The power to gas market is expected to register a CAGR of more than 2.5% during the forecast period. With decarbonization as a primary concern for the global energy industry, to reduce the impact of climate change due to the growing greenhouse gases across the world, several countries are taking initiatives to reduce emissions. With price reduction in power generation from wind and solar, the global renewable electricity generation is growing, and the excess electricity is getting utilized to produce hydrogen and methane with the help of water. The primary drivers of the market are the decreasing cost of wind and solar energy generation and the rising initiatives to reduce the carbon footprint across the globe. However, the lack of proper government interest in developing technology related to the power-to-gas market is expected to hinder the market from growing during the forecast period.
- Among the technological segments, power-to-hydrogen is expected to grow at the fastest rate over the forecast period. The power to hydrogen is used to generate hydrogen by the electrolysis method, which is cheaper in comparison to methane production from the power to methane facilities.
- With the objective of having net zero emission by 2050, it is expected that with the long term objective, the continuous burning of fossil-derived natural gas will not be sustainable. As per the International Renewable Energy Agency (IRENA), renewables can make up 60% or more of many country's total final energy consumption. For instance, the European Union is expected to have the possibility to grow the renewable energy share from about 17% to over 70% by 2050. The increase in renewable energy uses likely to create an opportunity for the power to gas facilities as well, which is another way would provide an alternative source of energy during the coming years.
- Europe is expected to dominate the market with the highest number of power-to-gas projects, in 2019.
Key Market Trends
Power-to-hydrogen to Grow at Fastest Rate
- During the process, hydrogen is extracted from water, through the electrolysis process, water breaks down to hydrogen and oxygen. Hydrogen produced is stored and is used to generate electricity through a gas turbine, mixed to gas grid in various percentages or further process to generate methane by the help of the methanation process.
- In 2019, there were nearly 56 hydrogen extraction projects; most of them were located in Germany. The process generates hydrogen by three processes, i.e., Alkaline Electrolysis (AEL), Polymer Electrolyte Membrane (PEM) Electrolysis, and Solid Oxide Electrolysis (SOEC). AEL is the most well-established technology, while PEM is newer than AEL, with better start-stop characteristics than AEL. SOEC has been recently developed and is at the laboratory stage.
- ITM Power is one of the prominent companies. It has the largest electrolyzer of nearly 10 megawatts (MW) in the Shell Rhineland refinery in Germany. The hydrogen produced in the plant is being used for oil product upgradation. The estimated cost of the plant was approximately EUR 20 million, which was funded by EU fuel cells and Hydrogen Joint Undertaking.
- With the growing wind and solar energy generation and expected price drop for the electrolysis process, especially the AEL process, the power to hydrogen segment is expected to dominate the market during the forecasting period.
Europe to Dominate the Market
- Europe dominated the power-to-gas market with Germany as the major country, in 2019. Nearly 64 power-to-gas plants are in Germany, with a maximum count of power-to-methane plants.
- Audi e-gas project at Werlte in Lower Saxony, Germany, is one of the prominent power-to-methane projects, that is operating since 2013. The plant produces hydrogen up to 1,300 Nm3/hour, which is further used to produce synthetic natural gas up to 325 Nm3/hour.
- Apart from Germany, Denmark, the United Kingdom, France, and Spain are the key countries that have power-to-gas plants. Apart from existing plants, there are nearly 30 proposed power-to-gas plants in Europe.
- The proposed plants are mostly expected to get completed by 2050, with the maximum of the plants to get installed in Germany. Germany being a dominant player in the region is expected to continue to dominate the market with maximum power to gas projects. Moreover, the country plans to increase its renewable share in electricity generation to 50% in 2030, and 80% in 2050 is expected to drive the power-to-gas market in the future.
The power-to-gas market is moderately consolidated. The key owners in the market include ENTSOG AISBL (European Network of Transmission System Operators for Gas), Sempra Energy, GRT Gaz SA, MAN Energy Solutions, Sunfire GmbH, Ineratec GmbH, Electrochaea GmbH, Astrea Power Ltd, Hitachi Zosen Inova AG, and Solar Energy and Hydrogen Research Baden-Württemberg (ZSW), among others.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support