Global Water Electrolysis Market Expands Amid Green Hydrogen Decarbonization Efforts

The worldwide water electrolysis sector is undergoing significant expansion throughout 2025, fundamentally driven by the global mandate for green hydrogen generation and overarching decarbonization objectives. Market valuations for water electrolysis in 2025 are estimated to range between $7.2 billion and $7.25 billion, with some analyses projecting figures up to $14.3 billion. This trajectory suggests the market could reach approximately $12.07 billion by 2029, or potentially $27.99 billion by 2034, underscoring a robust growth curve fueled by increasing global demand for sustainable hydrogen, supportive governmental incentives, and substantial capital deployment into hydrogen infrastructure.

Key institutional and corporate entities are actively shaping this expansion, including BASF, Sungrow Hydrogen, Nel ASA, ThyssenKrupp AG (thyssenkrupp nucera), Siemens Energy AG, Cummins Inc., Plug Power Inc., and Toshiba Energy Systems & Solutions Corporation. A tangible demonstration of this commitment occurred in March 2025 when BASF inaugurated Germany's largest Proton Exchange Membrane (PEM) electrolyzer, a 54-megawatt unit at its Ludwigshafen site. This facility, a partnership with Siemens Energy, is designed to produce about 8,000 tons of renewable hydrogen annually, potentially offsetting up to 72,000 tons of greenhouse gas emissions from the site's chemical production processes. The project, part of the Hy4CHem initiative, received significant backing, with Germany's Federal Ministry for Economic Affairs and Climate Action and the state government of Rhineland-Palatinate contributing a combined €124.3 million, alongside BASF's €25 million investment.

Technologically, Alkaline Electrolyzers currently command the largest segment of the market, favored for their established maturity and lower initial cost, holding over 58% of global installations in one assessment. However, PEM Electrolyzers are widely projected to achieve the fastest Compound Annual Growth Rate (CAGR). PEM technology, valued for its high efficiency and rapid response to intermittent renewable energy, captured over 53% of global electrolyzer installations by 2025 in one analysis, despite another report indicating an alkaline share of 43% in the same year. The deployment of PEM systems is further supported by government funding, such as the European Commission's approval for hydrogen projects totaling $19.5 billion, supplemented by an expected $10.3 billion in private investment.

Geographically, Europe maintained the leading regional revenue share in 2024, though North America is anticipated to exhibit the most accelerated growth throughout the forecast period, holding 41.2% of the water electrolysis machine market share in 2025 due to a strong manufacturing presence and favorable federal policies like the 2022 Inflation Reduction Act. Conversely, the Asia Pacific region, which dominated the overall electrolyzer market in 2024 with a share exceeding 43% in one assessment, is also expanding rapidly, driven by capacity ramp-ups in China, Japan, and South Korea. In terms of application, the Chemicals segment currently leads end-user consumption, followed by Power and Energy Storage applications. The steady reduction in electrolyzer unit prices, coupled with falling renewable electricity costs, is enhancing the economic viability of green hydrogen production, which is central to mitigating carbon outputs across energy-intensive sectors.