PEM Water Electrolyzer Market (By Type: Small Scale Type, Middle Scale Type, Large Scale Type; By Application: Power Plants, Steel Plant, Electronics and Photovoltaics, Industrial Gases, Energy Storage or Fueling for FCEVs, Others) - Global Industry Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast 2023-2032


The global PEM water electrolyzer market size was estimated at USD 6.59 billion in 2022 and is expected to hit around USD 13.12 billion by 2032, poised to grow at a CAGR of 7.13% during the forecast period 2023 to 2032. The growing shift towards cleaner and more sustainable energy sources propelled the PEM water electrolyzer market demand.

PEM Water Electrolyzer Market Size 2023 To 2032

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Key Takeaways:

  • North America is predicted to genarate the maximum market share between 2023 and 2032.
  • By Type, the middle scale type segment recorded the largest market share in 2022.
  • By Application, the energy storage or fueling for FCEVs segment contributed the highest market share in 2022.

The PEM (Proton Exchange Membrane) water electrolyzer market refers to the market for devices that use PEM technology to split water into its constituent parts, hydrogen and oxygen, through electrolysis. PEM electrolyzers are a type of electrolyzer that use a solid polymer electrolyte membrane to conduct protons from the anode to the cathode while preventing the mixing of the gases.

The market for PEM water electrolyzers has been growing rapidly in recent years due to increasing demand for hydrogen as a clean energy source for various applications, including fuel cells, energy storage, and transportation. PEM electrolyzers have several advantages over other electrolyzers, including high efficiency, low maintenance requirements, and fast response times, making them well-suited for various industries.

Furthermore, the market for PEM water electrolyzers is expected to grow in the coming years, driven by increasing demand for hydrogen as a clean energy source and technological improvements that make PEM electrolyzers more cost-effective and efficient. Also, advances in PEM electrolyzer technology have increased efficiency, lower costs, and improved performance, making them more attractive for commercial and industrial applications. This includes the development of new catalysts, improved membranes, and better system integration.

However, high initial costs, limited infrastructure, and dependence on renewable energy sources are anticipated to impede market growth. The initial capital costs of installing a PEM electrolyzer system can be high, which can be a barrier to adoption for some potential customers. While the costs are decreasing, they may still be prohibitively expensive for some applications. Also, PEM electrolyzers face competition from other technologies for hydrogen production, such as alkaline electrolysis and solid oxide electrolysis. These technologies may be more suitable for certain applications or have a lower cost of ownership, which could limit the market share of PEM electrolyzers.

The COVID-19 pandemic have highlighted the need for cleaner and more sustainable energy sources and the importance of reducing carbon emissions. This has increased interest in hydrogen as a clean energy carrier and a growing demand for PEM electrolyzers, particularly in transportation. In addition, the pandemic has accelerated the shift towards remote work and digital communication, which has led to an increased demand for data centers and other energy-intensive infrastructure. PEM electrolyzers can provide a reliable and sustainable backup power source for these facilities.

Report Scope of the PEM Water Electrolyzer Market:

Report Coverage Details
Market Size in 2023 USD 7.06 Billion
Market Size by 2032 USD 13.12 Billion
Growth Rate from 2023 to 2032 CAGR of 7.13%
Largest Market North America
Base Year 2022
Forecast Period 2023 to 2032
Segments Covered By Type and By Application
Regions Covered North America, Europe, Asia-Pacific, Latin America and Middle East & Africa


Key Market Drivers:

Increasing demand for clean energy to brighten the market prospect

As the world continues to shift towards cleaner and more sustainable sources of energy, there is a growing demand for hydrogen as a clean and versatile energy carrier that can be used for various applications, including power generation, fuel cells, transportation, and others. PEM electrolyzers are a key technology for producing hydrogen through electrolysis. They have several advantages over other electrolyzers, including high efficiency, low maintenance requirements, and fast response times, making them well-suited for use in various industries.

Governments worldwide are also implementing policies and incentives to promote hydrogen as a clean energy source, further driving demand for PEM electrolyzers. This includes funding for research and development, subsidies for the purchase of electrolyzers, and tax incentives for the production and use of hydrogen. Thus, the increasing demand for clean energy is a major driver for the growth of the PEM water electrolyzer market. This development is anticipated to continue in the coming years as the world shifts towards a more sustainable energy future.

Government support and incentives

Governments worldwide are implementing policies and incentives to promote the use of hydrogen as a clean energy source and to encourage the adoption of PEM electrolyzers for hydrogen production. These policies and incentives include funding for research and development, subsidies for the purchase of electrolyzers, tax incentives for the production and use of hydrogen, and other measures to support the development of a hydrogen economy. For example, in Europe, the European Commission has set a target to produce up to 10 million tonnes of renewable hydrogen by 2030, which is expected to drive significant investment in PEM electrolyzers.

