Solid Oxide Fuel Cell Market

Market Overview

The global solid oxide fuel cell market size was valued at USD 1.5 billion in 2022. It is estimated to reach USD 20.75 billion by 2031, growing at a CAGR of 33.9% during the forecast period (2023–2031). The increasing private-public partnerships and reduced environmental impact promotes solid oxide fuel cell market growth.

Solid Oxide Fuel Cells (SOFCs) directly generate power by oxidizing fuel. Proton Exchange Membrane Fuel (PEMFC) fuel cells will likely dominate due to their suitability for stationary and transportation applications. Due to its increased use in stationary applications, this fuel cell may be the fastest-growing segment. The U.S. Department of Energy (DOE) funds fuel cell technology development and cost optimization, which could lead to high-efficiency fuel cells at affordable prices. Strategic collaborations may expand emerging market end-use segments. Public-private collaborations are expected to enable good technological change.

Cleaner solutions to replace present methods are expected to be expensive, which will test the advances of important industry participants. Market participants must address fuel cell technical and operational issues. Due to their versatility in fuels, solid oxide fuel cells (SOFC) are one of the fastest-growing backup power sources. Unlike other technologies, their by-product is nontoxic, making them eco-friendly. Clean energy solutions for power generation and transportation were early adopters in the U.S. The U.S. Energy Act has elevated the need for sustainable energy solutions. These acts set the stage for sustainable energy solutions in the energy sector.

Market Dynamics

Solid Oxide Fuel Cell Market Drivers

Increasing Private-Public Partnerships

It is vital to have proactive involvement and collaboration between public and private organizations to deliver hydrogen fuel to the expanding application base and to adopt new commercially viable technologies. During the time covered by the analysis, the market would experience a rise in the number of public-private partnerships, particularly those about initiatives involving research and development.

The governments of various nations worldwide will likely play a catalytic role in the progress of advancements by giving support in various forms, such as allocating cash for activities related to research and creating appropriate financing programs. It is vital to have a comprehensive regulatory and legislative framework for cooperation, as government enterprises must provide an environment favorable for investments. Developing this framework is especially important. Public-private collaborations also aid the accomplishment of long-term organizational goals.

Reduced Environmental Impact

Hydrogen, natural gas, and other renewable fuels power solid oxide fuel cells directly. Thus, unlike conventional power-producing systems, the power generated rarely emits contaminants. Power generation with solid oxide fuel cells requires less fuel than hydrogen production from petroleum fuels, reducing pollutants. This hydrogen-forming process releases small amounts of hazardous chemicals. Zero-emission solid oxide fuel cell technology uses renewable hydrogen. Solid oxide fuel cell technology is projected to combat regional environmental challenges and global warming in the coming years.

Solid oxide fuel cells create power through chemical reactions and are quiet. They reduce noise pollution in autos and other mobile apps, decreasing human influence on the environment. Due to policymakers' schemes and a well-defined hydrogen supply infrastructure, customers are projected to benefit from solid oxide fuel cell technology in the coming years. To boost coal-fired power plant efficiency, SECA was founded. Solid oxide fuel cells can transport oxygen to fuel without air. Hence, this partnership concentrates on them. Solid oxide fuel cells may recover waste heat to generate electricity or steam. These reasons should boost the solid oxide fuel cell market growth in the coming years.

Solid Oxide Fuel Cell Market Restraint

High Cost of Solid Oxide Fuel Cell Systems

The high cost of solid oxide fuel cell systems is expected to increase vehicle and stationary power application costs compared to substitute fuel cell technologies. Market players must develop technologies to manage the solid oxide fuel cell stack and balance of plant (BOP) costs while increasing the system's service lifetime. Implementing policies that help manufacturers achieve economies of scale is crucial for making this technology economically viable. Elon Musk, CEO of Tesla Motors, argues that running a vehicle purely on hydrogen fuel cells is costly due to the inefficient electrolysis.

Fuel cells are inefficient compared to traditional power generation sources, and direct energy use from traditional resources is more economical. FCEVs have lower efficiency than battery-operated electric vehicles (BeV), further questioning their usage. In the coming years, manufacturers are expected to focus on technology packaging to reduce the overall cost of FCEVs. SOFC technology has a higher cost than PEMFC technology for stationary power generation and higher capital costs than solar PV, which has gained dominance in renewable energy. These factors are expected to hinder the growth of the SOFC market shortly.

Solid Oxide Fuel Cell Market Opportunities

Rising End-User Adoption in Data Centers and The Military Sector

In the US, data centers are the end users of the power generation applications that are expanding at the highest rate. A data center requires a significant amount of power to operate. Additionally, data centers need a constant power supply around the clock to prevent the loss of important data. The IEEE Communications Society estimates that the demand for electricity from data centers worldwide in 2018 was around 198 terawatt-hours or 1% of global electricity demand. Due to the high power usage, data centers are choosing to save costs by implementing distributed power generation, notably fuel cells. In the past, SOFC and other fuel cells have experienced rapid growth in the US. The US SOFC industry has experienced the strongest growth due to Google, IBM, and Equinix adopting SOFC for their data centers. The data center industry is one of the most lucrative end-use markets for SOFC. SOFC adoption is currently minimal relative to the total number of data centers in the US.

