The Evolving Hydrogen Value Chain Features Davids, Goliaths, and Unexpected Partnerships

The emerging hydrogen value chain overlaps with many points of the global energy, industry, and transport sectors, as I have covered previously. Since the picture is so complex, a closer look at global hydrogen associations reveals trends in a changing value chain as more energy players step into the ring. In the following figure, the gray bars provide an overview of the value chain segments.

Hydrogen Value Chain Segments

(Source: Guidehouse Insights)

To draw these disparate segments together, global hydrogen stakeholders have formed bodies that help support research, lobbying, and marketing—and the membership dynamics of those consortiums paint an interesting picture. The following figure shows a summary of the membership in eight of the largest global and regional hydrogen associations.

Membership in Eight Major Hydrogen Associations by Segment

(Source: Guidehouse Insights)

Of the member companies, 279 are split into the 10 value chain segments based on best fit of the company’s core focus. Annual revenues are averaged by segment. Total revenues are approximated for each segment, which serves as a proxy for potential influence or financial sway that each category brings (or could bring) to the hydrogen economy.

A takeaway is that the core of the hydrogen industry—the 81 companies in the industrial gas and electrolyzer/fuel cell segments—make up but a fraction of the interested universe. These two segments consist of the closest thing to pure play hydrogen companies, and account for over one-third of membership but barely 2% of revenue in the companies reviewed. These companies are the incumbents in an industry that hasn’t yet seen dramatic growth, but have lots of intellectual property and much to gain from the growing traction in the hydrogen economy. Meanwhile, supermajors like Shell, global energy players like Engie, and automakers like Toyota are just some of the deep-pocketed entities considering a post-oil, increasingly electrified planet, and counting on hydrogen for the growth of their businesses. The smaller hydrogen-focused companies have much to offer to these players, and vice-versa. This will lead to increased activity in partnerships and mergers and acquisitions in the coming years as the market enters a stage of faster growth.

An upcoming Guidehouse Insights report on the hydrogen economy will provide further analysis of these hydrogen value chain dynamics, in addition to recent reports such as Power-to-Gas for Renewables Integration and Gas for Climate (the latter from Ecofys, a Guidehouse company). While these reports acknowledge the hurdles still facing the hydrogen economy, they also identify the opportunities emerging as disruption continues across the global energy landscape.