Furthermore, the United States Department of Energy has launched several initiatives to support the development of a domestic hydrogen industry, including the H2@Scale program, which aims to accelerate the deployment of hydrogen technologies across multiple sectors. The program includes funding for research and development, pilot projects, and public-private partnerships to advance the adoption of PEM electrolyzers and other hydrogen technologies. Similar initiatives are also being implemented in countries such as Japan, South Korea, China, and Australia, which are expected to drive significant PEM water electrolyzer market growth in the coming years.

Thus, government support and incentives drive demand for the PEM water electrolyzer market. They provide funding and regulatory frameworks that support the development and adoption of this technology for hydrogen production.

Key Market Challenges:

High capital cost is causing hindrances to the market

PEM (proton exchange membrane) water electrolyzers are a relatively new technology that involves complex engineering and specialized materials. As a result, the production costs are higher than traditional electrolysis technologies. Moreover, the high capital costs of the equipment may not be feasible for small-scale applications or individuals, limiting the market demand for large-scale industrial applications. The initial investment costs may also deter investors and companies from entering the market, leading to limited supply and higher prices.

However, there are ongoing efforts to reduce the capital costs associated with PEM water electrolyzers, including the use of lower-cost materials, optimization of production processes, and technological advancements. These efforts may help expand the demand for PEM water electrolyzers, particularly as the demand for clean and sustainable energy solutions continues to increase.

Key Market Opportunities:

Growth of the fuel cell vehicles

The growth of fuel cell vehicles presents a significant opportunity for the PEM water electrolyzer market. As fuel cell vehicles rely on hydrogen as a fuel source, there is a growing demand for hydrogen fueling infrastructure. PEM water electrolyzers can play a critical role in producing hydrogen for fuel cell vehicles, particularly in applications such as hydrogen refueling stations. With the increasing adoption of fuel cell vehicles, there will be a need for more hydrogen fueling stations, driving the demand for PEM water electrolyzers.

In addition, the increasing focus on decarbonization and the transition to renewable energy sources is also driving the growth of the PEM water electrolyzer market. PEM water electrolysis is an attractive option for producing hydrogen using renewable energy sources, such as wind and solar power. As the demand for clean energy continues to grow, the demand for PEM water electrolyzers is expected to increase as well.

Moreover, government initiatives and investments in the development of hydrogen infrastructure and technologies are also driving the growth of the PEM water electrolyzer market. Many governments around the world have set targets for reducing carbon emissions and promoting the adoption of hydrogen as a clean energy source. These initiatives are expected to drive the demand for PEM water electrolyzers, as they are a key component of the hydrogen production process.

Green hydrogen production

The PEM water electrolyzer market is expected to experience significant growth opportunities due to the increasing demand for green hydrogen production. PEM water electrolyzers are an essential component of green hydrogen production, which involves the use of renewable energy sources, such as wind and solar, to produce hydrogen without generating carbon emissions.

Governments worldwide are investing heavily in the development of green hydrogen infrastructure, and the increasing focus on reducing carbon emissions is driving the demand for green hydrogen. This, in turn, is driving the demand for PEM water electrolyzers, which are the most efficient and cost-effective technology for green hydrogen production.

The PEM water electrolyzer market is also benefiting from the decreasing cost of renewable energy, making the production of green hydrogen more cost-competitive with traditional hydrogen production methods. As a result, industries such as transportation, power generation, and chemical production are expected to increase their demand for green hydrogen, further driving the growth of the PEM water electrolyzer market.

Growing industrial applications

The industrial sector is one of the major end-users of PEM water electrolyzers. These electrolyzers are used for various industrial applications such as the production of chemicals, electronics, and metals. The increasing demand for green and sustainable industrial processes is creating huge growth opportunities for PEM water electrolyzers in the industrial sector.

The use of hydrogen produced by PEM water electrolyzers in industrial applications has the potential to reduce greenhouse gas emissions and increase energy efficiency. Industries are increasingly looking for ways to reduce their carbon footprint and meet their sustainability goals, which is creating opportunities for the growth of the PEM water electrolyzer market in the industrial sector.

In addition, the increasing adoption of renewable energy sources such as wind and solar power is projected to raise the demand for PEM water electrolyzers over the forecast period. These electrolyzers can be used to store excess renewable energy in the form of hydrogen, which can then be used as fuel in industrial processes.

Segments Insight:

Type Insights:

On the basis of type, the PEM water electrolyzer market is divided into middle-scale type, large-scale type, and small scale type, with the middle-scale type segment accounting for most of the market. These systems have a higher capacity than small-scale systems and are typically used in larger industrial applications. They are more expensive than small-scale systems but offer higher efficiency and production rates. The demand for middle-scale PEM water electrolyzers is driven by the increasing adoption of green hydrogen production in the industrial sector. The industrial sector is gradually shifting towards green hydrogen production to reduce their carbon footprint, which is driving the demand for middle-scale PEM water electrolyzers.

Application Insights:

On the basis of the application, the PEM water electrolyzer market is divided into industrial gases, energy storage or fueling for FCEVs, steel plants, electronics and photovoltaics, power plants, and others, with energy storage or fueling for FCEVs accounting for most of the market. This is due to PEM water electrolyzers can be used to produce hydrogen fuel for fuel cell vehicles, which have the potential to replace traditional combustion engines and reduce greenhouse gas emissions.

