Power-to-Gas Market Size, Share, Growth, and Industry Analysis, By Type (Hydrogen Production, Synthetic Methane (SNG) Production), By Application (Energy Storage, Transportation, Industrial Use) and Regional Forecast to 2035

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POWER-TO-GAS MARKET OVERVIEW

The global Power-to-Gas Market Size is valued at USD 0.03 billion in 2025, is projected to grow steadily to USD 0.03 billion in 2026 and is expected to reach USD 0.09 billion by 2035, maintaining a CAGR of 7.6% over the forecast period 2025-2035.

The Power-to-Gas (P2G) Market is the process of converting surplus electricity, primarily from renewable sources, into gas, which can be stored and used later. The conversion usually takes the form of electrolysis of water to generate hydrogen, which is further processed into synthetic natural gas (SNG) or is stored for multiple uses in transportation and energy applications. The market is gaining momentum as demand for sustainable energy solutions continues to grow, especially concerning renewable energy integration.

The P2G technology plays a very significant role in solving the problems related to energy storage, balancing on the grid, and decarbonization. It permits excess electricity from wind farms or solar farms to be turned into gas, stored for long periods, and supplied when demand is greater than supply from renewable sources. Hydrogen generated through P2G can also be a source of clean fuel for other sectors, such as transport, and is a component for reaching global carbon-reduction targets.

KEY FINDINGS

COVID-19 IMPACT

Power-to-Gas Market  Had a Negative Effect Due To Supply Chain Disruption During COVID-19 Pandemic

The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

Several impacts occurred as a result of the COVID-19 pandemic on the Power-to-Gas (P2G) Market. First, it hindered the progress of various projects in the global energy sector. Furthermore, investments decreased as companies and governments focused on immediate priorities like health and economic recovery. Thus, this reduced the funds assigned to research, development, and deployment of P2G technologies, limiting the expansion of the market in its initial stages of crisis.

The pandemic also affected supply chain disruptions, which was an issue for P2G systems' critical components. These include the electrolysis equipment and the renewable energy infrastructure. Several projects' timelines were extended due to manufacturing and delivery delays as some were postponed or canceled. The overall economic depression also reduced demand for energy as the need for scalable storage solutions like P2G waned.

LATEST TRENDS

Increasing Integration Of Green Hydrogen To Drive Market Growth

An interesting recent trend in the P2G Market is how green hydrogen is increasingly becoming integrated into various sectors as a key energy carrier. This green hydrogen, which comes from renewable electricity-powered electrolysis, is rapidly emerging as a clean fuel replacement. The P2G process is becoming an important enabler in producing green hydrogen on a larger scale, mainly in relation to the increasing focus on the decarbonization of industries, transportation, and heating sectors. Hydrogen is viewed as an essential tool for decarbonization in hard-to-electrify sectors because governments and companies are increasingly setting ambitious decarbonization targets.

• According to the International Renewable Energy Agency (IRENA), around 40% of global electricity generation is expected to come from renewable sources by 2030. This shift in energy generation is driving the adoption of Power-to-Gas (PtG) technologies to store excess renewable energy in the form of hydrogen. This trend is accelerating the development of PtG systems in regions with high renewable energy penetration, particularly in Europe and North America.

• As of 2024, the European Commission has reported that more than 35% of hydrogen production is forecasted to be green hydrogen, produced via renewable electricity using Power-to-Gas technology. This is a significant leap, reflecting Europe's focus on decarbonizing the energy sector. Germany has also set a target to produce 10 million tons of green hydrogen annually by 2030 as part of its national hydrogen strategy.

Green hydrogen is not the sole rising trend; hybrid P2G systems are also included where the P2G technologies can be integrated with other CCU processes. Hence, these hybrid systems assimilate the generation of hydrogen with a capturing process of CO _{2}, thus developing more holistic approaches to emissions mitigations. These would create synthetic natural gas as well as carbon-neutral fuels compatible enough to be used in most infrastructures.

