Why Investing in Hydrogen and why NOW ?
The core of the hydrogen industry is a tiny part of the larger interested ecosystem.
The core of the hydrogen industry the 81 companies in the industrial gas and electrolyzer/fuel cell segments — account for more than one-third of membership but barely 2 percent of revenue of the companies reviewed, or about $117 billion in annual revenue versus more than $5 trillion across all companies. These smaller companies are incumbents in an industry that has not yet seen dramatic growth, with a lot of intellectual property and much to gain from the growing hydrogen economy. These companies will do well to partner across the value chain to help scale up.
The $3.4 trillion heft of the oil & gas (O&G) and transportation segments will drive the industry. Averaging $53 billion in annual revenue and accounting for nearly 5 percent of global GDP, the 66 O&G and transportation companies are aware of the potential disruption hydrogen can bring to their industries and are chasing its potential growth. From Total and Shell to Toyota and Hyundai, these companies are increasingly active in hydrogen and have long investment horizons, allowing them to invest across the hydrogen value chain with purpose.
The dices have fallen already
Utilities are underrepresented. Just 18 global gas or electric utilities (including gas and electric distribution system operators and transmission system operators) are members of hydrogen stakeholder organizations. Given the decarbonization hydrogen can bring to gas utilities — and the load growth, grid services and transmission and distribution deferral it could bring to electric utilities — there is room for much more engagement with utilities across the hydrogen value chain. In one example, a group of leading gas transportation companies formed Gas for Climate: A Path to 2050, which has identified innovative pathways to sustainability using renewable gas. This work is supported by Navigant.
Industrial hydrogen end users are underrepresented. Although some hydrogen end users fit into other segments (such as diversified manufacturers), large sections of industry are not represented — such as the world’s largest steel manufacturers. This underrepresentation signals an opportunity for hydrogen and equipment providers: Many end users may not yet be engaged in opportunities related to the advanced hydrogen economy and may not be aware of the sustainability and other benefits available.
„Diverse new stakeholders are joining the hydrogen value chain, forming links between sectors such as transport, electricity and industry“ (greenbiz.com)
