use by 2023.

FuelcellWorks is a prominent news and information platform dedicated to the hydrogen and fuel cell industry. It provides updates on technological advancements, governmental policies, and major projects in the green hydrogen sector. FuelcellWorks covers key initiatives like the UK government’s support for 11 green hydrogen projects, totaling £2 billion in investments, and significant advancements in hydrogen infrastructure globally.

Plug Power is a leading company in the green hydrogen sector, focusing on the development and deployment of hydrogen fuel cell systems. They are heavily involved in creating green hydrogen production infrastructure and have partnered with various industries to accelerate the adoption of hydrogen as a clean energy source. Their work includes building a comprehensive green hydrogen network across North America, with significant projects aimed at reducing carbon emissions and promoting sustainable energy solutions.

Hydrogenics, a subsidiary of Cummins Inc., specializes in hydrogen fuel cell and electrolyzer technologies. Acquired in 2019, Hydrogenics enhances Cummins’ fuel cell capabilities, offering a full range of hydrogen solutions from production to application. The company focuses on clean, efficient energy technologies and operates under Cummins’ Electrified Power Business Segment, headquartered in Mississauga, Canada.

Ballard Power Systems is a leader in the green hydrogen sector, known for its PEM fuel cell technology. The company develops and manufactures fuel cells for various applications, including transportation and stationary power. Ballard’s innovative solutions are pivotal in advancing hydrogen as a clean energy source, aiming to reduce carbon emissions globally. They partner with multiple companies to expand the adoption of hydrogen fuel cells.

Nikola Motors is making significant strides in the green hydrogen sector with its focus on hydrogen fuel cell electric vehicles (FCEVs) and infrastructure. In Q1 2024, Nikola produced and wholesaled 40 Class 8 hydrogen FCEVs and plans further growth with its HYLA hydrogen refueling solutions. The company has also partnered with Plug Power to enhance its hydrogen supply chain and infrastructure, aiming to decarbonize the transportation industry.

Linde Plc is a leading player in the green hydrogen market, actively developing hydrogen production and supply solutions. Linde operates several large-scale hydrogen production facilities and has been involved in numerous green hydrogen projects globally. The company is committed to expanding its hydrogen capabilities to support various industries in transitioning to clean energy, leveraging its expertise in gas technology and infrastructure to advance the hydrogen economy.

Conclusion

The green hydrogen market is experiencing a significant transformation, driven by a global push for decarbonization and sustainable energy solutions. With the market expected to grow from USD 0.7 billion in 2022 to USD 62.9 billion by 2032, achieving a CAGR of 58.6%, the sector is poised for rapid expansion. Key growth factors include technological advancements in electrolyzer efficiency, substantial public and private investments, and supportive government policies across major economies.

Challenges remain, particularly the high costs associated with the production, storage, and transportation of green hydrogen. However, ongoing research and development efforts aim to reduce these costs and enhance scalability, making green hydrogen a pivotal component in the global transition to clean energy.

Sources:

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