A groundbreaking study titled “Global Hydrogen Market Forecast to 2050” released by Rethink Energy reveals astonishing projections for the green hydrogen market.
The study estimates that by 2050, the market will be valued at an impressive $850 billion, with over 5 TW of electrolysis capacity installed worldwide. This significant capacity will serve various industries, including ammonia production, shipping fuel, fertilizers, heavy-duty trucking, aviation, steelmaking, and biofuel refining and methanol production.
To achieve this ambitious goal, the study suggests the construction of approximately 650 GW of electrolyzer manufacturing capacity between now and 2050. Cumulative sales of electrolyzers are expected to reach $2 trillion by then, generating a substantial return on the initial investment of $111 billion required for all the electrolyzer gigafactories.
Leading countries in the global supply chain, such as the United States, China, Australia, Chile, Europe, and select African nations, are predicted to dominate the market. These countries will contribute to reducing the global average cost of green hydrogen production to approximately $1.5/kg by 2050. The projected demand for 2050 is estimated at 583 million tons, encompassing biofuel refining, ammonia and methanol production, road transportation, aviation, steel manufacturing, and other smaller applications.
While the study acknowledges potential challenges in the supply chain, particularly concerning scarce elements predominantly produced in China, it does not anticipate significant hindrances to the ongoing cost decline of electrolyzers. Although increased demand may cause certain material prices to surge, the overall cost reduction trend is expected to continue.
The Global Hydrogen Market Forecast to 2050 emphasizes the importance of every color of hydrogen in sustaining the industry’s growth. Green hydrogen is projected to be the only remaining option beyond 2039, given anticipated future costs of nuclear power and natural gas, ensuring the industry’s long-term sustainability.
Experts in the hydrogen industry draw a parallel with the LNG market and foresee hydrogen following a similar trajectory. “The hydrogen industry is growing in sync with the LNG market,” stated Bogdan Avramuta, hydrogen analyst at Rethink Energy and lead author of the report. “Hydrogen is poised to become the next LNG, displacing natural gas, oil, and coal across multiple sectors.”
Significant policies, such as the Inflation Reduction Act (IRA) and the EU Delegated Acts on Renewable Hydrogen (Delegated Act), play a vital role in shaping the emerging rule book for managing the hydrogen industry.
The key component in any green hydrogen project is the electrolyzer, a device that utilizes water and electricity to produce hydrogen. Similar to Tesla’s gigafactories for batteries, an electrolyzer gigafactory assembles electrolysers.
Currently, the global pipeline for electrolyzer gigafactories stands at approximately 40 GW, with opening dates spanning from 2023 to 2030. “Australia, the US, China, India, and Europe are the hotspots, with countries like Saudi Arabia and Morocco also joining the fray,” added Mr. Avramuta. “We anticipate the focus to remain on these hotspots, resulting in a growing disparity in electrolyzer manufacturing capacity between them and several other countries on the periphery.”
Investment in gigafactories is expected to witness rapid growth, followed by a stabilization period. Once global capacity reaches around 247 GW in 2030, the installation rate will plateau, and cumulative investment will level off significantly after 2040.