U.S. Hydrogen Generation Market Size, Share & Trends Analysis Report By Systems, By Technology (Steam Methane Reforming, Coal Gasification), By Application, By Source, And Segment Forecasts, 2024 - 2030

U.S. Hydrogen Generation Market Trends

The U.S. hydrogen generation market size was estimated at USD 19.86 billion in 2023 and is expected to grow at a CAGR of 8.7% from 2024 to 2030. With rising government regulations towards sustainable energy sources, the investments in smart “energy-saving” residential and commercial buildings have also increased providing an impetus growth in the adoption of hydrogen for energy generation. Hydrogen is also a financially viable option to investors as it complies with federal and environmental regulations while effectively catering to the ever-increasing demand for energy.

Over the past two decades, research on clean fuels along with desulfurization of petroleum products has gained momentum giving a boost to studies on environmental catalysis across the world further fuelling the growth of global hydrogen generation market. US EPA regulations were able to permanently phase-out the use of leaded gasoline and other uses of lead compounds. However, emissions of air pollutants such as Sulfur Dioxide, are a major issue in the air quality. In 2022, about 66 million tons of pollution were emitted into the atmosphere in the U.S. alone.  Replacing other fuel sources with hydrogen can help bring down this number by a considerable amount.

Many players in the U.S. are investing in more sustainable power generation technologies and are moving away from conventional power sources. This has increased the adoption of green hydrogen in the market as it is carbon neutral and sustainable. Grey hydrogen and blue hydrogen are produced using natural gas or coal and increase a country’s dependence for fossil fuel which is expected to restrain the market growth in the forecast period. However, as green hydrogen is produced by electrolysis of water it is sustainable, leading to increased adoption of green hydrogen.

Market Characteristics & Concentration

The market is highly concentrated. The global hydrogen generation market is cost intensive & is dominated by large multinational companies which are present in the country. The market is also price sensitive & experiences frequent price wars in order to gain competitive advantage. Key service providers are constantly looking for new technologies in order to gain market share.

The impact of regulation is high and positive for the market since the government is looking after reducing the carbon footprint of the energy sources. U.S. Government promotes environment conservation by providing incentives including financial benefits towards effective fuel management.

Threat of substitute is low to moderate. Biofuels are considered as an alternative to hydrogen for heavy vehicles such as aircrafts and ships. However, the limited supply of biofuels feedstock can come up as a challenge, fueling the hydrogen generation market.

System Insights

The merchant segment dominated the market with a revenue share of over 54% in 2023. It is also anticipated to be the fastest growing segment at a CAGR of 9.2% over the forecast period. Merchant power generation began in 1998 in the U.S. with its roots in the UK. Since merchant power generation plants are independent power generation they are designed for competitive wholesale marketplaces. Furthermore, unlike conventional independent power plants, the merchant power plants are built to sell to competitive, spot markets using power purchase but short term agreements.

The mechanism in the merchant power generation is built in a way that it allows the power producers to directly sell their electricity to retailers who then re-sell it further to the consumers. However, the transmission and distribution is governed by the government agencies.

Technology Insights

Steam methane reforming dominated the technology segment with the largest revenue share in 2023. Theprocess offers an economical, efficient, and widely used process for hydrogen generation, and provides near- and mid-term energy security and environmental benefits. Furthermore, steam reforming process also has the highest efficiency among the currently available commercial hydrogen production methods, making it the most preferred amongst other methods.

Coal gasification technology is expected to witness the fastest growth in this segment during the forecast period. Coal Gasification is used to produce syngas, which is a mixture primarily consisting of hydrogen, carbon monoxide, methane, carbon dioxide, oxygen, and water vapor from coal, and water. Hydrogen derived from this procedure may be used for numerous purposes including producing ammonia, upgrading fossil fuels, or fueling a hydrogen economy. Coal gasification is economical and technically practical option to produce hydrogen in large scale owing to the current state of technology and coal reserves across the country. As of December 2021, U.S. accounted for 22% of the total coal reserves around the world.

Application Insights

Ammonia production dominated the application segment with the revenue share of over 20% in 2023. Large quantity of hydrogen produced is consumed in ammonia plants. Ammonia’s potential as a carbon-free fuel, hydrogen carrier, and energy store represents an opportunity for renewable hydrogen technologies to be deployed at an even greater scale. Green ammonia has seen increase in adoption during the last few years owing to no carbon emissions. Many companies are setting up green ammonia production plant in order to fulfil the growing demand.

The transportation segment is projected to witness the fastest CAGR during the forecast period. Increasing demand for hydrogen as a vehicle fuel is anticipated to augment the market growth over the coming years. Many car manufacturers are investing into developing cars powered by hydrogen. For instance, in September 2021, Hyundai announced its plans to offer hydrogen fuel cell powered vehicles for all of its commercial vehicles by 2028. Other companies that plan to launch new hydrogen powered vehicles in the coming years are Toyota Motors, BMW AG, and Volkswagen group which is expected to boost demand in the forecast period.

Source Insights

Natural gas dominated the source segment with a revenue share of 76% in 2023. Power industry has shifted its focus toward >200 MW scale power plants and incorporation of natural gas as a feedstock for hydrogen generation has increased. The global electricity demand is anticipated to witness an increase of nearly two-thirds the current demand over the forecast period. Thus, steam methane reforming, the most common among other hydrogen production process in the U.S, uses methane containing raw material like natural gas. The gas is heated to a temperature between 700°C–1,000°C and highly pressurized to break into hydrogen with carbon dioxide and carbon monoxides as by products.

Water as the source of hydrogen generation is expected to witness the fastest CAGR of 18.8% during the forecast period.  Electrolysis is recognized as promising option for hydrogen generation from renewable resources. In this process water is split into hydrogen and oxygen in an electrolyzer. Using this method, hydrogen could be produced with negligible local air pollutants and greenhouse gases. The efficiency of conversion to hydrogen in electrolysis technology is up to 80 - 90%.

Key U.S. Hydrogen Generation Companies Insights

The industry is highly competitive with key players constantly investing in R&D of new and cost-effective technologies. Ongoing technological advancement for stand by development of alternative energy sources including hydrogen generation with minimal environmental emissions is expected to reduce the threat to our ecology significantly. Increasing adoption of eco-friendly additives having lower economic impact are predicted to augment technological growth, further fueling the market growth.

Recent Developments

• In February 2023, the U.S. introduced hydrogen tax credits under the Inflation Reduction Act (IRA) to provide investment tax credit to hydrogen projects and standalone hydrogen storage technology. This scheme shall inhibit more hydrogen projects by lowering the production cost and increasing return on investment.

U.S. Hydrogen Generation Market Report Scope

U.S. Hydrogen Generation Market Report Segmentation

This report forecasts volume and revenue growth at country level and provides an analysis of the latest industry trends in each sub-segment from 2018 to 2030. For this study, Grand View Research has segmented the global hydrogen generation market report based on system, technology, application, and source:

• System Outlook (Volume, Million Metric Tons; Revenue, USD Billion, 2018 - 2030)

  • Captive

  • Merchant

• Technology Outlook (Volume, Million Metric Tons; Revenue, USD Billion, 2018 - 2030)

  • Steam Methane Reforming

  • Coal Gasification

  • Others

• Application Outlook (Volume, Million Metric Tons; Revenue, USD Billion, 2018 - 2030)

  • Methanol production

  • Ammonia Production

  • Petroleum Refining

  • Transportation

  • Power Generation

  • Others

• Source Outlook (Volume, Million Metric Tons; Revenue, USD Billion, 2018 - 2030)

  • Natural Gas

  • Coal

  • Biomass

  • Water