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POWER-TO-GAS MARKET SEGMENTATION

By Type

Based on Type, the global market can be categorized into Hydrogen Production, Synthetic Methane (SNG) Production

• Hydrogen Production: Hydrogen production is another major segment within the Power-to-Gas market where surplus electricity is converted to hydrogen via electrolysis, which then can be stored for use in various sectors, mainly transportation and industry. High demand for green hydrogen, induced by the decarbonization process, is a huge driver in the growth of this segment.

• Synthetic Methane (SNG) Production: Synthesizing methane, also named RNG, is the hydrogen molecule combined with carbon dioxide or CO2 through, for example, the Sabatier reaction. Injection in the natural gas grid, or as a motor vehicle fuel, SNG constitutes an energy carrier featuring relatively high energy density. Its versatility leads to Power-to-Gas solutions where synthetic methane is taking precedence due to its applications: replacing fossil fuels within a variety of industries while avoiding carbon emissions.

By Application

Based on application, the global market can be categorized into Energy Storage, Transportation, Industrial Use

• Energy Storage: One of the most critical uses of Power-to-Gas is energy storage. P2G systems provide a system that allows excess renewable electricity, often wind or solar, to be stored as hydrogen or synthetic methane to be used at times when energy generation is low and demand is high. It is one of the crucial ways to balance the grid to have an energy supply during times of power instability.

• Transportation: Hydrogen from Power-to-Gas technologies is utilized in the transportation sector as a clean fuel for fuel cell electric vehicles, buses, and trucks. Hydrogen fuel cells are seen as the perfect solution for heavy-duty vehicles that require long range and quick refueling times. The use of hydrogen in transportation is important to decarbonize the transport industry, and P2G is key in producing hydrogen at scale.

• Industrial Use: Hydrogen production through Power-to-Gas will be utilized in industrial applications such as refining, chemical production, and steel manufacturing. Most industries use hydrogen as the feedstock, and de-carbonizing hydrogen could help mitigate emissions from some of the high-energy-using industries. Power-to-gas technologies allow industries to meet sustainability targets while not compromising their high production efficiencies.

MARKET DYNAMICS

Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions. 

Driving Factors

Increasing Demand for Clean Energy Solutions to Boost the Market

There is a noticeable boost in the Power-to-Gas Market  growth. The major driving factor for the Power-to-Gas market is the global demand for decarbonization. As governments, corporations, and industries begin to set ambitious climate goals, there is a massive requirement for clean energy solutions. P2G allows for converting surplus renewable energy, say wind and solar, into a storable form such as hydrogen and synthetic methane usable in all sectors, especially in transportation, industrial applications, and energy storage. Such an increase in renewable generation further promotes the use of P2G technologies worldwide in the fight against intermittence and for reliable energy supply.

• According to the U.S. Department of Energy (DOE), the U.S. government has invested over $100 million in renewable hydrogen production technologies. Policies like tax credits for hydrogen production and clean energy standards are driving the adoption of Power-to-Gas systems. In Europe, initiatives like the EU Green Deal and Horizon 2020 have also propelled investments into PtG technologies, promoting sustainable energy solutions.

• A report by the International Energy Agency (IEA) states that by 2030, global energy storage requirements are expected to grow by up to 200%. Power-to-Gas technologies provide an essential solution to storing excess renewable energy in the form of hydrogen, supporting the grid’s stability and providing a sustainable option for balancing supply and demand in the energy market.

Advancements in Electrolysers to Expand the Market

Advancements in the electrolysis technology, specifically proton exchange membrane (PEM) and alkaline electrolyzers, have made the process of Power-to-Gas more efficient and cost-effective. With advanced electrolyzers in place, the production of green hydrogen and synthetic methane is becoming increasingly economical. This decrease in the costs of production is driving Power-to-Gas projects to increase in scale, which is further driving the growth of the market and its applications across regions.

Restraining Factor

High Capital and Operational Costs to Potentially Impede Market Growth

Despite the progress, Power-to-Gas technologies remain very expensive to deploy. One of the main cost drivers is the capital and operational costs of electrolyzers and associated infrastructure. It will be a challenge to most players, especially those in emerging markets, who would need to incur this investment to set up P2G plants and scale up the technologies. This may limit the diffusion of P2G solutions mainly in regions where renewable energy penetration is still in its infancy.

