Water Electrolysis Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Water Electrolysis Market is anticipated to grow from USD 6.94 Billion in 2025 to USD 9.33 Billion by 2031, registering a CAGR of 5.06%. Water electrolysis is an electrochemical process that uses electricity to separate water into hydrogen and oxygen, serving as a critical technology for producing low-emission hydrogen fuel. Market growth is largely propelled by strict global decarbonization mandates and falling renewable energy costs, which create a need for scalable green hydrogen solutions in hard-to-abate sectors like heavy industry and transportation. These regulatory and economic drivers establish a stable growth path distinct from temporary trends, positioning the technology as a pillar of future energy infrastructure.

Despite this potential, widespread deployment faces significant hurdles due to high capital expenditures and substantial electricity requirements, which impact financial viability in cost-sensitive regions. However, the industry remains committed to capacity expansion as it transitions from pilot phases to commercial scale. The International Energy Agency projected that installed water electrolyser capacity would reach 5 GW by the end of 2024, marking a significant increase from the 1.4 GW recorded in 2023.

Market Drivers

Supportive government policies and financial incentives act as the primary catalysts for the water electrolysis market, helping to mitigate the high upfront capital risks of green hydrogen deployment. Public funding mechanisms, such as competitive auctions and production tax credits, are essential for narrowing the price gap between renewable and fossil-fuel-derived hydrogen, thereby encouraging industrial adoption. This regulatory backing is evident in major economies aiming for energy independence and climate goals; for instance, the European Commission's 'European Hydrogen Bank Auction Results' in April 2024 awarded nearly EUR 720 million to seven renewable hydrogen projects to accelerate domestic production capabilities. Such financial interventions incentivize final investment decisions and stimulate the supply chain for gigawatt-scale facilities.

Simultaneously, growing investment in hydrogen infrastructure is a critical driver, supporting the ecosystem for producing, storing, and transporting hydrogen to end-users. As demand for decarbonized energy rises in hard-to-abate sectors, capital flows are increasingly targeting integrated electrolysis projects and logistical networks. The Hydrogen Council reported in September 2024, in its 'Hydrogen Insights 2024' report, that the global pipeline of hydrogen projects has matured, with committed capital investment reaching USD 75 billion. Furthermore, the U.S. Department of Energy announced USD 750 million in 2024 to reduce clean hydrogen costs and improve manufacturing technologies, underscoring the global shift from pilot testing to industrial viability.

Market Challenges

High capital expenditures coupled with substantial electricity requirements create a persistent barrier to the financial viability of water electrolysis projects. These elevated costs directly impact the levelized cost of hydrogen, making it difficult for green hydrogen to compete with established fossil-fuel alternatives in price-sensitive markets. Consequently, many potential investors delay final investment decisions, resulting in a significant lag between project announcements and actual construction.

This hesitation hinders the transition from pilot studies to commercial-scale operations, while the inability to secure affordable renewable power further exacerbates operational expenses, limiting market entry and infrastructure development. According to the International Energy Agency in 2024, only 4% of announced low-emission hydrogen production capacity had reached the final investment decision stage due to these economic constraints. This low conversion rate demonstrates that cost structures remain a primary factor restricting the rapid expansion of the global water electrolysis market.

Market Trends

The expansion of automated electrolyzer manufacturing capacities via gigafactories marks a fundamental shift in the supply chain, moving the industry from bespoke production to standardized mass manufacturing. Companies are increasingly investing in robotics and digitalized assembly lines to enhance throughput and achieve the economies of scale necessary for reducing unit costs, effectively addressing previous equipment availability bottlenecks. According to the International Energy Agency's 'Global Hydrogen Review 2024' in October 2024, global electrolyser manufacturing capacity doubled in 2023 to reach 25 GW per year, establishing a robust foundation for future market expansion.

Concurrently, the market is undergoing a decisive transition from megawatt to gigawatt-scale electrolysis project deployments, enabling the decarbonization of heavy industries such as steel and chemicals. Developers are moving beyond pilot phases to execute massive, integrated utility-scale operations that require sophisticated logistical planning and modular system designs. This scaling effect allows for significant operational efficiencies, as exemplified by Thyssenkrupp nucera in its August 2024 'Quarterly Statement Q3 2023/2024', which reported substantial progress on the NEOM green hydrogen project, confirming that the delivery of its standardized 20 MW modules had already exceeded 800 MW of the total capacity.

Key Players Profiled in the Water Electrolysis Market

• Asahi Kasei Corporation
• Nel ASA
• thyssenkrupp AG
• Cummins Inc.
• Toshiba Energy Systems & Solutions Corporation
• Teledyne Technologies Incorporated
• Suzhou Green Hydrogen Energy Co., Ltd.
• ITM Power PLC
• Clean Power Hydrogen PLC
• Plug Power Inc.

Report Scope

In this report, the Global Water Electrolysis Market has been segmented into the following categories:

Water Electrolysis Market, by Type:

• Alkaline Electrolyzer
• Proton Exchange Membrane (PEM) Electrolyzer
• Solid Oxide Electrolyzer Cell (SOEC)
• Anion Exchange Membrane (AEM) Electrolyzers

Water Electrolysis Market, by Application:

• Refining Industry
• Power and Energy Storage
• Ammonia Production
• Methanol Production
• Transportation/Mobility Industry
• Others

Water Electrolysis Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Water Electrolysis Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.