Rethink is predicting that in 2050 the green hydrogen market will be valued at $850 billion and the world will have installed over 5 TW of electrolysis capacity, feeding multiple industries from ammonia to shipping fuel to fertilisers, heavy duty trucking, aviation, steel making and both bio-fuel refining and methanol production.
All this will be achieved with the help of around 650 GW of electrolyser manufacturing capacity, built between now and 2050. By that time the electrolyzer market will have made cumulative sales of $2 trillion which will represent quite a return on the cumulative investment of $111 billion required by all the electrolyzer gigafactories.
Countries like the US, China, Australia, Chile plus Europe and a few African countries will dominate global supply and contribute to bringing down the global average cost of production for green hydrogen to around $1.5/kg by 2050.
This will in part be achieved due to an expected demand of 583 million tons in 2050, split between biofuel refining, ammonia production, methanol production, road transportation, aviation, steel manufacturing among other smaller uses.
Certain supply chain links might pose problems, especially scarce elements which are produced at scale in China. Other materials will see prices skyrocket as a result of increased demand, but all in all they won’t have a big final say in how the price of an electrolyser will continue to drop.
Global Hydrogen Market Forecast to 2050 also predicts that every color of hydrogen will play its part in sustaining the industry, as it scales. High future costs of nuclear power and natural gas will ensure that green hydrogen will be the only colour left in play past 2039, when the entire industry will reach full sustainability.
The current thinking among H2 suppliers is that hydrogen will be a carbon copy of the LNG market
“The hydrogen industry is growing to the beat of the LNG (Liquified Natural Gas) market” said Bogdan Avramuta, hydrogen analyst at Rethink Energy and lead author of the report. “Many fossil fuel companies are looking at copying everything from the LNG industry from trading to shipping. Hydrogen will become the next LNG. This is not to say that hydrogen will cover all the demand sectors that still rely on LNG, but rather it will amount to a considerable share of the global energy market as it will replace natural gas and oil (and coal) across multiple sectors.”
Pieces of fresh policy like the Inflation Reduction Act (IRA) or the EU Delegated Acts on Renewable Hydrogen (Delegated Act) are some large scale examples of contributions to a new rule book to manage the hydrogen industry.
The first piece of the puzzle in any green hydrogen project is the electrolyser. A device that takes in water and electricity in order to produce hydrogen. Similar to Tesla’s gigafactories – which are industrial scale manufacturing facilities for batteries – an electrolyser gigafactory is a plant that assembles electrolysers.
The global pipeline for Electrolyser gigafactories currently sits at around 40 GW – a 1 GW gigafactory is able to manufacture 1 GW worth of electrolysers in one year. All these have been publicly announced and have opening dates varying between 2023 and 2030.
“Geographically, Australia, the US, China, India and Europe represent the hotspots with the likes of Saudi Arabia, Morocco also getting involved” added Mr Avramuta. “We expect the bias to fall towards these hotspots and for the gap in electrolyser manufacturing capacity to grow between them and a number of fringe countries from around the world.”
The trend in investment in gigafactories is expected to follow a quick ramp up succeeded by a leveling off. Once the global capacity reaches around 247 GW in 2030, the install rate will saturate and cumulative investment will plateau significantly after 2040.
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