• According to the German Federal Ministry for Economic Affairs and Energy (BMWi), the installation of Power-to-Gas systems requires significant capital expenditure. The initial costs for electrolyzers, infrastructure, and integration with the existing energy grid are estimated to be around $2 million per megawatt (MW) of capacity. These high upfront costs remain a major barrier to widespread adoption of PtG systems, particularly in regions with limited financial support.

• As per a report by the U.S. Department of Energy (DOE), the U.S. currently has only 1,500 miles of dedicated hydrogen pipeline infrastructure, with a major portion of it located in California. The limited infrastructure for transporting hydrogen gas hampers the large-scale rollout of Power-to-Gas solutions, especially in regions without access to dedicated hydrogen networks.

Integration of Power-to-Gas with Carbon Capture and Utilization (CCU) To Create Opportunity For The Product In The Market

Opportunity

One of the emerging opportunities in the Power-to-Gas market is the integration of P2G with Carbon Capture and Utilization (CCU) technologies. This hybrid approach captures CO2 emissions from industrial sources, combines them with green hydrogen, and produces synthetic methane, helping to decarbonize industries while producing valuable clean fuels. This can result in drastically reduced net greenhouse gas emissions, thus supporting governments' climate action plans.

• The European Commission has allocated more than €10 billion for the development of hydrogen-based energy systems by 2030. This initiative is expected to stimulate further growth in the Power-to-Gas market, opening up opportunities for companies involved in hydrogen production, storage, and distribution technologies.

• According to the International Energy Agency (IEA), there has been a 30% increase in collaborative projects between governments and private players focused on Power-to-Gas technologies since 2020. This increased collaboration is expected to continue, creating additional opportunities for technological advancement and market expansion in both developed and emerging economies.

Regulatory and Policy Uncertainty Could Be A Potential Challenge For Consumers

Challenge

Clean energy technologies face considerable regulatory and policy uncertainty that hampers the growth of Power-to-Gas. As a matter of fact, though increasing incentives for green hydrogen and renewable energy are gaining momentum, unclear long-term policies and regulations may result in the hesitation of investors. Another factor is the evolving state of regulations on hydrogen production, storage, and transportation, with uncertainty regarding these factors, which slows the adoption of P2G systems.

• A report from the U.S. National Renewable Energy Laboratory (NREL) states that the efficiency of current electrolysis technologies used in Power-to-Gas systems is typically 65% to 70%, meaning that a significant amount of energy is lost in the conversion process. While advances are being made, improving the efficiency of these systems remains a technical challenge for the widespread adoption of PtG solutions.

• The International Energy Agency (IEA) notes that while Power-to-Gas offers distinct advantages in terms of long-term energy storage, technologies like lithium-ion batteries and pumped hydro storage remain more competitive for short-term storage. As the cost of these alternative technologies continues to decrease, PtG systems may face stronger competition, particularly in regions where energy storage duration is less critical.

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POWER-TO-GAS MARKET REGIONAL INSIGHTS

• North America

The North America region has a growing United States Power-to-Gas Market. North America, especially the United States and Canada, is one of the leading regions in the Power-to-Gas market. The U.S. focuses heavily on decarbonizing its energy sector by putting more investments in renewable sources of energy such as wind and solar power. It has been encouraging green hydrogen projects through the Department of Energy, and various private and public partnerships are going on to scale up P2G technologies. Canada is also investing in P2G systems mainly in regions with high potential for renewable energy, such as British Columbia. The good infrastructure, government incentives, and vast efforts to reduce carbon emissions make North America a leader in Power-to-Gas. Growth in this market is seen due to the increasing need for clean energy, solutions for energy storage, and technologies based on hydrogen.

• Europe

Europe, especially Germany, Netherlands, and the UK, seems to be at the head of the queue to roll out Power-to-Gas technologies. Germany was even one of the forerunners in hydrogen technology and P2G, and the government heavily funded green hydrogen projects within a plan to transition the state to renewable energy sources. The Netherlands and UK are also proactively engaged with P2G research and demonstration activities, partly due to policies in the EU focused on integrating renewables and carbon mitigation. Surplus renewables will be used to supplement the energy system through the help of P2G in these two countries. Strong regulatory environment, awareness, and attention to global climate change as well as its mitigation goals are promoting the use of P2G in Europe.

