Manufacturer scale-up, rising corporate activity and explicit policy support

Producers of electrolysers (which enable the generation of clean hydrogen) are scaling up rapidly to meet a 50+GW pipeline of announced projects that can drive down the costs of ‘green’ hydrogen to a level comparable with today’s ‘grey’hydrogen. Manufacturers of fuel cells (which convert hydrogen into power) are also building out capacity to pursue applications across transport, power and industry. Industrial partnerships, JVs and rising M&A activity signal greater corporate strategic alignment with hydrogen. Since the EU’s explicit 6GW target of green hydrogen capacity by 2024 and 40GW by 2030 announced in July, seven European countries have announced 2030 targets, providing greater clarity on growth and support for investments. Other countries globally are increasingly following the EU’s lead.

An industry fully industrialised by 2030

The chicken and egg question around hydrogen infrastructure buildout in parallel with hydrogen supply looks finally to have been answered. Early applications like hydrogen blending in gas networks require minimal equipment upgrades. Industrial users are exploring dedicated, locally produced clean hydrogen. Clean ammonia is emerging as a potential enabler for long-haul transportation of hydrogen which can use existing infrastructure. The rising number and scale of project announcements suggests that full industrialisation is more a question of ‘when’ than ‘if’. By 2030 we estimate total installed electrolyser capacity of 126GW, supplying 15mt of clean hydrogen (a 22% expansion of global pure hydrogen demand in 2018).

Our latest updated sector views: a trio of notes on hydrogen

HSBC Global Research published a number of notes on hydrogen last year, kicking off with Global Hydrogen: Why the journey from grey to green is taking off, 31 January 2020, and, in subsequent months, spoke with over 100 investors across global markets on this theme. Now, in advance of our Global Investment Seminar (25-28 January, see registration link adjacent right to register), we are returning to the theme. In this note, we look at market demand areas in Europe to 2030 underpinning supply. We also provide a list of stocks exposed to the hydrogen theme. Meanwhile, we also publish two other notes on the theme concurrently: Spotlight: Hydrogen electrolysers – The rock star of clean energy or just a case of FOMO? and Global Hydrogen – Policy,investment and innovation drive momentum, both 13 January 2021.