Jun 18, 2025
Despite the continued high market potential for hydrogen technologies — especially in industrial applications — the anticipated breakthrough has yet to materialize. According to the latest 2025 Hydrogen Sentiment Index from the Institute for Innovation and Technology (iit), 70 percent of surveyed experts rate the potential of hydrogen in Germany as high or very high. However, the assessment of the political and regulatory framework is sobering: With a score of only 42.1 points on a scale from 0 to 100, the corresponding sub-index lies clearly in the negative range.
This discrepancy between technological optimism and institutional reality is symptomatic of the current state of the hydrogen ramp-up. While industry is ready to invest on a large scale, reliable offtake agreements, clear support mechanisms, and coordinated infrastructure planning are lacking. The following article highlights the specific success factors now crucial to break the market ramp-up out of stagnation — and the roles that politics, business, and technology must play.
Reality Check for Green Hydrogen as a Future Solution
As an environmentally friendly alternative to fossil fuels, green hydrogen sparked widespread enthusiasm worldwide in early 2019, which lasted for several years. Consultants, associations, and businesses identified green hydrogen as the silver bullet for decarbonization across all sectors. This was supported by the expectation that by 2030, a competitive hydrogen price of around two euros per kilogram would be achieved. Many nations set ambitious targets for hydrogen deployment and production, forecasting an installed capacity of over 260 gigawatts by 2030. In reality, as of 2025, the global installed capacity remains below two gigawatts.
Since 2023, a growing sense of caution has emerged. Hydrogen applications are now being assessed more critically for their suitability in specific use cases and prioritized accordingly. A better understanding of previously unrecognized cost elements in hydrogen projects, along with inflation and rising interest rates, is challenging existing business models. This has led, among other things, to the cancellation of projects totaling around three gigawatts, even though they had already been initiated.
We see two main causes for this development: the lack of firm offtake agreements and underestimated costs and project complexity. Although many projects are still being completed, they are on average delayed by about two years. The reasons often include delays in project execution, financing, or a wait-and-see attitude due to unfavorable market conditions. Contrary to the forecasts of national and international hydrogen strategies, current projections estimate global installed capacity by 2030 at less than 100 gigawatts.
Status Quo of the Industrial Hydrogen Ramp-Up
Although reality has so far fallen short of expectations, important steps toward industrial scaling of the hydrogen economy have already been taken. In 2023, for example, orders totaling more than six gigawatts were placed with electrolyzer manufacturers outside China. In comparison, in 2020, it was less than 100 megawatts. Additionally, projects in sectors particularly suited for green hydrogen applications — such as refineries, steel, ammonia, and methanol — have progressed from pilot stages to large-scale projects with volumes well over 100 megawatts.
Significant progress has also been made in project implementation: by 2024, around two gigawatts had been installed worldwide. On the other hand, the industry is now forced to adapt to changing realities. As a result, many electrolyzer OEMs have had to make difficult decisions over the past six months. The impacts are widely felt—from large, established players in the oil and gas industry who have had to scale back their green hydrogen targets, to bankrupt project developers.
Barriers and Levers for Market Ramp-Up
The complexity of building a functioning hydrogen economy is immense, as the entire value chain must be coordinated and developed in parallel. This includes production, infrastructure, and the demand side. A key factor is always the cost of green hydrogen compared to existing alternatives. However, achieving a competitive H₂ price requires a rapid scale-up — only then can the necessary practical experience be gained. From our perspective, a supportive regulatory framework in the areas of production, infrastructure, and offtake is essential.
In the near future, industry will continue to rely on a variety of financing mechanisms. There are already numerous programs on the production side, such as the European Hydrogen Bank for projects in Europe, H2Global for projects outside Europe that supply hydrogen and derivatives to European end customers, as well as various national programs.
A crucial prerequisite for the widespread use of green hydrogen will be a functioning hydrogen infrastructure connecting low-cost production and import locations with existing consumers. Without a hydrogen core network, the market ramp-up will not be feasible. Therefore, it is essential that countries implement their plans for national and international pipelines. Almost one-third of the proposed core network pipelines in Germany currently lack a developer. Delays have also occurred with pipelines in the Netherlands and the connection between Denmark and Germany. Such developments reduce planning certainty for both producers and consumers.
How Can Offtake Be Increased?
First and foremost, the cost gap between production costs and a potential offtake price must be reduced. Additionally, predictable demand is needed, for example through the introduction of EU quotas (in sectors such as shipping and aviation). These enable more economical infrastructure expansion through better predictability. A purposeful implementation of RED III (Renewable Energy Directive III) at the national level can also reduce volume risk. This EU directive aims to cover at least 42.5% of energy consumption from renewable sources by 2030 and includes binding sub-targets for RFNBOs (Renewable Fuels of Non-Biological Origin) in the transport and industrial sectors.
Promoting a Rapid Hydrogen Ramp-Up
A key lever for accelerating the hydrogen ramp-up is the development of standardized and modular plant concepts with a high degree of industrial prefabrication. Quest One, in collaboration with Everllence and its extensive EPC (Engineering, Procurement, and Construction) expertise, is working on reference designs for complete industrial solutions. This approach aims to reduce complexity, project risks, and costs as much as possible.
Another important factor is making electrolyzer solutions more tangible for potential customers, thereby facilitating their transition. With the construction of a demonstration plant based on the large-scale MHP electrolyzer in cooperation with Everllence in Augsburg, Quest One has reached a significant milestone. The facility allows potential customers, planners, and project developers to gain insights into key parameters such as construction phases, dimensions, internal components, and infrastructure. Additionally, it serves for intensive testing, the collection of real operational data, and staff training. The demonstration plant is also a vital tool for further optimizing performance and operational parameters for industrial solutions.
