July 20, 2024
Power-to-Gas Market

Growing Demand for Clean Energy Solutions to Drive the Growth of Power-to-Gas Market

The global Power-to-Gas Market is estimated to be valued at US$ 33.96 Bn in 2023 and is expected to exhibit a CAGR of 12% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Overview:

Power-to-gas technology facilitates the conversion and storage of surplus renewable electricity from intermittent sources such as wind and solar into hydrogen or methane that can be fed into the existing natural gas infrastructure or used as fuel. This helps overcome intermittency issues associated with renewable energy sources and enables cleaner energy storage. Hydrogen and methane produced through power-to-gas can replace fossil fuels in transportation, heating, industry and power generation, thereby reducing dependence on fossil fuels and curbing carbon emissions. Growing emphasis on cleaner energy transition and increasing deployment of renewable energy worldwide is driving demand for large-scale energy storage solutions like power-to-gas.

Market key trends:

One of the key trends in the power-to-gas market is the increasing focus on renewable hydrogen production to decarbonize industries and transport sectors. Power-to-gas facilitates production of renewable hydrogen from curtailed renewable power which can then be used as a clean fuel in sectors that are difficult to electrify like long-haul freight transportation. Many countries in Europe are actively promoting production and use of renewable hydrogen to reduce emissions from industries and fuel cell vehicles. Secondly, power-to-gas technology helps integrate a larger share of variable renewable energy into the grid by converting excess renewable electricity into hydrogen or methane during periods of overproduction. This allows avoidance of curtailment and wastage of renewable electricity. Growing share of renewables in the power mix is presenting new opportunities for power-to-gas applications to support large-scale renewable energy integration into the energy system.

Porter’s Analysis

Threat of new entrants: The threat of new entrants to this growing niche market is moderate. Developing power-to-gas technology requires high initial costs for technology and infrastructure development. However, supportive government policies and investment from large utilities can help overcome these barriers to entry.

Bargaining power of buyers: The bargaining power of buyers in the power-to-gas market is low. Currently there are few alternatives for electricity grid balancing and storage at large scale. Power-to-gas helps meet this need by converting surplus renewable energy into hydrogen or methane.

Bargaining power of suppliers: A few large technology providers supply key components for power-to-gas plants and electrolyzers. However, increasing privatization of the energy sector and investment in the technology is gradually decentralizing the supplier power in this market.

Threat of new substitutes: Emerging technologies like batteries and hydrogen fuel cells pose a threat, but power-to-gas has advantages at large scales. It provides long duration storage better suited for balancing seasonal variability in renewable energy output.

Competitive rivalry: Competition is intensifying as the market expands. Players are differentiating by improving efficiency, reducing costs and expanding technology applications. Partnerships are also growing across industries to develop integrated energy systems leveraging power-to-gas.

Key Takeaways

The global Power-to-Gas Market Size is expected to witness high growth, exhibiting a CAGR of 12% over the forecast period, due to increasing deployment of renewable energy sources. Power-to-gas helps store surplus renewable energy and stabilize electricity grids with large amounts of intermittent wind and solar power.

Europe dominates the power-to-gas landscape currently due to supportive regulation and pilot projects. Germany has emerged as a leader with over 10 pilot plants installed. However, Asian markets are also growing rapidly led by China and Japan. Pilot projects in the US are picking up pace with a large plant announced in California.

Key players operating in the power-to-gas market are Aquahydrex, Inc., MAN Energy Solutions, Electrochaea GmbH, ITM Power PLC, EXYTRON GmbH, Hydrogenics Corporation, and Hitachi Zosen Corporation. Players are focusing on improving the efficiency and reducing the costs of electrolyzers, the core component in power-to-gas systems. Partnerships across industries aim to explore wider applications of stored renewable hydrogen in transportation, industry and buildings.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it