• Asia

The Asia-Pacific region, especially Japan and South Korea, is experiencing a rapid pace of growth in the Power-to-Gas market. While Japan is focusing on green hydrogen as part of its decarbonization strategy, it has developed many P2G projects supporting its energy transition. Meanwhile, South Korea is placing significant investments in clean hydrogen technologies, including Power-to-Gas, as part of its Green New Deal. This year, both countries have presented ambitious targets to reduce carbon emissions and are utilizing P2G to enable large-scale hydrogen production and storage for energy security as well as industrial applications. Innovations, government support, and technological advancements in this region are fueling the growth of the Power-to-Gas market in Asia-Pacific.

KEY INDUSTRY PLAYERS

Key Industry Players Shaping the Market Through Innovation and Market Expansion

The Power-to-Gas (P2G) Market is marked by the presence of key industrial players across various segments, from energy providers to technology developers. Energy companies that focus on renewable energy generation and storage solutions are usually included, as well as engineering firms specializing in electrolysis technology and infrastructure developers involved in hydrogen storage and distribution systems. Many of them are involved in the production of innovative solutions for big hydrogen production scales, for power-to-gas technologies in combination with renewable energy systems, and advanced synthetic methane production.

• Hydrogenics (Now part of Cummins): Hydrogenics, a key player in the Power-to-Gas market, is known for its hydrogen production technologies and electrolyzers. According to the U.S. Department of Energy (DOE), Hydrogenics' hydrogen production systems can generate up to 2,000 Nm³ of hydrogen per hour. They are actively involved in numerous international projects aimed at integrating PtG systems into the energy grid.

• ITM Power: ITM Power is a leader in electrolysis technology, providing high-efficiency electrolysis systems for Power-to-Gas solutions. According to the UK Department for Business, Energy & Industrial Strategy (BEIS), ITM Power’s systems are capable of delivering up to 1.2 MW of hydrogen production, helping to support large-scale renewable energy integration.

Apart from large corporations, there are several research institutions and technology start-ups that play an essential role in driving innovation within the market. These organizations are focused on improving the efficiency of electrolyzers, reducing the cost of hydrogen production, and exploring new applications for P2G technologies in sectors like transportation, industrial use, and grid balancing.

List of Top Power-to-Gas Companies

• Siemens Energy (Germany)
• Hitachi Zosen Corporation (Japan)
• Hydrogenics Corporation (Canada)
• McPhy Energy (France)
• ITM Power PLC (United Kingdom)
• MAN Energy Solutions (Germany)
• NEL ASA (Norway)
• Thyssenkrupp AG (Germany)
• ENGIE SA (France)
• Sunfire GmbH (Germany)

KEY INDUSTRY DEVELOPMENT

June 2021: The modular clothing market saw a highly significant industrial development in June 2021 when a popular sustainable fashion startup launched its first modular apparel collection. The collection was designed as interchangeable clothing components, comprising detachable sleeves, adjustable length and reversible designs, to be used in any desired combination by the consumer. This would allow consumers to utilize the same wardrobe for many different occasions while reducing fast-fashion concerns by encouraging versatility and sustainability. Leveraging innovative design technologies and eco-friendly materials, the development catered to the rising consumer demand for personalized and sustainable fashion solutions. This marked a significant step toward advancing circular fashion and reducing textile waste.

REPORT COVERAGE

The Power-to-Gas (P2G) Market report gives in-depth coverage of the dynamics, trends, and opportunities for growth in the market. It includes an analysis of key factors driving adoption in Power-to-Gas technologies, such as the demand for clean energy solutions, integration of renewable energy, and decarbonization targets set by governments around the world. The report goes into technological advancements in electrolyzer systems and the efficiency gains in hydrogen production and synthetic methane production.

The report covers market segmentation, dividing the Power-to-Gas market into type, which includes hydrogen production and synthetic methane production, and application, which includes energy storage, transportation, and industrial use. It also studies the regional landscape, examining the adoption and growth potential of Power-to-Gas technologies in major regions such as North America, Europe, and the Asia-Pacific.