Whether industry, mobility or energy storage – the importance of and demand for hydrogen will increase rapidly in the coming years. For companies, investors and project developers, entering the hydrogen economy offers enormous opportunities – but also challenges.
In this article, we shed light on the economic potential, highlight relevant areas of investment and assess the risks that need to be considered.
Why hydrogen?
With the global goal of climate neutrality, CO₂-free technologies are increasingly coming into focus. Hydrogen enables decarbonization where electrification reaches its limits – for example in the steel industry, chemical production or heavy goods transport. According to the EU Commission and the IEA, global hydrogen demand will increase 6 to 10-fold by 2050. The National Hydrogen Strategy also anticipates massive expansion in Germany – especially for green hydrogen.
Investment opportunities
Generation & Infrastructure
The investment opportunities along the hydrogen value chain are diverse. Particularly in the area of production and infrastructure, there are opportunities in the construction and operation of electrolysers powered by renewable electricity. There are also technologies for the storage, compression and distribution of hydrogen as well as the construction of entire H₂ hubs, energy parks or offshore projects.
Technology & components
At a technological level, developments in fuel cell technology, the production of hydrogen filling stations, valves and digital control systems are in demand. Automation and digitalization are also playing an increasingly important role.
Applications & markets
New application markets are emerging through the conversion of industrial operations, particularly in energy-intensive sectors such as steel, glass and chemicals. In the transport sector, hydrogen-powered trucks, trains, ships and even airplanes are increasingly coming onto the market. At the same time, hydrogen is being integrated into energy systems, for example through power-to-gas applications or intelligent sector coupling.
Subsidies as a catalyst
The investment landscape is flanked by extensive public funding programs, e.g:
- IPCEI Hydrogen (Germany & EU)
- KfW promotional loans & investment grants
- Clean Hydrogen Partnership (EU)
- Innovation fund and national transformation programs
These subsidies reduce market risks and accelerate the profitability of new projects.
Risks and challenges
Despite all the potential, however, the hydrogen economy remains fraught with challenges. From a technological perspective, these include the still high production costs – especially for green hydrogen – complex plant technology in some cases and a lack of standardization. From an economic perspective, there are risks due to the dependency on the price of electricity and subsidies, as well as uncertain economies of scale in the development of demand. International competition, particularly with cheap imported hydrogen, must also be taken into account. In regulatory terms, the market is in a constant state of flux – EU directives, national legislation and CO₂ pricing have a direct impact on projects and business models. The timely development of a suitable infrastructure will also be decisive in determining whether potential players gain access to the market at all.
Conclusion
In summary, it can be said that investments in hydrogen offer great opportunities – for climate protection, for technological innovations and for opening up new markets. However, as with any future technology, the same applies here: Success requires sound planning, technical know-how and a good understanding of market and funding structures.
