The fuel cell market is expected to register a CAGR of about 14.06% during the forecast period of 2021 - 2026, reaching approximately USD 7.12 billion by 2026, up from USD 2.83 billion in 2019. The outbreak of the COVID-19 pandemic has negatively affected the global fuel cell market in the form of supply chain disruptions, project delays, and lack of financial support for R&D activities. The introduction of government initiatives in key markets and increasing investment support from the private sector are expected to act as drivers for the market in the coming years. On the other hand, one of the biggest competitors of fuel cells in today's clean fuel-powered vehicle market is the battery. The prices of lithium-ion batteries (LIB) have been decreasing at a very steep rate, which augmented the growth of LIB adoption, and in a way, it has been side-lining the relatively expensive fuel cell technology. This sharp and sustained cost reduction is expected to help reinforce lithium-ion as the battery of choice in all energy storage markets, including residential storage and micro-grids, in turn, hindering the growth of the market studied.
- Vehicular application is expected to dominate the market due to increasing innovation in the sector and increasing economic viability of the technology.
- Rising interest in heavy-duty transport and energy storage applications and huge market potential in Asia-Pacific for fuel cells are expected to create significant opportunities for the fuel cell market in the near future.
- As of 2020, Asia-Pacific dominated the fuel cell market across the world, with the majority of the demand coming from countries such as China, Japan, and South Korea.
Key Market Trends
Vehicular Application to Dominate the Market
- The rising environmental issues, such as climate change and low air quality, due to significant growth in the regional transportation sector and high fossil fuel consumption, have generated the need for clean energy sources.
- Fuel cells generate zero emissions and contribute to eliminating greenhouse gases. A fuel cell majorly uses hydrogen or methanol, thereby reducing economic dependence on oil and gas while optimizing energy security across the region. Rising environmental concerns and increasing infrastructure related to hydrogen refueling stations are likely to support the vehicular fuel cell market's growth over the forecast period.
- Moreover, fuel cell-based automotive has become more lucrative in recent years due to higher performance, reduced refueling time, and long-range offered by the systems. The exhaust in terms of water, a decline in the proportion of emissions, and superior power and torque output play a significant role in terms of the adoption of fuel cell technologies for automobiles. The fuel cell technology provides a driving range of over 300 miles on a traditional vehicle. It reduces the weight of carrying heavy batteries compared to battery electric vehicles, thereby boosting the market's growth over the forecast period.
- Furthermore, government regulations for reducing environmental pollution are encouraging the adoption of fuel cells in the automotive sector. The countries are focusing on R&D and investing in fuel cell technology to improve their public transportation while reducing harmful emissions. For instance, the South Korean government is planning to replace around 26,000 CNG buses with fuel cell buses by 2030.
- In the coming years, nations such as China, Japan, and South Korea are expected to act as a pivot in advancing the fuel cell electric vehicle technology, as large corporations such as Toyota and Hyundai-Kia are trying to become the leaders in fuel cell technology. Also, the governments are looking to phase out the battery electric vehicle (BEV) incentives globally, from 2020 onwards, paralleled by the continued government subsidies for fuel cell electric vehicles (FCEVs) in Asian countries, such as China, Japan, and South Korea.
- Hence, the vehicular application is expected to dominate the market due to increasing technological innovation and rising private player involvement.
Asia-Pacific to Dominate the Market
- Asia-Pacific accounted for the significant share in 2020, and it is expected to continue its dominance during the forecast period. Asia-Pacific is one of the promising regional markets for fuel cells in the coming years, on account of the favorable government policies in countries, such as China, Japan, and South Korea, which are driving clean energy usage. Among the available fuel cell technologies, the PEMFC is the most commonly used fuel cell in the region.
- China has great potential in the fuel cell market, as the government is increasingly focusing on ways to utilize clean energy technology in order to switch to a low-carbon economy.
- Moreover, the country's hydrogen fuel cell industry has been gaining traction on the back of favorable national and provincial government subsidies and incentive programs from local authorities to encourage the uptake of hydrogen vehicles to cut pollution.
- In China, an order for 74 fuel cell electric buses (FCEBs) was placed from Zhangjiakou City in preparation for the 2022 Winter Olympics. The deployment of FCEBs is likely to grow in other cities in China in the near future.
- Japan had implemented one of the most successful fuel cell commercialization programs, the Ene-farm program, in 2015. The program led to the deployment of over 120,000 residential fuel cell systems. Japan added nearly 50,000 units (roughly 35 MW) of residential micro-CHP fuel cell systems in 2018, under the Ene-farm program.
- Tokyo Metropolitan Government's (TMG's) plan to power several operations in the 2020 Olympic and Paralympics games, which will be held in Tokyo, using fuel cell technology, has created ample business opportunity for fuel cell companies. Toyota is planning to sell 100 fuel cell-powered buses, including PEM type, before the game starts. Also, the Tokyo government created a reserve of USD 350 million to subsidize hydrogen-based fuel cell cars and refueling stations for the same.
- Therefore, factors such as supportive government policies and efforts to incorporate fuel cell technology in transportation and other applications are expected to drive the region's fuel cell market during the forecast period.
The global fuel cell market is moderately fragmented. Some of the major companies include Ballard Power Systems Inc., FuelCell Energy Inc., Mitsubishi Power Ltd., Plug Power Inc., and Cummins Inc.
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