Water Electrolysis Market Size, Share & Trends Analysis Report By Product (Proton Exchange Membrane, Alkaline Water Electrolysis), By End-use (Chemicals, Power Plants), By Region, And Segment Forecasts, 2024 - 2030

Water Electrolysis Market Size & Trends

The global water electrolysis market size was estimated at USD 6.18 billion in 2023 and is projected to grow at a CAGR of 7.9% from 2024 to 2030. The market is poised for significant growth in the coming years, driven by several key factors. Firstly, the transition towards sustainability positively impacts market expansion as industries increasingly identify hydrogen as a crucial element for numerous future applications. With heightened interest in hydrogen as a green energy solution, ongoing innovations and technological advancements primarily target sustainable hydrogen production methods, thereby instigating the market.

Moreover, stringent government regulations on fossil fuel usage are expected to compel substantial demand for water electrolysis machines in near future. As hydrogen finds extensive use across various industries, particularly in fuel cell-based applications, it is significantly impacting hydrogen production. Water electrolysis machines stand as efficient solutions for sustainably producing hydrogen and in considerable volume, meeting the substantial demand for hydrogen as a green energy source and further elevating the market share in the upcoming years.

Drivers, Opportunities & Restraints

Advancements in urban wastewater treatment are opening new avenues for market growth. As electrocoagulation methods gain popularity, the water electrolysis process has become an essential component of wastewater treatment facilities, contributing to upgrading the market's growth graph in the forecast years. Furthermore, the transportation industry captures the potential share of the market and is expected to grow at a fast pace over the forecast period, as hydrogen offers emission-free power for cars and trucks.

The market presents numerous growth opportunities driven by the increasing demand for green hydrogen as a clean energy source. As industries seek sustainable hydrogen production methods, ongoing innovations in water electrolysis technologies open new avenues for market expansion. The decreasing cost of renewable energy and water electrolysis equipment further enhances the market's attractiveness.

The market faces several restraints, including the high initial capital investment required to establish electrolysis facilities, which hinders widespread adoption. Limitations in grid infrastructure for accommodating renewable energy sources can pose challenges in scaling up electrolysis operations. Regulatory complexities and the need for supportive policies also impede rapid market expansion.

Product Insights

Alkaline water electrolysis held the market with the largest revenue share of 57.72% in 2023. The increasing demand for green hydrogen as a sustainable energy source drives the market for alkaline water electrolysis. This demand is fueled by global carbon reduction goals and the transition to renewable energy, necessitating efficient hydrogen production methods. Government initiatives and supportive policies further enhance market growth by promoting hydrogen technologies.

Moreover, the proton exchange membrane (PEM) market is driven by the increasing demand for green hydrogen as a clean energy source, government initiatives to promote hydrogen technologies, and ongoing technological advancements improving PEM electrolysis systems' efficiency and cost-effectiveness. The growing adoption of fuel-cell electric vehicles and the need for reliable hydrogen production methods are also critical market drivers for PEM water electrolysis.

End-use Insights

Chemicals held the largest revenue share of 41.52% in 2023. The market in the chemical end use sector is driven by the rising demand for hydrogen as a key feedstock in various chemical processes, including ammonia and methanol production. The shift towards sustainable and carbon-free production methods propels industries to adopt water electrolysis for hydrogen generation.

The market in power plants is driven by the increasing focus on renewable energy sources and the need for green hydrogen production to meet carbon reduction targets. As power plants seek to enhance their sustainability efforts, water electrolysis technology offers an efficient method for generating hydrogen, which can be utilized in energy storage and fuel cells. In addition, supportive government policies and investments in low-carbon infrastructure bolster the adoption of electrolysis systems in power generation. The growing demand for hydrogen as a clean energy carrier further propels market growth, aligning with global energy transition goals.

Regional Insights

The water electrolysis market in North America is expected to grow at the fastest CAGR during the forecast period. Government incentives and supportive policies further enhance market growth by promoting adopting water electrolysis systems integrated with renewable energy sources like wind and solar power. In addition, advancements in electrolyzer technologies, including proton exchange membrane (PEM) and alkaline electrolysis, improve efficiency and reduce costs, making hydrogen production more viable. The emergence of hydrogen as a key enabler for the energy transition and the development of hydrogen economies across North America also present long-term growth opportunities, positioning the region as a market leader.

The U.S. water electrolysis market is driven by a confluence of factors that underscore the increasing demand for clean hydrogen as a sustainable energy solution. The shift towards renewable energy sources is becoming paramount as the U.S. intensifies its efforts to combat climate change. Hydrogen, produced through water electrolysis, is recognized as a crucial component in achieving decarbonization goals across various sectors, including transportation, power generation, and industrial applications.

Europe Water Electrolysis Market Trends

The water electrolysis market in Europe is expected to grow significantly over the forecast period. A combination of robust regulatory frameworks, technological advancements, and increasing demand for green hydrogen drives the European Water Electrolysis Market. The European Union's commitment to achieving carbon neutrality by 2050 is a significant catalyst, leading to substantial investments in hydrogen infrastructure and technology.

