Water Electrolysis Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Alkaline Electrolyzer, Proton Exchange Membrane (PEM) Electrolyzer, Solid Oxide Electrolyzer Cell (SOEC), Anion Exchange Membrane (AEM) Electrolyzers), By Application (Refining Industry, Power and Energy Storage, Ammonia Production, Methanol Production, Transportation/Mobility Industry, Others), By Region and Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 6.94 Billion
CAGR (2026-2031)	5.06%
Fastest Growing Segment	Alkaline Electrolyzer
Largest Market	Europe
Market Size (2031)	USD 9.33 Billion

Market Overview

The Global Water Electrolysis Market will grow from USD 6.94 Billion in 2025 to USD 9.33 Billion by 2031 at a 5.06% CAGR. Water electrolysis is an electrochemical process that utilizes electricity to split water molecules into hydrogen and oxygen, acting as a foundational technology for generating low-emission hydrogen fuel. The expansion of this market is primarily driven by rigorous global decarbonization mandates and the steadily declining costs of renewable energy, which collectively necessitate scalable green hydrogen solutions for hard-to-abate sectors such as heavy industry and transportation. These fundamental regulatory and economic forces provide a stable growth trajectory that is distinct from temporary market trends, positioning the technology as a cornerstone of future energy infrastructure.

Despite this robust potential, the widespread deployment of electrolysis systems faces a significant challenge regarding high capital expenditures and substantial electricity requirements, which can hinder financial viability in cost-sensitive regions. However, commitment to capacity expansion remains strong as the industry moves from pilot phases to commercial scale. According to the International Energy Agency, in 2024, installed water electrolyser capacity was projected to reach 5 GW by the end of the year, representing a substantial increase from the 1.4 GW recorded in 2023.

Key Market Drivers

Supportive government policies and financial incentives serve as the primary catalyst for the water electrolysis market, effectively mitigating the high upfront capital risks associated with green hydrogen deployment. Public funding mechanisms, such as competitive auctions and production tax credits, are essential for narrowing the price differential between renewable and fossil-fuel-derived hydrogen, thereby encouraging industrial adoption. This regulatory backing is evident across major economies aiming to secure energy independence and meet climate goals. According to the European Commission, April 2024, in the 'European Hydrogen Bank Auction Results', the institution awarded nearly EUR 720 million to seven renewable hydrogen projects to accelerate domestic production capabilities. Such financial interventions not only incentivize project developers to reach final investment decisions but also stimulate the manufacturing supply chain needed to deliver gigawatt-scale electrolyzer facilities.

Concurrently, growing investment in hydrogen infrastructure development acts as a critical driver, supporting the requisite ecosystem for producing, storing, and transporting hydrogen to end-users. As the demand for decarbonized energy vectors rises in hard-to-abate sectors, capital flows are increasingly directed toward integrated electrolysis projects and associated logistical networks. According to the Hydrogen Council, September 2024, in the 'Hydrogen Insights 2024' report, the global pipeline of hydrogen projects has matured significantly, with committed capital investment rising to USD 75 billion. This influx of funding allows for the scaling of technologies and the establishment of regional hubs. Furthermore, according to the U.S. Department of Energy, in 2024, the administration announced USD 750 million in funding specifically to reduce the cost of clean hydrogen produced via electrolysis and to improve manufacturing technologies. These investments underscore a global shift from pilot testing to industrial viability.

Download Free Sample Report

Key Market Challenges

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

This hesitation hampers the transition from pilot studies to commercial-scale operations. The inability to secure affordable renewable power further exacerbates operational expenses, limiting market entry for new players and reducing the overall pace of 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.

Key Market Trends

The expansion of automated electrolyzer manufacturing capacities via gigafactories represents 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. This industrialization is critical for meeting the surging hardware requirements of global decarbonization targets, effectively addressing previous bottlenecks in equipment availability. According to the International Energy Agency, October 2024, in the 'Global Hydrogen Review 2024', global electrolyser manufacturing capacity doubled in 2023 to reach 25 GW per year, creating 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 and is exemplified by the physical delivery of large hardware volumes to active construction sites. According to Thyssenkrupp nucera, August 2024, in the 'Quarterly Statement Q3 2023/2024', the company 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.

