Hydrogen Fuel Cell Vehicle Market Trends

Growth Drivers

• Supportive government initiatives for infrastructure development: The infrastructure setup for hydrogen fueling systems is high, which is why the U.S. Government introduced the Inflation Reduction Act (IRA) in 2022. It incentivizes projects by allowing a tax credit of up to 45V, USD 3/kg of hydrogen. This comprehensive policy for taxpayers establishes certainty for hydrogen producers to stabilize their product offering in the hydrogen fuel cell vehicle market. Furthermore, in 2023, the U.S. DOE, complying with Assembly Bill 8, sanctioned the California Energy Commission (CEC) to provide financial aid of USD 20 million annually for building refueling stations for hydrogen fuel cell vehicles till July 1, 2030.
  
  California aims to achieve carbon neutrality for buses and trucks by 2045. By Q3 2023, the State supported a network of 66 retail stations, and 54 of them operated at a 60% capacity, thereby catering to 34,800 FCEVs. CARB reported in the 2023 Annual Evaluation that the FCEV population in California could grow to 34,900 FCEVs by 2026 and to 62,600 FCEVs by 2029.  In November 2023, the CEC released the GFO-23-604, a solicitation to enhance station reliability, and funded USD 11 million for operations. This has a mandatory 95% station uptime as a clause for this grant.
  
  Additionally, in 2023, the CEC rendered USD 7.7 million to FirstElement Fuel Inc. for hydrogen refueling component production in California and to ease supply chain restraints. The Clean Transportation Program in FY 2022-23 allocated USD 257 million to light-duty hydrogen refueling station projects and the Budget Act in 2022 granted USD 100 million to the CEC to clean hydrogen generation from biofuels and electrolysis of renewable sources, which is estimated to stabilize prices in California.

Hydrogen Refueling Station Network and Quantity of FCEVs Supported

Source: U.S. DOE

• Financial incentives and investments in hydrogen and fuel cell projects:
  
  The IRA 2022 includes clean energy tax credits to propel in-house renewable energy manufacturing. The IRA's incentives include provisions promoting fuel cell technologies and clean hydrogen by creating new federal tax credits or extending existing federal tax credits. For instance, the Advanced Energy Project Credit allows an extension of investment tax credit by 30% and approves funding for hydrogen infrastructure, fuel cell EVs, and electrolyzers, among other products. It also expands tax credit to include projects at manufacturing facilities that want to reduce their greenhouse gas emissions by at least 20%. Also, it covers the credit sunset and extends the 30% credit cap for alternative fuel refueling projects.
  
  Research Nester estimates that the hydrogen momentum is likely to remain strong through 2037 with the rising deployment of resources. Till October 2023, more than 1,400 green hydrogen projects were announced globally, and over 1,000 will be at a partial deployment stage by 2030. Europe has the highest number of these developments (~500), with investments announced (~USD 190 billion) and an absolute funding surge (~USD 30 billion), followed by North America with roughly 250 projects. Moreover, the DOE is keen on boosting the domestic clean hydrogen production to 10 million metric tonnes (MMT) annually by 2030 and 50 MMT by 2050. It also emphasizes the government’s strategy to reduce hydrogen costs to USD 1/Kg.

Challenges  

• High cost of infrastructure development and barriers in the Final Investment Decision (FID): The development of infrastructure poses a hurdle for hydrogen fuel cell vehicles (FCVs). The limited number of hydrogen refueling stations makes potential buyers wary of investing in FCVs as they have concerns, about the convenience and range of refueling options.