A groundbreaking study titled “Global Hydrogen Market Forecast to 2050” has been released today by Rethink Energy, the energy intelligence division of Rethink Technology Research. The study projects that the green hydrogen market will be valued at a staggering $850 billion by 2050, with over 5 TW of electrolysis capacity installed worldwide. This massive capacity will serve various industries ranging from ammonia production to shipping fuel, fertilizers, heavy-duty trucking, aviation, steelmaking, and biofuel refining and methanol production.
To accomplish this ambitious goal, it is estimated that approximately 650 GW of electrolyzer manufacturing capacity will be built between now and 2050. By then, the cumulative sales of the electrolyzer market are expected to reach $2 trillion, providing a substantial return on the initial investment of $111 billion required for all the electrolyzer gigafactories.
Leading countries in the global supply chain, including the United States, China, Australia, Chile, Europe, and a few African nations, will dominate the market and contribute to reducing the global average cost of green hydrogen production to around $1.5/kg by 2050. This cost reduction will be facilitated by the projected demand of 583 million tons in 2050, encompassing biofuel refining, ammonia and methanol production, road transportation, aviation, steel manufacturing, and other smaller applications.
However, the study acknowledges potential challenges in the supply chain, particularly related to scarce elements that are predominantly produced in China. While the increased demand may cause prices of certain materials to skyrocket, these factors are not expected to significantly impede the continued decline in the cost of electrolyzers.
The Global Hydrogen Market Forecast to 2050 also emphasizes that every color of hydrogen will play a crucial role in sustaining the industry as it scales. With anticipated future costs of nuclear power and natural gas, green hydrogen is projected to be the sole remaining option beyond 2039, ensuring the industry's full sustainability.
Drawing a parallel with the LNG market, hydrogen industry experts believe that hydrogen will follow 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. “Many fossil fuel companies are looking to emulate the LNG industry, from trading to shipping. Hydrogen is poised to become the next LNG. This doesn't mean that hydrogen will entirely replace LNG in all demand sectors, but it will hold a significant share of the global energy market, displacing natural gas, oil, and coal across multiple sectors.”
Prominent policies such as the Inflation Reduction Act (IRA) and the EU Delegated Acts on Renewable Hydrogen (Delegated Act) represent significant contributions to the emerging rule book for managing the hydrogen industry.
The pivotal component in any green hydrogen project is the electrolyzer, a device that utilizes water and electricity to produce hydrogen. Similar to Tesla's gigafactories, which are large-scale manufacturing facilities for batteries, an electrolyzer gigafactory assembles electrolysers.
Currently, the global pipeline for electrolyzer gigafactories stands at approximately 40 GW, with opening dates ranging 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 experience rapid growth followed by a stabilization period. Once global capacity reaches approximately 247 GW in 2030, the installation rate will plateau, and cumulative investment will significantly level off after 2040.
