Global clean H2 market growing rapidly driven by demand in Asian superpower, analyst says in second quarter sector outlook.
The global clean hydrogen market is growing rapidly, with expectations “nearly everything” in the market will double in size this year, from electrolyser installations to the number of countries creating H2 strategies, BloombergNEF said in its second quarter sector outlook.
“Nearly everything has doubled already this year in the world of clean hydrogen, and we expect the momentum to continue in the months ahead,” said Martin Tengler, lead hydrogen analyst at BNEF.
“More than 40 countries have now published a hydrogen strategy or are developing one. More than 90 projects are being planned worldwide to use hydrogen in industry. Electricity generators have almost doubled their planned hydrogen-fired turbine capacity since January.”
The explosive growth of the hydrogen sector in China during the first half of this year could drive the electrolyser market to exceed 2GW in 2022, the report finds.
Nevertheless, clean H2 demand still lags behind electrolyser makers’ aggressive capacity expansion plans. To sustain the momentum, more policies stimulating clean hydrogen demand need to emerge, BNEF reckons.
China’s carbon neutrality target may be doing the most on this front.
“What’s happening in China right now is revolutionary for clean hydrogen,” Tengler said.
“Chinese companies are racing to show their compliance with the country’s carbon neutrality target, pushing the market for electrolysers – the devices that produce hydrogen using water and electricity – to be at least nine times bigger in 2022 than in 2020.”
Electrolyser shipments are set to double in 2021 and quadruple in 2022, reaching at least 1.8GW, with China expected to account for 60-63% of global installations.
By 2030, cumulative global installations could cross 40GW based on developer disclosures, the report estimates. Alkaline electrolysers are expected to continue to dominate the market due to better economics, with an 80% share in 2022.
In response to rising sales, electrolyser manufacturers are building more factories than needed, with about 16GW of manufacturing capacity possibly coming online by 2024. Unused capacities could push down prices.
“Still, hydrogen’s future as a major clean energy source is far from certain. Sustained, large-scale demand for clean hydrogen will need stronger demand-side incentives than what we are seeing now,” Tengler said.
“We’ll need to see CO2 prices of at least $100 per ton by 2030 to incentivise hydrogen adoption.
“No country has such carbon prices today, and we forecast only three markets to reach that level before 2030: Canada, the EU and the U.K. It is no surprise then that the vast majority of announced large-scale demand-side clean hydrogen projects come from these regions.”
Government funding for hydrogen is on the rise, the report said, with $11.4bn per year available for low-carbon H2 projects over 2021-30. For most countries, these subsidies total less than 0.1% of GDP, well below what solar got in its early years, but still a sizeable boost compared to a few years ago.
Source: rechargenews
