According to Wood Mackenzie, 2025 is set to be a pivotal year for the low-carbon hydrogen and ammonia sectors, following modest progress in the previous year.
The global energy consultant’s report, “Hydrogen: 5 things to look for in 2025,” highlights key themes such as the rise of blue hydrogen in the U.S., the anticipated final investment decision (FID) for a giga-scale green project, increased deployment of Chinese electrolysers, ongoing mismatches between project FIDs and offtake contracts, and a surge in low-carbon ammonia investments.
The U.S. is expected to solidify its position as a blue hydrogen market, with over 1.5 million tonnes per annum (Mtpa) of blue hydrogen capacity projected to reach FID in 2025. In contrast, green hydrogen development faces challenges, with FIDs anticipated to disappoint.
The report indicates that while 16 gigawatts (GWe) of green capacity has reached FID, only two projects exceed 1 GWe. Monica Trilho, research analyst at Wood Mackenzie, noted that securing offtakers and access to renewable energy are critical for advancing large-scale projects. Despite these hurdles, there is an expectation for at least one additional giga-scale FID announcement in 2025.
Furthermore, Wood Mackenzie predicts that Chinese electrolyser manufacturers will begin to penetrate global markets outside North America and Europe, potentially capturing over one-third of these markets by the end of 2025. This shift is attributed to rising demand for green hydrogen and the competitive advantages of Chinese equipment.
The report also highlights a persistent mismatch between initiated FIDs and available offtake contracts, with more than 2.5 Mtpa currently uncontracted. Danish Sunasra from Wood Mackenzie indicated that while some uncontracted capacity may decrease, overall volumes are expected to rise due to anticipated blue hydrogen project FIDs.
Lastly, low-carbon ammonia investments are projected to double in 2025 compared to 2024, with an estimated $8 billion in deals expected. Upstream investments are anticipated to reach $5 billion as various stakeholders expand their portfolios targeting new energy markets for hydrogen. Downstream investments are also expected to focus on ammonia storage terminals and large ammonia carriers to meet rising export demand from Asia and Europe.
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