The Zhitong Finance App learned that since 2023, photovoltaics has continued to reduce costs and improve efficiency to the extreme, leading to a continuous decline in electricity costs. However, the underlying logic of the hydrogen energy industry is also expected to be restructured due to the reduction in the cost of producing hydrogen from electrolyzed water, that is, from the promotion and application of downstream fuel cells to upstream green hydrogen to promote the release of electrolyzers. Huabao Securities believes that China's green hydrogen supply and demand plan continues to expand, and water electrolysis hydrogen production equipment is expected to usher in an increase in the scale of the industry. With the simultaneous expansion of both supply and demand for green hydrogen, China's electrolyzer industry is expected to usher in an increase in market size.
Against the backdrop of increasingly strict controls on carbon emissions, the development of China's green hydrogen industry has welcomed multiple benefits.
Looking at this year, on January 19, at a press conference held by the State Information Office, Tao Qing, press spokesperson of the Ministry of Industry and Information Technology and director of the Operation Monitoring and Coordination Bureau, said that green and low-carbon industries such as hydrogen energy and energy storage will be vigorously developed, backward energy consumption, environmental protection, etc., and accelerate the synergy of pollution reduction and carbon reduction. On January 3, the Ningdong Energy and Chemical Base Management Committee issued the “2024 Revised Edition on Certain Measures to Promote the High-Quality Development of the Hydrogen Energy Industry at the Ningdong Base (Consultation Draft)”. The core of the measures is to strengthen top-level design for hydrogen energy development in the Ningdong region and enhance industry support.
The cost of producing green hydrogen mainly consists of electricity costs and hydrogen production equipment. Since last year, the cost reduction process for photovoltaic modules and energy storage has been accelerated, which will drive down the cost of green hydrogen. On December 26, 2023, Ouyang Minggao, an Academician of the Chinese Academy of Sciences, said at the New Energy Science Forum 2023 that with the sharp increase in wind power and photovoltaic installations, the price of electricity in the grid was reduced to 0.15 yuan/kWh in 2023, making the cost of preparing green hydrogen from electrolyzed water close to the cost of producing hydrogen from coal, and entering the economic cost space 5 years earlier than expected.
The Guojin Securities Research Report also believes that the economy of green hydrogen has already been shown. In the future, with further cost reductions brought about by technological iterations and large-scale effects of optical hydrogen storage equipment, the project will achieve economy, and the share of green hydrogen in photovoltaic power generation will also increase dramatically.
Unlike the previous logic of “taking the lead in downstream fuel cell development and application”, the focus of the hydrogen energy industry in 2023 is on upstream green hydrogen production, which is driving demand for electrolyzers. Statistics show that from January to December 2023, a total of 19 green hydrogen projects have been publicly tendered for electrolyzers in China. The total number of electrolyzer tenders reached 1,882 MW, close to 2 GW, doubling from the previous year.
“With the doubling of the number of electrolyzer tenders for green hydrogen projects in 2023, the hydrogen energy industry has reached a brand new starting point.” Zhu Keli, executive director of the China Information Association and founding director of the National Research Institute of New Economics, said that green hydrogen is developing strongly, driven by both cost reduction in wind and solar hydrogen storage equipment and policy support.
According to an analysis by Guojin Securities, considering that the national plan is to produce 100,000 tons to 200,000 tons of green hydrogen fuel per year in 2025, and the total production capacity of each region will reach 1 million tons of green hydrogen, the 2024 green hydrogen project will usher in a wave of commencement, driving a high demand for hydrogen production equipment. It is optimistic that domestic electrolyzer tenders will double to 4 GW year-on-year in 2024.
Furthermore, the agency said that against the backdrop of a high increase in green hydrogen project setups, as the project progresses, large-scale tenders for equipment will follow, and demand for hydrogen production end equipment will explode first, mainly for equipment such as electrolyzers, hydrogen production power supplies, and hydrogen storage tanks. Among them, the electrolyzer will be the first to benefit as a core device.
According to a recent research report by Huafu Securities, green hydrogen support policies have been implemented intensively. Among them, some regions have introduced subsidy policies for green hydrogen applications or green hydrogen electricity bills, and further regulated the pace of green hydrogen project promotion, which is expected to increase the competitiveness of green hydrogen while driving the release of demand for upstream green hydrogen equipment such as electrolyzers; a large number of green hydrogen projects will be added in 2023, and the bid volume for electrolyzers is close to 2 GW. In the context of policy increases, a large number of green hydrogen projects are expected to start construction this year, and orders for midstream upstream core equipment such as electrolyzers will accelerate. The performance delivery logic is expected to be straightened out.
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Jinyuan Hydrogenation (02502): In June 2023, Jinyuan Hydrogen Energy signed a cooperation agreement with the committee designated by the government to coordinate matters relating to the Zhengzhou High-tech Industrial Development Zone. The agreement states that Jinma Energy must establish a project company in the Zhengzhou High-tech Zone. The project company plans to build 15 gas stations equipped with hydrogenation facilities in the Zhengzhou High-tech Industrial Development Zone within the next three to five years.
Dongyue Group (00189): Mr. Wang Zhenhua, Deputy General Manager of Dongyue Group, said earlier that the company has now achieved autonomous control of more than a dozen products in the entire industry chain, from the most basic software to proton exchange membranes (used in PEM electrolyzers and fuel cells). At the same time, it has formed a 500,000 square meter production base and is a strong competitor among domestic manufacturers.
China Xuyang Group (01907): In the road show in December last year, China's Xuyang Group mentioned that in terms of hydrogen energy, the company will promote the construction of a hydrogen energy transportation pipeline between Dingzhou, Gaobeidian, and Beijing, reduce hydrogen energy transportation costs, and establish a joint venture to expand the hydrogen energy transportation fleet. In addition, the company will continue to promote the construction of liquid hydrogen, natural gas hydrogen mixing, and hydrogen energy demonstration projects.
CGN New Energy (01811): CGN has deployed hydrogen energy multi-scenario application projects in several provinces. Among them, the Ningxia Lingwu 1 million kilowatt photovoltaic off-grid hydrogen production project (included in the third batch of major bases in the country) and the Hami 1 million kilowatt photovoltaic hydrogen production project (600,000 kilowatts in the first phase) have obtained construction targets. The planned 3 million kilowatt wind hydrogen to methanol project is expected to be completed in 2024.