POWER-TO-GAS MARKET ANALYSIS

The global power-to-gas market size was valued at US$ 30.27 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 12.2% from 2023 to 2030. The global power-to-gas market is expected to gain major growth in the coming years, owing to factors such as growing market share of renewable energy in power generation, regulations promoting technologies in hydrogen production, and rise in use of CNG and hydrogen in transportation sector.

Regional Insights

Among regions, Europe is anticipated to account for major share in the global power-to-gas market over the forecast period. Growth of this region can be attributed to increasing requirement for developing efficient energy storage solution having minimum impact of the environment. The investments in power-to-gas technology in the region is emphasizing the willingness of countries to create a sustainable ecosystem. As the region is focused on reducing its carbon emission to zero by 2050, the global power-to-gas market is projected to gain major growth in the Europe over the forecast future.

Furthermore, Asia Pacific is also expected to gain substantial growth in the global power-to-gas market over the forecast period. This is owing to presence of diverse countries on different levels of economic development. The region is known to be one of the largest greenhouse gas emission contributors, and the government of countries across the region are implementing frameworks and policies regarding sustainable energy. Thus, the demand for power-to-gas plants is increasing rapidly in the region, which is expected to drive growth of the global power-to-gas market over the forecast period.

Figure 1: Global Power-to-Gas Market Share (%), By Region, 2022

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Global Power-to-Gas Market Drivers:

Growing shift to renewable energy sources to boost the market growth

Countries around the world are capitalizing on the renewable resources and are involved in major investments through R&D in order to make a significant shift toward decarbonization. As the fossil fuel reserves are limited resources, they cannot cater the ever-growing demand for energy around the world. Thus, demand for technological creativity is increasing to cater the growing need for energy. This increasing shift toward renewable energy sources is therefore expected to drive growth of the global power-to-gas market over the forecast period.

Government initiatives toward reducing emission of CO₂ to fuel the market growth

Due to the concept of carbon footprint, awareness regarding amount of carbon dioxide emitted and its impact on the environment is increasing among producers and consumers. There is a rise in emphasis on carbon footprint due to which, the demand for environmentally friendly products is increasing. As a result, the demand for power-to-gas technology is increasing all over the world to reduce the emissions of carbon dioxide. Thus, this in turn is expected to drive growth of the global power-to-gas market over the forecast period.

Global Power-to-Gas Market Opportunities:

Increasing demand for hydrogen is expected to create multiple growth opportunities in the global power-to-gas market over the forecast period. The momentum to reduce the greenhouse gas emissions around the world is increasing, due to which the use of hydrogen as a green transportation fuel is increasing globally. This in turn is creating opportunities for the development of a clean mobility sector. The amount of carbon dioxide emitted by the transportation sector is huge and curtailing this amount of emission, industry is widely adopting various alternatives. The use of power-to-gas technology is therefore increasing in this sector, which in turn is creating opportunities in the global market.

Increasing need for energy storage flexibility is likely to generate business opportunities in the global power-to-gas market over the forecast period. The need for transforming the energy system is increasing all over the world. The power-to-gas technology can develop sustainable, flexible, and efficient energy system. Thus, to cater the growing demand for synergic system capable of integrating the major components such as heat, gas, and electricity, the demand for power-to-gas is increasing, which is expected to drive the market growth in the near future.

Global Power-to-Gas Market Trends:

Stringent regulations promoting emission reduction is a major trend

The fossil fuel combustion for driving the energy utilized to power heavy industries is a major contributor of emissions of greenhouse gases. Several governments around the world are imposing regulations on such industries including steel, cement, and iron production, mining, construction, and food processing; for limiting their carbon footprint. This in turn is driving the demand for power-to-gas technology. Thus, this trend is anticipated to augment growth of the market in the near future.

Power-to-hydrogen gaining traction is a recent trend

Power-to-hydrogen comprises of various technologies that use electricity for performing electrolysis and split water into oxygen and hydrogen. The manufacturing of hydrogen with the use of renewable energy is called green hydrogen, which can be utilized for transporting, storing, and utilizing renewable energy. With this, the curtailment of variable renewable energy from sources such as solar and wind can offer grid-balancing and long-term storage through electrolyzers. Thus, the power-to-hydrogen sector is gaining traction in the global power-to-gas market. This trend is likely to continue over the coming years.

Global Power-to-Gas Market Restraints:

High cost of power-to-gas system to hinder the market pace

Despite the multiple advantages of power-to-gas system, the high cost is one of the factors impacting adoption of these systems. The end user industries in middle- and low-income countries show uncertainty towards adoption power-to-gas systems, due to their high initial cost as well as the cost of maintenance. Moreover, the lack of trained professionals to operate these systems also impacts the adoption. Thus, these factors are expected to hinder growth of the global power-to-gas market over the forecast period.

