Market Overview

Water electrolysis is a technology that uses electricity to split liquid water into its constituent gases, hydrogen and oxygen. This technology is garnering attention as a sustainable method of producing green hydrogen using electricity from renewable energy sources. Green hydrogen, a next-generation energy source, is expected to play a key role in achieving a decarbonized society, because it can be stored long-term and does not emit CO2 when used or produced.

Amid global decarbonization trends, the water electrolyzer market is growing alongside steady adoptions of green hydrogen. In 2025, the global water electrolyzer market was estimated to have reached 2.6GW based on newly installed capacity and 4.2GW based on cumulative installed capacity. However, global inflation and higher interest rates have increased initial investment costs. Additionally, hydrogen production costs have risen due to grid connection constraints, including persistently high electricity prices and prolonged grid interconnection processes. These factors have delayed plans to implement the use of green hydrogen in high-demand sectors such as chemicals and steel. This has resulted in postponement and suspension of hydrogen-related projects. Consequently, the growth of the water electrolyzer market has been slower than the scenario forecasted by market participants in around 2020.

Noteworthy Topics

Trends in the Water Electrolysis Market by Region

As of 2025, China accounted for approximately 60% of water electrolyzer adoption based on cumulative installed capacity. Europe and North America followed behind. While China and Europe are expected to continue leading the market, the Middle East and India are expected to increase their market shares due to the accelerated adoption of renewable energy sources.

China has a significant presence in terms of both demand and supply. A series of green hydrogen, ammonia, and methanol manufacturing plants that use renewable energy sources at the gigawatt (GW) level have been constructed, many of which are in the northwest regions with ample wind and solar power. Meanwhile, Chinese water electrolyzer manufacturers have strengthened their supply capacities, leading to fierce price competition due to mass production. Consequently, China is not only meeting domestic demand but also propelling exports to the Middle East, Southeast Asia, and Europe.

Future Outlook

The ambitious initial scenario of the water electrolyzer market, which was based on a projection setting “decarbonization” as the goal, has been abandoned. The market is shifting to a more realistic phase that prioritizes economic rationality. Nevertheless, green hydrogen reduces CO2 emissions during production and facilitates the decarbonization in industrial sectors, such as chemical and steel, where electrification is difficult. Green hydrogen also contributes to the effective use of surplus electricity by powering water electrolyzers, thereby addressing the sharp power fluctuations caused by weather conditions in renewable energy systems. Without dramatic changes in global decarbonization trends, the adoption of water electrolyzers for producing green hydrogen is anticipated to grow in the medium to long term. Consequently, the global water electrolyzer market size, based on cumulative installed capacities, is expected to exceed 300GW by 2035.

Research Outline