Hydrogen Generation Market (By System: Merchant, Captive; By Technology: Steam Methane Reforming, Coal Gasification; By Application; By Source) - Global Industry Analysis, Size, Share, Growth, Trends, Revenue, Regional Outlook and Forecast 2024-2033

The global hydrogen generation market size was estimated at around USD 170.18 billion in 2023 and it is projected to hit around USD 416 billion by 2033, growing at a CAGR of 9.35% from 2024 to 2033.

Key Pointers

• Asia Pacific accounted for the largest revenue share of over 36% in 2023.
• By Technology, the coal gasification contributed the largest market share of 35% in 2023.
• By Source, the natural gas generated the maximum market share of 73% in 2023.
• By System, the merchant generation segment led with a revenue share of about 61% in 2023.
• By Application, the ammonia production had the largest market share of 22% in 2023.

Hydrogen Generation Market Overview

The global hydrogen generation market driven by increasing demand for clean energy solutions and the growing emphasis on reducing carbon emissions. As nations strive to transition towards a more sustainable energy landscape, hydrogen emerges as a promising alternative due to its versatility and environmental benefits.

Hydrogen Generation Market Growth Factors

The growth of the hydrogen generation market is propelled by an increasing global initiatives aimed at decarbonization and the transition to renewable energy sources are driving the demand for hydrogen as a clean energy solution. Additionally, technological advancements in hydrogen production methods, such as electrolysis and steam methane reforming, are enhancing efficiency and reducing costs, making hydrogen more competitive with conventional fuels. Moreover, the growing investment in hydrogen infrastructure, including production facilities and refueling stations, is facilitating the expansion of hydrogen-based technologies across various sectors.

Hydrogen Generation Market Trends:

• Growing Demand for Clean Energy: With increasing concerns about climate change and air pollution, there's a rising demand for clean energy sources. Hydrogen, particularly green hydrogen produced through renewable energy sources, is gaining attention as a sustainable alternative to fossil fuels.
• Advancements in Technology: Technological advancements are driving down the costs of hydrogen production. Innovations in electrolysis, biomass conversion, and other hydrogen production methods are making the process more efficient and economical.
• Expansion of Infrastructure: As the demand for hydrogen grows, there's a need for expanded infrastructure for its production, storage, and distribution. Investments in hydrogen refueling stations, pipelines, and storage facilities are on the rise to support this expanding market.
• Increasing Applications: Hydrogen is finding applications beyond traditional sectors like industrial processes and transportation. It's being explored for use in power generation, heating, and even as a feedstock for chemical production, broadening its market potential.
• Focus on Green Hydrogen: Green hydrogen, produced using renewable energy sources like wind and solar, is gaining prominence due to its zero-emission nature. As the costs of renewable energy continue to decline, the competitiveness of green hydrogen is expected to improve.
• Integration with Renewable Energy: Hydrogen generation is increasingly being integrated with renewable energy projects to provide storage solutions and grid balancing. This integration enhances the flexibility and reliability of renewable energy systems while supporting the growth of hydrogen as a clean energy carrier.

Hydrogen Generation Market Challenges:

• Cost Competitiveness: One of the primary challenges is the cost competitiveness of hydrogen compared to conventional fossil fuels. While the costs of hydrogen production are decreasing, they still need to be further reduced to compete with existing energy sources on a large scale.
• Infrastructure Development: Building the necessary infrastructure for hydrogen production, storage, and distribution is a significant challenge. This includes establishing hydrogen refueling stations, pipelines, and storage facilities, which requires substantial investments and coordination among stakeholders.
• Scaling Up Production: Scaling up hydrogen production to meet increasing demand poses challenges, particularly in the case of green hydrogen produced from renewable sources. The production capacity of renewable energy installations needs to be expanded to support large-scale electrolysis for hydrogen generation.
• Technological Limitations: Despite advancements, there are still technological limitations in hydrogen production methods such as electrolysis and biomass conversion. Improvements are needed to enhance efficiency, reduce costs, and increase the reliability of these processes.
• Storage and Transportation: Hydrogen has low energy density by volume, which presents challenges in storage and transportation. Developing efficient and safe methods for hydrogen storage and transportation, including liquefaction and compression, is essential for its widespread adoption.

Technology Insights

Based on technology type, global market is divided into steam methane reforming, coal gasification, and others. Steam methane reforming process is a mature and advanced technology in hydrogen generation. Growing global demand for hydrogen generation is a crucial driving factor for steam methane reformers technology, as this is the most economical hydrogen generation method. Other growth driving factors include operational benefits such as high conversion efficiency associated with steam methane reforming process. Steam methane reforming segment is expected to maintain its lead during the forecast period.