The production of stationary and mobile electricity by SOFC for the military is increasing. Additionally, there is a market opportunity for SOFC in this sector due to the demand for efficient and noiseless power production for military applications. With increased chances for this market's continued expansion, SOFC portable applications for military use are anticipated to advance.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the solid oxide fuel cell market share is bifurcated in North America, Europe, and Asia-Pacific.

Asia-Pacific is the most significant solid oxide fuel cell market shareholder and is estimated to exhibit a CAGR of 46.2% over the forecast period. Throughout the forecast period, Asia-Pacific is anticipated to maintain its dominance in the global market for solid oxide fuel cells. It is expected to make up a significant portion of the world's capacity demand in the upcoming years, with Japan serving as its hub. In Asia-Pacific, stationary markets account for most large-scale applications for solid oxide fuel cells. Over the projection period, the market is anticipated to experience the greatest growth rate. To maximize the effectiveness and cost of their products, Asia-Pacific-based companies that develop and manufacture solid oxide fuel cells also engage in research and development.

In addition, due to the favorable policies that have resulted in higher adoption than other Asia Pacific nations, Japan and South Korea currently dominate the SOFC market in the area. Regulations are still being developed in nations like India, Singapore, and Malaysia to promote expanding the alternative energy industries. The market for solid oxide fuel cells is being driven by government agencies and research organizations evaluating the operating hours of solid oxide fuel cells in countries like India, Thailand, and Singapore. Throughout the projection period, these variables are anticipated to support the SOFC market's expansion in the area.

Europe is anticipated to exhibit a CAGR of 46.9% over the forecast period. In Europe, Germany is one of the most important markets for using SOFCs. This can be linked to the German government's introduction of a defined energy policy and concrete targets. The energy policies have also defined the future technological progress relevant to solid oxide fuel cells. At the national level, research, development, and demonstration projects are carried out with the backing of designated authorities to cut down on the time it takes to bring relevant items to market.

Additionally, in terms of the emission of greenhouse gases, Germany has set one of its primary priorities for the long term: reaching carbon neutrality by the year 2025. This plan defines what must be done on three levels for Germany to transition into a low-carbon economy. In addition to this, it outlines guiding principles and transformation pathways for key sectors until the year 2050, including energy, industry, buildings, transportation, and agriculture.

North America is an important market leader. Nations like the United States and Canada provide significant funding in this area. These grants will likely aid the development of cost-effective parts for solid oxide fuel cell systems and developments in research and development for solid oxide fuel cell technologies. For instance, the Department of Energy (DOE) in the United States funds the research of fuel cells through initiatives like the Solid Oxide Fuel Cell (SOFC) program and the Fuel Cell Technologies Office (FCTO). Additionally, groups and businesses that make solid oxide fuel cells in Canada have received funding from the federal government.

Furthermore, the U.S. monopolized the regional market due to favorable rules and incentives in American states like California and Connecticut. Additionally, the U.S. DOE's availability of research grants has accelerated the uptake of SOFC systems in the nation. To deliver on-site stationary power generation globally, Bloom Energy, one of the leading businesses in the market, is concentrating on growing the number of large-scale installations of Bloom servers. U.S. Additionally, throughout the forecast period, the market is anticipated to increase in response to the region's growing desire to decentralize electricity generation and dependable power supply.

Segmental Analysis

The solid oxide fuel cell market is bifurcated into applications.

The market is bifurcated based on application into stationary, transportation, and portable. 

The stationary supplement segment owns the highest market share and is predicted to exhibit a CAGR of 42.0% over the forecast period. The stationary solid oxide fuel cell system is one of the cleanest and most effective technologies for producing heat and power. Three major factors—net electrical efficiency, total efficiency in the case of cogeneration, and robustness—are used to evaluate how well these systems function. The residential and commercial sectors provide tremendous growth potential for stationary solid oxide fuel cells. Stationary solid oxide fuel cells are commonly employed in data centers and for industrial applications in the United States. These cells are potentially useful in the military sector.

Legislative frameworks in nations like Germany, Japan, and South Korea are being strengthened to encourage the use of solid oxide fuel cells in residential applications. For instance, the Ene farm program, implemented in Japan, has encouraged deploying SOFC-based systems for fuel cell micro-cogeneration in the residential sector. Solid oxide fuel cell research and development is receiving significant funding from European nations, including France and the UK, for transportation and energy production. Throughout the forecast period, the reasons mentioned above are expected to favorably impact the growth of the stationary application segment in the SOFC market. Compared to the transportation and portable application categories, the segment is anticipated to hold a dominant market share.

Recent Developments

• June 2022- South Korea’s first SOFC power plant of 4.2 MW capacity power plant came into operation, which is expected to energize close to 14,000 households annually in the country. The power plant located in the eastern port city of Donghae was built with an investment of approx. USD 19.6 billion is operationalized by a state-owned generation company, Korea East-West Power Company (EWP).
• January 2022- The Clean Hydrogen Partnership announced an investment of USD 2.65 million to fund a project exploring possibilities to integrate SOFCs with uninterruptible power supply (UPS) and lithium-ion batteries to facilitate flexible and clean primary power to data centers. The project also considers implementing natural gas SOFC as a prime power application for standby and excellent power requirements.