The driving factors for this segment include the increasing demand for renewable energy sources, government incentives and subsidies for clean energy, and the need to reduce carbon footprint, increasing demand for high-purity hydrogen gas for sever applications. In addition, the rising demand for fertilizers, chemicals, and transportation fuels is another factor bolstering the growth of this segment.

Regional Insights:

On the basis of geography, North America dominates the market, primarily driven by technological advancements, government support, and increasing demand for clean and sustainable energy solutions. Also, North America has been investing heavily in the research and development of PEM water electrolyzers, which has led to technological advancements and cost reductions. Thus, the North American PEM water electrolyzer market is expected to experience growth in the coming years, driven by increasing demand for clean and sustainable energy solutions, government initiatives to promote hydrogen infrastructure and the growing adoption of fuel cell electric vehicles (FCEVs).

PEM Water Electrolyzer Market Share, By Region, 2022 (%)

Europe is a significant market for PEM water electrolyzers, with Germany, the United Kingdom, and France being the major contributors to the market's growth. This is due to the increasing demand for hydrogen in various applications such as energy storage, industrial gases, and transportation. Furthermore, the European PEM water electrolyzer market has witnessed several initiatives and projects promoting the adoption of hydrogen as a clean energy source. For instance, the European Union has set a target of producing 40 GW of renewable hydrogen by 2030, which is expected to drive the demand for PEM water electrolyzers in the region.

The region in Asia-Pacific is anticipated to have the greatest CAGR. The market is driven by increasing demand for clean and sustainable energy solutions, government initiatives to promote hydrogen infrastructure, and the growing adoption of fuel cell electric vehicles (FCEVs). In addition, The Asia-Pacific PEM water electrolyzer market has witnessed several initiatives and projects promoting the adoption of hydrogen as a clean energy source. For instance, China has set a target of producing 1 million fuel cell vehicles and building 1,000 hydrogen refueling stations by 2030, which is expected to drive the demand for PEM water electrolyzers in the region.

Recent Developments:

  • In March 2019, ITM Power, a UK-based company that designs and manufactures PEM electrolyzer systems, signed a strategic partnership with Linde, a global industrial gas company, to collaborate on developing and promoting hydrogen solutions.
  • In September 2019, Nel ASA, a Norwegian company that produces PEM electrolyzer systems, announced a partnership with Haldor Topsoe, a Danish catalyst company, to offer integrated solutions for green hydrogen production.
  • In October 2019, Cummins Inc., a global power technology company, announced the acquisition of Hydrogenics Corporation, a Canadian company that designs and manufactures PEM electrolyzer systems, to expand its portfolio of hydrogen technologies.
  • In January 2021, Plug Power, a US-based company that produces PEM electrolyzer systems and hydrogen fuel cells, announced a partnership with Renault to develop and manufacture hydrogen fuel cell commercial vehicles for the European market.
  • In March 2021, Ballard Power Systems, a Canadian company that produces PEM electrolyzer systems and fuel cells, announced a strategic partnership with Linamar Corporation, a diversified Canadian manufacturing company, to develop and manufacture fuel cell powertrains for light-duty vehicles.

Key Market Players:

  • Proton On-Site
  • Teledyne Energy Systems
  • Suzhou Jingli
  • Hydrogenics
  • McPhy
  • Areva H2gen
  • ITM, Elchemtech
  • Siemens
  • Toshiba

Segments Covered in the Report:

(Note*: We offer report based on sub segments as well. Kindly, let us know if you are interested)

By Type

  • Small Scale Type
  • Middle Scale Type
  • Large Scale Type

By Application

  • Power Plants
  • Steel Plant
  • Electronics and Photovoltaics
  • Industrial Gases
  • Energy Storage or Fueling for FCEVs
  • Others

By Geography

  • North America
  • Europe
  • Asia-Pacific
  • Latin America
  • Middle East and Africa

Frequently Asked Questions

What is the PEM water electrolyzer market size?
The global PEM water electrolyzer market size is expected to increase USD 13.12 billion by 2032 from USD 6.59 billion in 2022.
What will be the CAGR of global PEM water electrolyzer market?
The global PEM water electrolyzer market will register growth rate of 7.13% between 2023 and 2032.
Who are the prominent players operating in the PEM water electrolyzer market?
The major players operating in the PEM water electrolyzer market are Proton On-Site, Teledyne Energy Systems, Suzhou Jingli, Hydrogenics, McPhy, Areva H2gen, ITM, Elchemtech, Siemens, Toshiba and Others.
Which are the driving factors of the PEM water electrolyzer market?
The driving factors of the PEM water electrolyzer market are the increasing demand for clean energy to brighten the market prospect and government support and incentives.
Which region will lead the global PEM water electrolyzer market?
North America region will lead the global PEM water electrolyzer market during the forecast period 2023 to 2032.

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