The UK water electrolysis market is driven by several key factors that align with the country's commitment to achieving net-zero carbon emissions by 2050. The UK government has set ambitious targets, including a goal of producing 5 GW of low-carbon hydrogen by 2030, which significantly boosts demand for water electrolysis technologies. This initiative is supported by various policies and funding programs to develop hydrogen infrastructure and promote its use across multiple sectors, including transportation, power generation, and industrial processes.

The water electrolysis market in Germany is expected to grow significantly over the forecast period. A combination of strong government policies, technological advancements, and increasing demand for green hydrogen drives the water electrolysis market in Germany. Germany is at the forefront of the European hydrogen strategy, aiming to produce 10 million tons of green hydrogen annually by 2030. This ambitious target is supported by significant investments in hydrogen infrastructure and research, fostering the development of water electrolysis technologies. The transition to renewable energy sources, particularly wind and solar, creates a favorable environment for electrolysis, as these technologies can efficiently convert surplus renewable energy into hydrogen.

Asia Pacific Water Electrolysis Market Trends

Asia Pacific dominated the water electrolysis market and accounted for the largest revenue share, over 42.45%, in 2023. The Asia Pacific market is driven by the increasing demand for green hydrogen to support energy security and reduce reliance on fossil fuels. Government initiatives promoting renewable energy adoption and investments in hydrogen infrastructure are further propelling market growth. Furthermore, technological advancements enhancing the efficiency and cost-effectiveness of electrolysis systems are attracting significant interest from various industries, including transportation and power generation, thereby fostering a robust market environment.

Rising partnerships and collaborations among industry stakeholders are accelerating the development of innovative solutions for clean energy production. The anticipated growth in hydrogen applications across various sectors, including transportation, power generation, and industrial processes, positions the Asia Pacific region as a key player in the global hydrogen economy, driving the market forward.

China water electrolysis market is driven by a surge in demand for green hydrogen, fueled by the country's commitment to achieving carbon neutrality by 2060. As part of its strategy, the Chinese government has implemented policies to promote hydrogen production and infrastructure development, significantly boosting investment in electrolysis technologies. The rapid expansion of the power-to-gas market also contributes to this growth, with projections indicating substantial increases in electrolyzer capacity to meet rising hydrogen needs.

India water electrolysis market is driven by the government's commitment to achieving carbon neutrality and promoting renewable energy sources. Initiatives such as the National Hydrogen Mission aim to establish a robust hydrogen economy, significantly increasing investments in electrolysis technologies. The rising demand for green hydrogen in transportation, power generation, and industrial applications further propels market growth.

Central & South America Water Electrolysis Market Trends

The water electrolysis market in Central and South America is driven by the increasing adoption of hydrogen as a clean energy source, supported by government initiatives aimed at reducing carbon emissions. The region's focus on renewable energy integration, particularly solar and wind, enhances the viability of water electrolysis for hydrogen production.

Middle East & Africa Water Electrolysis Market Trends

The water electrolysis market in the Middle East and Africa is driven by the region's abundant renewable energy resources, particularly solar and wind, which facilitate sustainable hydrogen production. Governments are increasingly investing in hydrogen infrastructure as part of their strategies to diversify energy sources and reduce carbon emissions. Initiatives such as Saudi Arabia’s NEOM project and various green hydrogen hubs in Egypt highlight the commitment to establishing a hydrogen economy. The rising demand for green hydrogen in sectors like transportation, power generation, and industrial applications further propels market growth.

Key Water Electrolysis Company Insights

The market is a highly competitive industry with several key players operating globally. Moreover, the market is witnessing strategic partnerships and joint ventures aimed at enhancing production capabilities and expanding market reach, positioning these companies to capitalize on the growing hydrogen economy globally. Focusing on reducing carbon emissions and integrating renewable energy sources further supports market growth, making water electrolysis a pivotal technology in transitioning to sustainable energy solutions.

Recent Developments

• In February 2024, Chiyoda Corporation and Toyota announced a collaboration to develop a large-scale electrolysis system. The system will include a highly integrated water electrolysis stack group produced by Toyota and a large-scale electrolysis system by Chiyoda Corporation.

• In October 2023, Bekaert partnered with Toshiba Corporation to develop a membrane electrode assembly for proton exchange membrane electrolysis, leveraging the company's global commercial and manufacturing network.

Water Electrolysis Market Report Scope

Global Water Electrolysis Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global water electrolysis market report based on product, end-use, and region:

• Product Outlook (Revenue, USD Million, 2018 - 2030)

  • Proton Exchange Membrane

  • Alkaline Water Electrolysis

  • Solid Oxide Electrolyte (SOE)

• End-use Outlook (Revenue, USD Million, 2018 - 2030)

  • Chemicals

  • Electronics & Semiconductor

  • Power Plants

  • Petroleum

  • Pharmaceuticals

  • Others

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • Italy

    • Spain

    • France

    • Russia

  • Asia Pacific

    • China

    • India

    • Japan

    • Australia

  • Central & South America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • South Africa

    • UAE