In its newly released report, AMI anticipates that the global green hydrogen market will grow at 30.2% CAGR on account of increasing global clean energy demand along with high rate of fossil fuel depletion.
Global Energy Transition toward Sustainable Solutions Is Projected To Drive the Market Growth Over The Forecast Period
According to Absolute Markets Insights report, various consumers and investor’s inclination towards decarbonisation concept along with underpinning of manufacturers via global shift of regulators have driven unprecedented investments and interest in green hydrogen. Also, growing concerns regarding climatic changes and oil price shocks have pushed the industrial manufacturers to opt for alternative fuels. Production of green hydrogen is likely to contribute in energy security by being an energy carrier with various producers, supply chains, and market; this is projected to diversify the energy mix and improve the ecosystem’s resilience. Such a factor is likely to drive the economic growth through job creation. As a result, myriad of investors are investing more in new green hydrogen projects albeit with low product penetration in the market. Some of the major driving factors for green hydrogen production are low variable electricity costs, commercial scaling up of technologies, government objectives of net-zero energy systems, and growing interest of multiple stakeholders. According to International Renewable Energy Agency, the price of electricity procured from onshore wind plants and solar PV has decreased substantially. In 2020, solar energy average prices contracted from 250 USD/MWh to 13.5 USD/MWh. Also, electricity generated from onshore wind plants fell from 75 USD/MWh to 21.5 USD/MWh. Such decrease in electricity prices is projected to drive the green hydrogen production and is perceived to be economically attractive option for investors. Moreover, global adoption of net zero GHG emission targets are further likely to drive the demand for green hydrogen market in extended run.
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Currently, green hydrogen in global energy transition faces numerous challenges. The product is already present globally at an industrial scale; however, it is highly derived from coal and natural gas. The expansion of hydrogen infrastructure is sluggish which subsequently is projected to decrease the rate of adoption. However, near term opportunities is expected to boost the product growth which includes international cooperation for initiating hydrogen trade via shipping routes. Replacing clean hydrogen with natural gas and targeting hydrogen plants which are concentrated at coastal industrial zones will drive down the costs. These factors are propelling the global green hydrogen market.
Scaling up of Green Hydrogen is Projected to Drive the Market Growth
Scaling up of green hydrogen via long term energy strategies and R&D activities is projected to play a vital role in bolstering the market growth. Establishing green hydrogen in long term energy policies by increasing adoption in sectors such as refining, steel, chemicals, freight, power generation, storage, and transport can drive the product consumption which subsequently will drive the production of green hydrogen on large scale. Also, stimulating commercial demand through suppliers, distributors, and consumers which underpins the sustainable policies for clean hydrogen can ramp up the production and drive the global green hydrogen market growth in the the near future.
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Clean hydrogen supply and its infrastructure projects can pose risk at the time of deployment. However, private sector is likely to invest and share profits by learning risks through time-limited loans, and guarantees. High investments from private sector is projected to play pivotal role in driving the green hydrogen market growth over the forecast period.
Price Decrease Expected in Green Hydrogen Production Cost Dynamics
According to World Energy Council, the production price for producing green hydrogen ranges from USD 2.7 – 8.8/Kg which is expected to significantly decrease by the year 2030. Decreasing renewable electricity costs coupled with hydrogen technologies following the learning curve with advancements are projected to further lower the production costs. The operating expenses in green hydrogen production is directly influenced by renewable electricity costs, thus being major driver for lowering its production cost. As for capital expenses, the cost of electrolysers are expected to significantly decrease as production and economies of scale are streamlined in future. Moreover, prices shall be dependent on significant difference between production sites and countries which are dependent on price of renewable electricity. Countries such as Chile and Australia which have low renewable electricity costs are projected to play pivotal role in influencing the green hydrogen market dynamics.
Market participants are still in the phase of plant development and increasing production capacity. For instance, in November, 2021, bp p.l.c., an oil and gas company announced its planning of large-scale green hydrogen production facility in North East England which targets 60MWe green hydrogen production by 2025. Increasing market participation along with growing number of green hydrogen projects are likely to propel the green hydrogen market growth over the forecast period.
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Global Green Hydrogen Market:
By Renewable Source:
- Wind
- Solar
- Others
By Technology:
- Alkaline Electrolyser
- Proton Exchange Membrane Electrolyser
- Solid Oxide Electrolyser
By Location:
- Onshore
- Offshore
By Application:
- Transport
- Power Generation
- Chemical
- Industrial
- Others
By Region
- North America
- U.S.
- Canada
- Mexico
- Rest of North America
- Europe
- France
- The UK
- Spain
- Germany
- Italy
- Nordic Countries
- Denmark
- Finland
- Iceland
- Sweden
- Norway
- Benelux Union
- Belgium
- The Netherlands
- Luxembourg
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- New Zealand
- Australia
- South Korea
- Southeast Asia
- Indonesia
- Thailand
- Malaysia
- Singapore
- Rest of Southeast Asia
- Rest of Asia Pacific
- Middle East & Africa
- Saudi Arabia
- UAE
- Egypt
- Kuwait
- South Africa
- Rest of Middle East & Africa
- Latin America
- Brazil
- Argentina
- Rest of Latin America
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