How Can Entrants in the Green Fuel Industry Tap into the $7.17 Billion Potential of Water Electrolysis Market?

Water electrolysis is gaining prominence as a pivotal technology in sectors such as transportation, energy storage, and power generation due to its ability to produce green hydrogen. This is driving the growth of the water electrolysis industry as the demand for clean and sustainable energy solutions continues to rise.

According to the BIS Research report, the global water electrolysis market was valued at $0.36 billion in 2022 and is forecast to reach $7.17 billion by 2031 at a CAGR of 35.4% during the forecast period 2022-2031. 

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This blog aims to provide insights into how businesses can tap into the growing market potential and establish a strong foothold in the water electrolysis industry.

1. Embrace Technological Innovation

To succeed in the water electrolysis market, industry entrants must prioritize technological innovation. Investing in research and development activities to enhance the efficiency and cost-effectiveness of electrolysis systems is crucial.

Exploring new electrode materials, catalysts, and membrane technologies can significantly improve the performance of electrolyzers, making them more competitive and attractive to customers.

Moreover, collaborating with research institutions and fostering partnerships with technology providers can accelerate innovation and ensure a competitive edge.

For instance, according to data insights from BIS Research, Asahi Kasei Corporation, a leading manufacturer of water electrolyzers, invested in R&D activities by investing 1.48% of its total revenue in the FY2021, leading to the growth of the water electrolysis market.

The company is constantly working to strengthen its position and offer innovative water electrolyzer products, such as anion exchange membranes, to various industries.

Moreover, in March 2023, Evolve Hydrogen developed an innovative water electrolysis system that utilizes an electro-conductive polymer, which can produce hydrogen from various sources of water, such as groundwater, seawater, and tap water.

The development of these advanced electrolysis technologies leads to a reduction in the cost of producing green hydrogen and an expansion of its supply chain.

2. Focus on Scalability and Cost Reduction

One of the primary challenges for industry entrants is achieving scalability and cost reduction. To tap into the market potential, companies must strive to develop electrolysis systems that can be deployed on a large scale, catering to diverse applications and industries.

For instance, on April 18th, 2023, Ionomr Innovations and Sunfire collaborated on developing an anion exchange membrane (AEM) electrolyzer for industrial-scale hydrogen production. The collaboration aims to address the challenge of scaling up electrolysis systems to meet growing demand. With the use of Ionomr's cost-effective Aemion+ AEMs, which replace expensive materials, cost reduction is achieved.

Moreover, on May 22nd, 2023, Thyssenkrupp Nucera and H2 Green Steel partnered to establish an electrolysis plant for Europe's inaugural commercial green steel facility.

Thyssenkrupp Nucera, a German-Italian joint venture, would supply more than 30 electrolyzers, equivalent to over 700 MW of water electrolysis capacity, to H2 Green Steel. Utilizing electrolyzers instead of coal-powered burners would enable the water electrolysis plant to achieve an impressive 95% emissions reduction compared to traditional steelmaking methods.

This collaboration highlights Thyssenkrupp Nucera's proficiency in delivering large-scale electrolysis solutions and reinforces H2 Green Steel's position in the flourishing green hydrogen economy.

3. Establish Strategic Partnerships

Collaborations and partnerships play a crucial role in entering and expanding the water electrolysis market. Industry entrants should actively seek partnerships with established players, such as utilities, energy companies, and industrial manufacturers.

These partnerships can provide access to existing customer bases, distribution networks, and technical expertise. Joint ventures and strategic alliances can also facilitate knowledge sharing, resource pooling, and risk mitigation, enabling faster market entry and growth.

For instance, on March 10th, 2023, Thermax, a Pune-based energy solutions provider, joined forces with Fortescue Future Industries (FFI) from Australia to explore opportunities for developing green hydrogen projects for commercial and industrial customers in India.

Similarly, on March 13th, 2023, Unigel, a chemical company, and Thyssenkrupp Nucera signed a memorandum of understanding (MoU) to expand the capacity of Unigel's green hydrogen plant in Bahia, Brazil, from 60 MW to 240 MW of water electrolysis. This collaboration aims to accelerate the production of green hydrogen and green ammonia, leading to the development of a global green hydrogen economy.

4. Tapping into the Rising Potential of Developing Countries

Developing countries offer a unique landscape for investment and expansion in the water electrolysis sector, with abundant renewable energy resources and a need for affordable and environmentally friendly energy production.

For instance, in January 2023, India approved $2.3 billion in funding to accelerate the development of green hydrogen and establish the country as a global hub for the industry. The funding aims to produce at least 5 million metric tons of green hydrogen by the end of the decade.

Leading renewable energy companies in India, including Adani Group, Reliance Industries, and Indian Oil, are investing in green hydrogen production. India's move aligns with global efforts to promote green hydrogen, and its market is expected to grow significantly in the coming years, allowing new entreats to explore the market potential.

Conclusion

The transition toward a sustainable and decarbonized energy system is driving the demand for electrolysis solutions, making it a promising sector for new entrants to contribute to a greener future while reaping significant financial rewards.

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