Loss of energy and low efficiency to hinder the market pace

The use of power-to-gas system also poses risk of energy loss. In the first step of electrolysis process, nearly 20 to 30% of energy is lost. After the second step in methanation, 40 to 50% of energy is lost. As a result, the loss of energy acts as a major challenge in adoption of power-to-gas systems. This factor in turn is expected to impede growth of the power-to-gas global market over the forecast period.

Figure 2: Global Power-to-Gas Market Share (%), By Product, 2022

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Global Power-to-Gas Market Segmentation:

The global power-to-gas market report is segmented into Technology, Product, and End User.

Based on Technology, the market is segmented into Electrolysis; (Alkaline Electrolysis (AEL), Polymer Electrolyte Membrane (PEM) Electrolysis, Solid Oxide Electrolyser Cell (SOEC)); Methanation, (Catalytic, Biological). Out of which, Electrolysis is expected to dominate the global market over the forecast period and this is attributed to the growing need for carbon neutral technologies to substitute the conventional procedures. The investments in research and development activities regarding energy efficient technologies that is capable of facilitating the energy storing for future usage. These factors are driving the need for electrolysis technology, which is expected to drive growth of the segment.

Methanation segment is also expected to witness significant growth in the near future and this is owing to the growing applications of methanation in various end user industries. Methanation process offers different advantages compared to electrolysis. The demand for this process is increasing, as it creates methane through amalgamation of carbon dioxide and hydrogen. Thus, the segment is expected to show strong growth in the near future.

Based on By Product, the market is segmented into Hydrogen, Methane. Out of which, Hydrogen is expected to dominate the global market over the forecast period and this is attributed to the increasing R&D, regulatory framework, and government initiatives in various developed countries. These regions are also involved in regional demonstration projects, as hydrogen is being viewed as a clean, versatile, and attractive energy carrier. Thus, the segment is likely to gain major growth in the global power-to-gas market over the forecast period.

Methane segment is also expected to witness significant growth in the near future and this is owing to the various advantages of methane, such as its capability of replacing natural gas. Methane can be injected directly into grid of natural gas, and can be used as a potential fuel without requiring infrastructure development. Thus, demand for methane is increasing, which is further driving growth of the market.

Based on End User, the market is segmented into Steel Industry, Transportation, Gas Grid, and Others. Out of which, Steel Industry is expected to dominate the global market over the forecast period and this is attributed to the demand for steel across several end use industries such as construction, transportation, and manufacturing. As the steel industry depends majorly on coal, coke, and natural gas, the demand for power-to-gas technology is increasing in the sector. This in turn is likely to boost growth of this segment in the coming future.

Transportation segment is also expected to witness significant growth in the near future and this is owing to the growing emission of greenhouse gases driving the demand for hydrogen fuel. Power-to-gas plants produce hydrogen, which is highly important to simultaneously address the energy security and environmental quality. Increasing growth of transportation sector is likely to drive the need for power-to-gas plants and this is anticipated to boost growth of the market in the forecast future.

Global Power-to-Gas Market: Key Developments

In June 2022, the U.S. Department of Energy invested US$ 504.4 million in finance Advanced Clean Energy Storage, a clean energy and clean hydrogen storage facility that can provide long-term energy storage.

In February 2022, Mitsubishi Power announced a purchase agreement with HydrogenPro in place of a strong electrolyzer system. The HydrogenPro electrolyzer syste creates green hydrogen and oxygen through electrolysis with the use of solar and wind energy.

In January 2021, Linde PLC Company announced the plans to develop the largest ever electrolyzer plant in Germany, in 2022. As per the EU member states, the complete hydrogen mobility target is likely to be achieved completely by 2030.

In December 2021, Larsen & Toubro (L&T) announced partnership with ReNew Power to tap into the emerging green hydrogen business in India. Under this partnership agreement both companies will together develop, own, execute, and operate green hydrogen projects in the country.

Global Power-to-Gas Market: Key Companies Insights

The global power-to-gas market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis.

Some of the key players in the global power-to-gas market are Aquahydrex, Inc., MAN Energy Solutions, Electrochaea GmbH, ITM Power PLC, EXYTRON GmbH, Hydrogenics Corporation, Hitachi Zosen Corporation.

*Definition: The Power-to-Gas (P2G) is a method that uses PEM electrolysis to transform surplus renewable energy into hydrogen gas. Hydrogen can replace natural gas in this way, lowering greenhouse gas emissions and the need for high-carbon fuels.