Coal gasification hold a revenue share of more than 35% in 2023. Coal gasification which uses coal as a raw material for producing hydrogen has been in practice for nearly two centuries, moreover, is it also recognized as a mature technology for hydrogen generation. U.S. has a huge domestic resource in coal. Use of coal to generate hydrogen for transportation sector is expected to aid America in reducing its dependency on imported petroleum products.

Technologies in “others” segment include electrolysis and pyrolysis process and electrolyzers. Over the last decade, there has been an increase in new electrolysis installations with an aim to produce hydrogen from water, wherein PEM technology is gaining a significant market share as the process emits only oxygen as a byproduct without carbon emission. Presently most electrolysis projects are in Europe; however, new and upcoming projects have been announced in Australia, China, and America.

Source Insights

Natural gas led hydrogen generation industry with a revenue share of more than 73% in 2023. Hydrogen is produced from natural gas reforming which produces hydrogen, carbon monoxide, and carbon dioxide. Hydrogen production from natural gas is the cheapest method of producing hydrogen. Hydrogen production from natural gas is expected to keep its lead in the forecast period.

System Insights

Based on system, the merchant generation segment led with a revenue share of about 61% in 2023. Merchant generation of hydrogen means hydrogen is produced at a central production facility and is transported and sold to a consumer by bulk tank, pipeline, or cylinder truck. In many countries such as the U.S., Canada, and Russia there is an extensive existing natural gas pipeline network that could be used to transport and distribute hydrogen. Merchant generation segment is expected to retain its leading position from 2024 to 2033.

Application Insights

Ammonia production accounted for the largest revenue share of above 22% in 2023. It is expected to maintain its lead throughout the forecast period. Ammonia’s potential as a carbon-free fuel, hydrogen carrier, and energy store represents an opportunity for renewable hydrogen technologies to be deployed at an even greater scale. Hydrogen is typically produced on-site at ammonia plants from a fossil fuel feedstock. Natural gas is the most common feedstock, which feeds a steam methane reforming (SMR) unit. Coal can also be used to produce ammonia via a partial oxidation (POX) process.

Turning crude oil into various end-user products such as transport fuels and petrochemical feedstock are some of the major applications of hydrogen. Hydrotreatment and hydrocracking are the main hydrogen-consuming processes in refineries. Hydrotreatment is used to remove impurities, especially Sulphur, and accounts for a large share of refinery hydrogen use globally. Hydrocracking is a process that uses hydrogen to upgrade heavy residual oils into higher-value oil products.

Regional Insights

Asia Pacific accounted for the largest revenue share of over 36% in 2023. China led it in 2023, in terms of revenue. Presence of a high number of refineries in major countries such as China and India has resulted in driving the utilization of hydrogen generation. Furthermore, governments in some Asia Pacific countries such as Japan and Australia are evaluating greener and cleaner technologies for hydrogen generation.

Expansion of hydrogen generation industry in North America has been underway for several years. Industry has grown at a brisk pace with contributions from each application and technology. Methanol production and ammonia production are the fastest growing sectors with countries such as the U.S. and Canada witnessing significant growth in the last five years.

Growth in hydrogen generation is expected on account of fuel cell development and deployment in Europe, which is witnessing an increase due to the projects announced by European Commission (EU) through organizations such as Fuel Cells and Hydrogen Joint Undertaking (FCH JU). These projects have been announced with an objective of increasing adoption of fuel cell vehicles in Europe and this will aid in development of supportive hydrogen infrastructure for fuel cell vehicles in major European countries.

Hydrogen Generation Market Key Companies

• Air Liquide International S.A
• Air Products and Chemicals, Inc
• Hydrogenics Corporation
• INOX Air Products Ltd.
• Iwatani Corporation
• Linde Plc
• Matheson Tri-Gas, Inc.
• Messer
• SOL Group
• Tokyo Gas Chemicals Co., Ltd.

Hydrogen Generation Market Segmentations:

By Technology

• Steam Methane Reforming
• Coal Gasification
• Others

By Application

• Methanol production
• Ammonia Production
• Petroleum Refining
• Transportation
• Power Generation
• Others

By System

• Captive
• Merchant

By Source

• Natural Gas
• Coal
• Biomass
• Water

By Region

• North America
• Europe
• Asia Pacific
• Central & South America
• Middle East & Africa