Segmental Insights

The Alkaline Electrolyzer segment is identified as the fastest-growing category within the Global Water Electrolysis Market, driven primarily by its superior cost-effectiveness and technical maturity. Unlike emerging alternatives, this technology offers significantly lower capital expenditure requirements, making it the preferred option for large-scale green hydrogen projects. Heavy industries, particularly chemical processing and steel manufacturing, are aggressively deploying these reliable systems to meet decarbonization targets. Furthermore, the segment's ability to scale without relying on scarce, expensive catalyst materials reinforces its accelerated adoption in global infrastructure developments.

Regional Insights

Europe maintains a leading position in the Global Water Electrolysis Market, driven by robust regulatory frameworks and strategic initiatives for decarbonization. The European Commission has been instrumental in this growth through the European Green Deal, which establishes clear mandates for reducing carbon emissions and promoting renewable hydrogen adoption. This policy environment fosters extensive collaboration between public and private sectors to develop necessary infrastructure. Furthermore, the region benefits from a mature industrial base that actively integrates electrolysis technologies to meet strict environmental targets, thereby securing its dominance in the global landscape.

Recent Developments

• In November 2024, Lummus Technology formed a strategic partnership with Advanced Ionics to accelerate the deployment of next-generation solutions in the "Global Water Electrolysis Market". The collaboration aimed to commercialize a proprietary water vapor electrolyzer technology that utilizes low-grade waste heat to decrease electricity requirements by up to 40% compared to traditional alkaline and PEM systems. Alongside the partnership, Lummus Venture Capital provided an investment to support the scaling of this technology for decarbonizing heavy industries such as refining and ammonia production. This agreement highlighted a growing industry focus on enhancing the energy efficiency and cost-effectiveness of green hydrogen production systems.
• In September 2024, Siemens Energy solidified its presence in the "Global Water Electrolysis Market" by securing a contract to supply a 100 MW electrolysis system for the Hamburg Green Hydrogen Hub. The company committed to providing six units of its latest proton exchange membrane (PEM) electrolyzers, which were scheduled to be manufactured at its new gigafactory in Berlin. Construction of the facility was planned to commence in 2025, with full commercial operations targeted for 2027. This project was designed to produce substantial quantities of green hydrogen annually, directly supporting the transition to renewable energy sources in the German industrial sector.
• In June 2024, researchers at the Institute of Photonic Sciences (ICFO) announced a major technological breakthrough relevant to the "Global Water Electrolysis Market" by developing a robust iridium-free catalyst. This novel cobalt-tungsten material demonstrated exceptional stability and performance in proton exchange membrane (PEM) water electrolysis, a process typically reliant on expensive and scarce noble metals. The study reported that the catalyst achieved a high current density while maintaining durability for hundreds of hours under industrial conditions. This innovation presented a viable pathway to significantly reduce manufacturing costs and material constraints for future large-scale electrolyzer deployments.
• In March 2024, Thyssenkrupp nucera entered into a strategic partnership with the Fraunhofer Institute for Ceramic Technologies and Systems IKTS to advance capabilities within the "Global Water Electrolysis Market". This collaboration focused on the industrialization of high-temperature electrolysis (SOEC) technology, which leverages industrial waste heat to generate green hydrogen with superior efficiency compared to conventional methods. The partners agreed to construct a pilot facility for manufacturing SOEC stacks, with operations scheduled to begin in early 2025. This strategic expansion aimed to strengthen the company’s position as a leading supplier of diverse electrolysis solutions for industrial decarbonization.

Key Market Players

• 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.

By Type	By Application	By Region
Alkaline Electrolyzer Proton Exchange Membrane (PEM) Electrolyzer Solid Oxide Electrolyzer Cell (SOEC) Anion Exchange Membrane (AEM) Electrolyzers	Refining Industry Power and Energy Storage Ammonia Production Methanol Production Transportation/Mobility Industry Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Water Electrolysis Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• 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
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE