Power to Gas Market Massive Growth USD 126.9 Mn | CAGR of 11.8%

Updated · Apr 1, 2025

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Table of Contents

Introduction
Key Takeaways
Power-to-Gas Statistics
Emerging Trends
Use Cases
Major Challenges
Market Growth Opportunities
Key Players Analysis
Conclusion

Introduction

The global power-to-gas market is experiencing significant growth, driven by the increasing integration of renewable energy sources and the development of hydrogen economies worldwide. In 2024, the market was valued at approximately USD 41.6 Million, and projections indicate a substantial rise to around USD 126.9 Million by 2034, reflecting a compound annual growth rate (CAGR) of 11.8% during the forecast period from 2023 to 2033.

This expansion is primarily fueled by the rising demand for renewable hydrogen across various sectors, including transportation, chemicals, and energy, as governments globally implement policies to promote clean energy and reduce carbon emissions. However, the market faces challenges such as high capital costs associated with establishing power-to-gas systems and energy losses during conversion processes, with estimates suggesting 20-30% loss during electrolysis and 40-50% during methanation.

Recent developments underscore the sector’s potential; for instance, Dutch natural gas grid operator Gasunie plans to invest approximately €12 billion ($13 billion) through 2030 to support the energy transition, with two-thirds of this investment directed towards infrastructure for sustainable gases like hydrogen and biomethane. These developments highlight the dynamic nature of the power-to-gas market, reflecting both its growth prospects and the challenges that lie ahead.

Cummins Inc. has demonstrated a strong commitment to hydrogen technologies. In March 2025, Cummins and its partners celebrated the successful completion of a project developing a 6.7-liter hydrogen internal combustion engine (H2-ICE) for medium-duty trucks and buses. This engine operates on zero-carbon hydrogen fuel, achieving over a 99% reduction in tailpipe carbon emissions compared to diesel engines. This development showcases Cummins’ dedication to advancing hydrogen-powered transportation solutions.

In October 2024, Cummins’ zero-emissions business segment, Accelera, unveiled next-generation technologies, including enhanced hydrogen fuel cell engines, a high-efficiency eAxle, and advanced batteries. These innovations aim to accelerate the adoption of zero-emission solutions in commercial transportation, reflecting Cummins’ strategic focus on sustainable technologies.

Key Takeaways

The global power-to-gas market was valued at USD 41.6 million in 2024.
The global power-to-gas market is projected to grow at a CAGR of 11.8% and is estimated to reach USD 126.9 million by 2034.
By technology, electrolysis accounted for the largest market share at 74.2%.
By capacity, 1000 kW and above accounted for the majority of the market share at 49.3%.
By use case, solar accounted for the largest market share of 63.1%.
By application, utility accounted for the largest market share of 48.2%.
North America is estimated as the largest market for solar-powered trains with a share of 46.8% of the market share.

Power-to-Gas Statistics

U.S. Federal Investment: The Infrastructure Investment and Jobs Act (IIJA) of November 2021 allocated $9.5 billion to clean hydrogen initiatives, which include P2G projects.
New York’s Investment: In 2021, New York announced a $290 million investment to construct a green hydrogen fuel production facility, highlighting the state’s commitment to hydrogen infrastructure.
Midwest Alliance for Clean Hydrogen: In 2024, the U.S. Department of Energy provided an additional $22 million to the Midwest Alliance for Clean Hydrogen, supporting supply chains for heavy-duty clean hydrogen applications, including the development of a model hydrogen fueling station in Detroit.
Axios
Plug Power’s DOE Loan Guarantee: In early 2025, Plug Power secured a $1.66 billion loan guarantee from the DOE to construct up to six green hydrogen manufacturing plants across the U.S., each capable of producing up to 15 tons of liquid hydrogen daily.
Hyliion Holdings Grant: In 2025, Hyliion Holdings received a $6 million grant from the DOE’s Methane Emissions Reduction Program to develop well-head gas generators, with plans to install up to 2 megawatts of generators in the Permian Basin.
Greenhouse Gas Reduction Fund: The Environmental Protection Agency (EPA) announced $27 billion in grants through the Greenhouse Gas Reduction Fund to mobilize financing for climate and clean energy projects, potentially benefiting P2G initiatives.
Solar for All Program: The EPA’s Solar for All program aims to provide over $350 million in annual household savings, with an average of ~$400 in annual savings per low-income household benefiting from solar programs, indicating significant investment in renewable energy infrastructure.
Energy Savings Potential: Distributing capacitors across a plant’s power system can achieve energy savings ranging from 0.5% to 1.5% of the average kilowatt (kW) demand, highlighting the efficiency benefits of APFC systems.
Federal Energy Regulatory Commission (FERC) Standards: FERC’s Order No. 827 requires non-synchronous generators to maintain a power factor within the range of 0.95 leading to 0.95 lagging, ensuring grid reliability and efficiency.
Distribution Automation: Across the U.S., more than 6 million miles of distribution lines and over 200,000 distribution circuits provide critical links in the power system, with automation playing a key role in enhancing efficiency and reliability.
Grid Resilience Grants: The DOE’s Grid Resilience Utility and Industry Grants program provides up to $2.5 billion over five years to enhance grid resilience, which may include investments in technologies like APFC to improve power quality and efficiency.
High Energy Cost Grants: The USDA’s High Energy Cost Grants program assists in offsetting extremely high household energy costs in areas where local conditions cause energy costs to exceed 275% of the national average, potentially supporting APFC installations to improve energy efficiency.

➤ 𝐒𝐚𝐦𝐩𝐥𝐞 𝐑𝐞𝐩𝐨𝐫𝐭 𝐑𝐞𝐪𝐮𝐞𝐬𝐭: 𝐔𝐧𝐥𝐨𝐜𝐤 𝐕𝐚𝐥𝐮𝐚𝐛𝐥𝐞 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬 𝐟𝐨𝐫 𝐘𝐨𝐮𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬: https://market.us/report/power-to-gas-market/free-sample/

Emerging Trends

Methane Pyrolysis: This process converts methane into hydrogen and solid carbon, offering a method for low-emission hydrogen production. Companies like Monolith Materials have demonstrated this technology at a commercial scale, producing approximately 14 metric tons of hydrogen daily.
Power-to-Methane Systems: Integrating hydrogen with carbon dioxide to produce methane allows for the storage and transportation of renewable energy using existing natural gas infrastructure. For instance, the Audi e-gas plant in Germany utilizes this approach to produce synthetic natural gas.
Sector Coupling and Grid Integration: Power-to-gas facilitates sector coupling by linking the electricity and gas sectors, enhancing grid stability and flexibility. Studies suggest that sector coupling can increase renewable energy generation by 12-55% and reduce system costs by 6-14%, supporting deep decarbonization goals.
Policy Support and Demonstration Projects: Governments worldwide are investing in P2G technologies to meet climate targets. For example, Gasunie plans to invest €12 billion ($13 billion) by 2030 in sustainable gas infrastructure, including hydrogen production and storage. Additionally, projects like the Underground Sun Storage in Austria aim to inject hydrogen into underground gas storage, demonstrating practical applications of P2G.
Challenges and Future Outlook: Despite technological advancements, challenges such as high production costs, energy conversion losses, and infrastructure integration persist. Addressing these issues requires continued research, supportive policies, and collaboration among industry stakeholders. The ongoing development and scaling of P2G technologies are crucial for achieving a sustainable and resilient energy future.

Use Cases

Renewable Energy Storage and Grid Balancing: P2G systems enable the storage of excess renewable energy by converting it into hydrogen or methane, which can be stored and reconverted to electricity when needed. This process helps stabilize the grid and ensures a continuous energy supply. For instance, Germany’s P2G initiatives have demonstrated the feasibility of integrating renewable energy into the gas grid, with projects like the 6 MW plant in Werlte producing synthetic natural gas injected into the local distribution network.
Sector Coupling and Decarbonization: P2G facilitates sector coupling by linking the electricity and gas sectors, promoting efficient energy use and reducing carbon emissions. A study indicated that sector coupling could increase renewable energy generation by 12% to 55% and lower system costs by 6% to 14%, supporting deep decarbonization goals.
Transportation Sector Applications: In the mobility sector, P2G-derived hydrogen can be utilized as a clean fuel for vehicles, contributing to emission reductions. However, studies suggest that using hydrogen for heating purposes may be less efficient and more costly compared to alternatives like heat pumps.
Industrial Feedstock and Energy Supply: Industries can utilize hydrogen produced via P2G as a feedstock for chemical processes or as an energy source, aiding in reducing reliance on fossil fuels. This application supports industrial decarbonization and enhances process efficiency.
Integration with Existing Gas Infrastructure: The methane produced through P2G can be injected into existing natural gas grids, leveraging current infrastructure for energy distribution. This approach allows for the utilization of renewable methane without significant modifications to the gas network. For example, the Audi e-gas plant in Germany produces synthetic methane from renewable energy, contributing to the gas supply.
Enhancing Energy Security and Flexibility: By converting surplus electricity into storable gas forms, P2G enhances energy security and flexibility, providing a buffer against fluctuations in renewable energy generation and ensuring a stable energy supply.

Major Challenges

Energy Conversion Efficiency Losses: The P2G process involves multiple energy conversions, each introducing efficiency losses. After electrolysis, only about 67% to 81% of the energy remains, and with the additional step of methanation, the overall efficiency drops to approximately 54% to 65%. This means that a substantial portion of the initial energy input is lost during conversion.
High Production Costs: Producing synthetic fuels through P2G is currently more expensive than conventional methods. The production costs of synthetic natural gas (SNG) vary between €47 and €319 per megawatt-hour, depending on factors such as technology used and energy prices. In the best-case scenarios, these costs approach those of natural gas, but achieving this requires optimal conditions and significant investment.
Infrastructure Integration Challenges: Integrating P2G-produced gases into existing energy infrastructures poses technical and regulatory challenges. While methane can be injected into natural gas grids, blending hydrogen into these systems is limited to about 20% without requiring significant modifications. This constraint affects the scalability of hydrogen integration into current gas networks.
Storage and Transport Limitations: Storing and transporting gases produced via P2G involve energy losses and logistical complexities. For instance, compressing hydrogen to 200 bar results in energy losses, reducing the overall efficiency of the storage system. Additionally, transporting hydrogen requires specialized infrastructure, which adds to the cost and complexity.
Competition with Alternative Energy Storage Solutions: P2G competes with other energy storage technologies, such as batteries, which are improving in efficiency and cost-effectiveness. While batteries are suitable for short-term storage, P2G offers potential for long-term storage solutions. However, the higher losses associated with P2G may limit its competitiveness, especially as battery technologies continue to advance.
Policy and Regulatory Uncertainties: The development of P2G technologies is heavily influenced by policy decisions and regulatory frameworks. Inconsistent policies, such as potential changes to federal tax credits in regions like Texas, can create uncertainty, hindering investment and slowing the deployment of P2G solutions.

➤ 𝐁𝐮𝐲 𝐍𝐨𝐰 𝐭𝐡𝐢𝐬 𝐏𝐫𝐞𝐦𝐢𝐮𝐦 𝐑𝐞𝐩𝐨𝐫𝐭 𝐭𝐨 𝐆𝐫𝐨𝐰 𝐲𝐨𝐮𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬: https://market.us/purchase-report/?report_id=144516

Market Growth Opportunities

Renewable Energy Integration: P2G technology plays a crucial role in integrating renewable energy sources, such as wind and solar, into the energy grid. By converting excess renewable energy into hydrogen or methane, P2G addresses the intermittency challenges associated with renewable power generation, thereby enhancing grid stability and reliability.
Energy Storage and Grid Balancing: The ability of P2G systems to store energy in the form of hydrogen or synthetic methane offers a viable solution for balancing supply and demand. This capability is particularly valuable in regions with high renewable energy penetration, where energy production can fluctuate based on weather conditions.
Decarbonization of Various Sectors: P2G-produced hydrogen serves as a clean fuel alternative in sectors such as transportation, industry, and heating. Its utilization contributes to reducing carbon emissions, aligning with global decarbonization goals. For instance, hydrogen can be used in fuel cell vehicles, industrial processes, and as a replacement for natural gas in heating applications.
Technological Advancements and Cost Reduction: Ongoing advancements in electrolysis and methanation technologies are improving the efficiency and cost-effectiveness of P2G systems. As technology matures and economies of scale are achieved, production costs are expected to decline, making P2G a more attractive option for energy storage and grid management.
Policy Support and Regulatory Frameworks: Government policies and regulatory incentives play a pivotal role in promoting P2G adoption. Supportive measures, such as subsidies, tax credits, and mandates for renewable energy integration, encourage investment and development in the P2G sector. For example, the European Union has been actively supporting projects that demonstrate the viability of P2G technologies.

Key Players Analysis

AquaHydrex was a clean-tech company specializing in power-to-gas technologies, aiming to convert excess renewable energy into hydrogen. In late 2023, AquaHydrex filed for Chapter 7 bankruptcy, leading to the liquidation of its assets, including a 32,000-square-foot R&D facility near Denver.
Avacon AG is a German energy company actively involved in integrating renewable energy sources through power-to-gas initiatives. Their operations include biogas facilities, with multiple plants in operation since 2015, enhancing energy storage and grid stability.
CarboTech specializes in converting biogas into biomethane, a renewable energy source. In 2023, the company achieved annual sales of €40.3 million and aimed for over €43 million in 2024.
Siemens has been actively involved in power-to-gas initiatives. In October 2023, Siemens successfully tested an industrial turbine powered entirely by 100% green hydrogen. In December 2024, Siemens Energy and SSE announced plans to jointly develop a 600 MW gas turbine capable of operating on 100% hydrogen, with deployment targeted for 2030.
Cummins Inc. has significantly advanced its role in the power-to-gas sector. In June 2024, Cummins and Liberty Energy partnered to develop a natural gas variable-speed engine for hydraulic fracturing, with deployment expected in early 2025. Additionally, in October 2024, Cummins inaugurated a €75 million electrolyzer manufacturing facility in Guadalajara, Spain, marking it as Europe’s largest dedicated to green hydrogen production.
Electrochaea has made notable strides in power-to-gas technology. In August 2024, the company scaled up its capacity to 10 MWe with support from the European Innovation Council’s Accelerator Program, applying this new plant design to its first commercial project in Denmark. Earlier, in July 2024, Electrochaea, in collaboration with Carbonaxion Bioénergies and Énergir, secured nearly $350,000 in government funding to study a clean energy project in Portneuf, Quebec.
ENTSOG AISBL is the European Network of Transmission System Operators for Gas, dedicated to enhancing the efficiency and security of gas transmission across Europe. In October 2024, ENTSOG published its Winter Supply Outlook 2024/25, assessing the European gas system’s capability to handle varying demand scenarios, including the end of Russian transit via Ukraine after December 2024. The organization also released its Annual Report 2023 in May 2024, outlining initiatives to support the EU’s energy and climate objectives, such as integrating renewable and low-carbon gases into the transmission network.
Exytron GmbH was a German technology company specializing in power-to-gas systems, converting surplus renewable electricity into synthetic natural gas. In early 2024, Exytron initiated a decentralized power-to-gas system in Augsburg, Germany, designed to store excess renewable energy and extract power when needed. However, by August 2024, Exytron filed for insolvency, leading to the company’s liquidation.
FuelCell Energy Inc. is a leader in fuel cell technology, focusing on clean energy solutions. In fiscal year 2024, the company reported revenues of $112.1 million, a decrease from $123.4 million in the previous year. Despite this, FuelCell Energy added approximately $250 million to its revenue backlog through utility-scale projects and advancements in clean energy technologies, including a carbon capture platform developed with ExxonMobil.
Green Hydrogen Systems specializes in designing and manufacturing efficient, standardized, and modular electrolysers for producing green hydrogen using renewable energy. In 2023, the company reported a loss of DKK 406 million (approximately EUR 54.4 million), significantly higher than its revenue of DKK 42 million, highlighting the financial challenges in scaling up green hydrogen production.
GRTgaz is a French gas transmission system operator actively involved in the development of power-to-gas projects. In July 2023, GRTgaz launched the GoCO₂ project, aiming to capture residual CO₂ emissions from industrial sites and transport them for storage or utilization, with an expected annual capacity of 2.6 to 4 million tonnes by 2030. Additionally, in March 2024, GRTgaz, in collaboration with Enagás and Teréga, signed a joint development agreement for the BarMar project, which plans to establish a maritime hydrogen pipeline between Spain and France, capable of transporting approximately 2 million tonnes of hydrogen per year.
Hitachi Zosen Inova AG, now operating as Kanadevia Inova, is a Swiss-based company specializing in waste-to-energy and renewable gas technologies. In May 2023, the company was awarded a contract by 3 Rivers Energy Partners to design and construct a renewable natural gas plant in Kentucky, USA, utilizing anaerobic digestion of spent stillage from the bourbon industry, with operations expected to commence by December 2024. Furthermore, in April 2023, Kanadevia Inova announced a project in Thuringia, Germany, to produce and sell liquefied biogas and carbon dioxide, aiming to provide renewable fuels for transportation and reduce greenhouse gas emissions.
ITM Power is a UK-based company specializing in the production of green hydrogen through electrolysis. In the fiscal year ending April 2024, ITM reported a revenue increase, with adjusted EBITDA losses reduced compared to the previous year. The company’s contracted order backlog reached a record £135 million during this period, reflecting significant growth in demand for their technology.
MAN Energy Solutions is a German company focusing on sustainable energy solutions, including power-to-gas technologies. In August 2023, MAN Energy Solutions secured a pre-engineering contract for a methanation reactor in a power-to-X plant in Finland, aiming to produce 55,000 tonnes of synthetic natural gas annually to decarbonize heavy-duty transport. In December 2024, the company was selected to supply a 150-MW riverine heat-pump system for RheinEnergie’s Cologne-Niehl power plant, intended to deliver climate-neutral district heating to approximately 50,000 households.

Conclusion

In conclusion, power-to-gas (P2G) technology offers a promising pathway for integrating renewable energy sources into existing energy infrastructures, enhancing grid stability, and supporting decarbonization efforts across multiple sectors. This expansion is driven by technological advancements, supportive policies, and the increasing demand for sustainable energy solutions. However, challenges such as energy conversion efficiency losses, high production costs, and infrastructure integration complexities remain. Addressing these issues through continued innovation and strategic investments will be crucial for realizing the full potential of P2G technologies in the transition to a more sustainable and resilient energy future.