According to a new report published by Allied Market Research, titled, “Power-to-gas Market,” The power-to-gas industry was valued at $30.3 million in 2021, and power to gas market size is estimated to reach $84.4 million by 2031, growing at a CAGR of 10.8% from 2022 to 2031.
Power to gas is an innovative energy conversion process that transforms surplus renewable energy into hydrogen gas using Proton Exchange Membrane (PEM) electrolysis technology. This method enables excess electricity generated from renewable sources like wind and solar to be converted into hydrogen, which can then be injected into existing natural gas grids. By blending or replacing natural gas with hydrogen, this approach contributes to reducing greenhouse gas emissions and decreases dependence on fossil fuels with high carbon intensity.
The hydrogen produced through this method, known as green hydrogen, serves as a clean energy carrier that supports the storage, transport, and utilization of renewable energy. It plays a crucial role in stabilizing energy systems by minimizing renewable energy curtailment, especially during peak production periods. Moreover, power-to-gas technology provides long-term energy storage and grid balancing capabilities, enhancing the flexibility and resilience of modern energy infrastructure.
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According to the International Energy Agency (IEA), global hydrogen demand reached approximately 90 million tons in 2020, with the vast majority being produced from fossil fuels. However, the green hydrogen sector—powered by renewable energy—has been gaining momentum. Installed capacities have doubled in just five years, reaching nearly 300 MW by mid-2021. In addition, around 350 green hydrogen projects, totaling an estimated capacity of 54 GW, are currently under development and are expected to be operational by 2030. Furthermore, another 40+ projects with a combined capacity of 35 GW are in early development stages and are projected to be commissioned by the same year.
Green hydrogen generated through electrolysis offers versatile applications. It can be directly used as a clean fuel alternative in various transport sectors, including light vehicles, marine vessels, and railway systems, effectively reducing oil dependence. Additionally, green hydrogen serves as a critical feedstock for industrial operations and can power hydrogen fuel cells for energy storage. As the cost of renewable energy technologies like solar and wind continues to decline, energy storage methods such as power-to-gas (PtG) are becoming more economically feasible. This has led to increased deployment of commercial electrolyzer systems, with the two leading technologies being alkaline water electrolysis (AWE) and proton exchange membrane (PEM) electrolysis.
Hydrogen consumption is primarily concentrated in heavy industrial sectors. According to the European Commission, the refinery industry alone accounted for 48% of hydrogen usage in 2020, followed by significant demand from the fertilizer and chemical manufacturing sectors. Germany stands out in the European power-to-gas landscape, hosting about 40 pilot-scale power-to-gas projects as of 2020. These initiatives use surplus electricity—mainly from wind and solar—to perform electrolysis, converting water into hydrogen and oxygen to generate zero-carbon fuels.
To further accelerate green hydrogen adoption, the European Union launched its Hydrogen Strategy in July 2020. This roadmap targets the deployment of 6 GW of electrolyzer capacity by 2024 and aims for 40 GW by 2030. The strategy also outlines plans to scale up renewable hydrogen production from 1 million tons to 10 million tons annually by 2030. Such supportive policy frameworks, along with growing investments and technological advancements, are poised to create significant growth opportunities in the global power-to-gas market over the coming decade.
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The power-to-gas market is analyzed across various segments based on technology, capacity, use case, application, and region. By technology, it is divided into electrolysis and methanation. Based on capacity, the market is categorized into less than 100 kW, 100–999 kW, and 1000 kW and above. In terms of use case, it includes wind, solar, and biomass. The application segment covers residential, commercial, and utility sectors, reflecting the diverse adoption of power-to-gas solutions across different energy demands and infrastructures.
The power-to-gas market is witnessing significant growth across various regions, driven by increased focus on renewable energy integration, energy storage, and decarbonization goals. Europe currently dominates the global power-to-gas market due to supportive regulatory frameworks, substantial investments in hydrogen infrastructure, and a growing number of pilot and commercial-scale projects, especially in countries like Germany, the Netherlands, and France. Germany, in particular, has emerged as a key player, hosting several power-to-gas installations and implementing its National Hydrogen Strategy to promote green hydrogen production and usage. The European Union’s commitment to achieving climate neutrality by 2050 further accelerates the adoption of power-to-gas technologies in the region.
North America and Asia-Pacific are also showing considerable potential for power-to-gas market expansion. In North America, the U.S. and Canada are exploring hydrogen and storage technologies as part of their broader clean energy initiatives, supported by government funding and research activities. Meanwhile, the Asia-Pacific region—particularly countries like Japan, South Korea, and Australia—is actively investing in hydrogen infrastructure and power-to-gas projects to enhance energy security and meet carbon reduction targets. These nations are focusing on green hydrogen production to support transportation, industrial applications, and electricity grid balancing, positioning the region as a fast-growing market for power-to-gas technologies in the coming years.
The major companies profiled in this report include, Hydrogenics, ITM Power, McPhy Energy, Siemens AG, MAN Energy Solutions, Nel Hydrogen, ThyssenKrupp, Electrochaea, Exytron, GreenHydrogen, Hitachi Zosen Inova Etogas, Fuelcell Energy, Avacon, Carbotech, and Aquahydrex. Due to rapid development of industrialization and modernization and exhaustion of fossil fuel resources have led to the innovation of alternative fuels, such as hydrogen. Increase in demand for hydrogen in various sectors has fueled the growth of the power-to-gas market. Additional growth strategies, such as expansion of production capacities, acquisition, partnership, and research & innovation in the solar energy application led to attain key developments in the global power-to-gas market trends.
Key Findings Of The Study:
- Europe is expected to exhibit CAGR of 10.4% during 2022-2031.
- As per the global power-to-gas market analysis, by technology, the electrolysis segment accounted for the largest share in 2020.
- By capacity, 1000KW and above capacity power-to-gas was the leading segment in 2021.
- By use case, the solar segment was the highest revenue contributor in 2021.
- By application, the utility segment dominated the power-to-gas market and is expected to retain its dominance during the forecast period.
