Europe Electrolyzer Market Expected to Reach $13.9 billion by 2032

The Europe electrolyzer market was valued at $3.1 billion in 2022 and is estimated to reach $13.9 billion by 2032, exhibiting a CAGR of 16.5% from 2023 to 2032.

Introduction

An electrolyzer is a specialized device designed for the process of electrolysis, which involves splitting water into its constituent elements such as hydrogen and oxygen, through the application of an electric current. Comprising two electrodes immersed in an electrolyte solution, the electrolyzer facilitates the transfer of ions between the electrodes, leading to the separation of water molecules into hydrogen gas at the cathode and oxygen gas at the anode. This electrochemical process is driven by the electrical energy supplied to the electrolyzer, and it offers a means of producing hydrogen in a clean and sustainable manner.

Market Dynamics

Ambitious environmental policies and carbon reduction initiatives across Europe are propelling the demand for electrolyzers. The European Union's ambitious targets, as outlined in the European Green Deal, are driving unprecedented investments in renewable energy and clean technologies. According to the European Commission, Europe set a goal of reducing net greenhouse gas emissions by at least 55% by 2030 and becoming a climate-neutral continent by 2050. Electrolyzers, being integral to the production of green hydrogen from renewable sources such as wind and solar power, are projected to benefit substantially from this supportive policy landscape. All these factors are expected to drive the demand for the Europe electrolyzer market during the forecast period.

However, the lack of harmonization in regulations and policies related to electrolyzers also poses challenges for cross-border trade and collaboration within the European Union. In a region where integration and cooperation are essential for maximizing the benefits of clean energy technologies, regulatory fragmentation impede the free flow of goods, services, and knowledge, hindering the growth potential of the electrolyzer industry. All these factors hamper the Europe electrolyzer market growth.

The integration of electrolyzers has the ability to leverage excess renewable energy production for hydrogen generation through electrolysis. Moreover, when renewable energy production is abundant, but demand is low, electrolyzers are employed to convert excess electricity into hydrogen. This technique, referred to as power-to-gas, serves as a valuable form of energy storage, aiding in grid stabilization and optimizing the utilization of renewable energy sources. All these factors are anticipated to offer new growth opportunities for Europe electrolyzer market during the forecast period.

Segments Overview

The Europe electrolyzer market is segmented into capacity, application, product, and country. On the basis of capacity, the market is classified as less than 500 KW, 500 KW to 2 MW, above 2 MW. On the basis of application, the market is categorized into power generation, transportation, industry energy, industry feedstock, building heat and power, and others. Based on product the market is segmented into alkaline electrolyzer, proton exchange membrane electrolyzer, solid oxide (SOE) electrolyzer, and anion exchange membrane (AEM) electrolyzer. Country wise, the market is analyzed across Germany, the UK, France, Italy, Spain, Norway, Sweden, Denmark, and rest of Europe.

On the basis of capacity, the market is classified as less than 500 KW, 500 KW to 2 MW, above 2 MW. The less than 500 KW segment is anticipated to grow at the fastest CAGR of 16.8% during the forecast period. The increasing emphasis on sector coupling and energy integration is driving the deployment of less than 500 kW electrolyzers. Furthermore, advancements in electrolyzer technology have made smaller systems more efficient, cost-effective, and scalable. Innovations in materials, manufacturing processes, and system design have lowered the capital costs and improved the performance of less than 500 KW electrolyzers, making them more accessible to a broader range of applications and stakeholders.

On the basis of application, the market is categorized into power generation, transportation, industry energy, industry feedstock, building heat and power, and others. The power generation segment is anticipated to grow at the fastest CAGR of 17.3% during the forecast period. The increasing adoption of renewable energy sources for power generation is one of the primary driving factors for the demand for electrolyzers in the energy sector. According to the Internation Energy Agency (IEA), renewable electricity capacity additions are expected to reach 507 GW in 2023, almost 50% higher than in 2022. Electrolyzers play a crucial role in facilitating the integration of renewable energy into existing power grids. Traditional power grids are designed to accommodate centralized electricity generation from fossil fuel-based power plants, which operate continuously to meet demand fluctuations.

By product, the market is segmented into alkaline electrolyzer, proton exchange membrane electrolyzer, solid oxide (SOE) electrolyzer, anion exchange membrane (AEM) electrolyzer. The proton exchange membrane electrolyzer segment is anticipated to grow at the fastest CAGR of 16.9% during the forecast period. Proton exchange membrane electrolyzer electrolyzers are characterized by their compact size and modular design, which makes them suitable for decentralized hydrogen production. This feature is particularly advantageous for applications where hydrogen needs to be produced on-site, such as refueling stations for hydrogen fuel cell vehicles or remote industrial sites. By decentralizing hydrogen production, PEM electrolyzers reduce transportation costs and logistics associated with distributing hydrogen from centralized production facilities, thereby enhancing the overall efficiency of hydrogen supply chains.

Key players in the Europe electrolyzer market include Air Liquide, Cummins Inc., Enapter S.r.l., Green Hydrogen Systems, H-TEC SYSTEMS GmbH, INEOS, ITM Power PLC, John Cockerill, Linde PLC, McPhy Energy S.A., Nel ASA, Plug Power Inc., Siemens AG, Sunfire GmbH, thyssenkrupp nucera AG & Co. KGaA, and Topsoe A/S.

Key Market Insights

• By capacity, 500 KW to 2 MW segment was the highest revenue contributor to the market accounting for less than half of Europe electrolyzer market share in 2022.
• On the basis of product, the alkaline electrolyzer segment was the highest revenue contributor to the Europe electrolyzer market share in 2022.
• On the basis of application, the power generation segment was the highest revenue contributor to the market accounting for less than one-third of the Europe electrolyzer market share in 2022.
• Country wise, Germany was the highest revenue contributor of Europe electrolyzer market share in 2022.