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Power-to-X market shifts as green hydrogen deals quadruple by 2026

From unrealistic assumptions to record investments, the PtX market is evolving fast. Can cluster-based models and hybrid portfolios bridge the cost divide?

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Power-to-X market shifts as green hydrogen deals quadruple by 2026

EY-Parthenon and VDMA Publish 'Power-to-X Barometer 2026': Market Consolidation Underway as Economic Realities Reshape Sector

Management consultancy EY-Parthenon, in collaboration with the German Engineering Federation (VDMA), has released the Power-to-X Barometer 2026, a study analyzing the current state of the PtX market in Germany and Europe. The findings reveal a period of consolidation, with projects lacking solid economic foundations losing momentum. The authors also identify key obstacles to market growth—and outline three critical levers to accelerate progress.

PtX Market Enters Consolidation Phase

These trends are highlighted in the Power-to-X Barometer 2026, published by EY-Parthenon and VDMA on March 16, 2026. Between 2021 and 2023, many project plans were based on assumptions that failed to materialize: low electricity prices, high capacity utilization, and swift permitting processes. Reality has proven different—power prices remain volatile, grid connections face delays, and capital costs have risen. Only projects with clear permitting and infrastructure outlooks, backed by bankable offtake agreements with creditworthy buyers, are moving forward.

"Over the coming years, Germany and Europe will see fewer but more resilient projects," says Cornelius Knecht, Sector Lead for Industrial Products in Western Europe at EY-Parthenon.

The study uses concrete market data to illustrate the sector's current trajectory. Global transaction volumes have surged: green hydrogen deals quadrupled (from roughly €444 million in 2023 to nearly €1.9 billion in 2024), while derivatives and synthetic fuels saw a near-doubling (from around €904 million to €1.7 billion).

Meanwhile, global electrolyzer capacity expanded from approximately 2.0 GW in 2024 to 4.9 GW in 2025, with Germany accounting for about four percent of the total.

Yet the cost gap remains substantial: green hydrogen in Europe averages around €6.80 per kilogram—nearly double the price of gray hydrogen, which sits at roughly €3.40 per kilogram. These economic conditions explain why investments are becoming more selective, with the market focusing on viable business models.

Cluster-Based and Hybrid Portfolios as the Future Model

EY-Parthenon and VDMA forecast a shift toward cluster-driven approaches—centered around ports, chemical parks, and industrial hubs where electricity, molecules, CO₂ logistics, and off-takers converge.

The authors anticipate that hybrid portfolios will become standard. Green hydrogen will be deployed where renewable electricity is abundant and cost-competitive, while blue hydrogen will dominate in regions with reliable CO₂ storage and gas supply infrastructure. Future optimization will prioritize the lowest delivery costs per certified CO₂ intensity rather than hydrogen color.

Three Levers to Accelerate Market Growth

The Power-to-X Barometer 2026 identifies three key measures to speed up market expansion:

  1. Reliable Revenue Support. Mechanisms like Carbon Contracts for Difference (CCfDs) or the H2Global auction system guarantee a calculable minimum price for low-carbon molecules. These tools create predictable cash flows, enhance project bankability, and bolster investment security.
  2. Trustworthy Certification. A cross-border certification framework is essential for buyers, investors, and auditors to reliably assess the climate impact and origin of PtX products. Ambiguous or inconsistent standards stifle demand and financing.
  3. Dependable Infrastructure Access. Grid connections, hydrogen pipelines, and CO₂ transport and storage capacities must be available as planned, accessible resources. Transparent tariffs and reliable capacity bookings are prerequisites for turning project concepts into fundable ventures.

15 Success Factors: What Determines Implementation and Scalability

The study's authors also identify 15 key success factors for Power-to-X (PtX) projects, which can be grouped into three core dimensions:

  1. Market
  2. Location
  3. Technology and Capabilities

Critical factors include competitive electricity and production costs, long-term secured demand, and stable financing and regulatory frameworks. Location-based advantages—such as access to infrastructure and integration into existing value chains—also play a vital role. On the technological side, scalability and flexibility are particularly decisive. The study underscores that only the interplay of these factors determines whether projects move from planning to implementation.

"The market ramp-up of Power-to-X hinges on investment security, demand, and execution—not technology," says Peter Müller-Baum, Managing Director of VDMA Power-to-X for Applications. The study analyzes international reference projects that could serve as a blueprint for Europe.

A look at global benchmark projects reveals where the market is heading. Successful initiatives emerge where low-cost renewable energy, clear regulatory frameworks, and industrial off-takers converge—such as in North Africa, the Middle East, or Australia.

A defining feature is an integrated approach spanning the entire value chain: from generation and conversion to secured offtake. According to the study, these projects offer a model for Europe—particularly in terms of scalable cluster structures, international supply chains, and the fusion of energy and industrial policy.

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