Hydrogen power in China: a key market soon?

A sector strongly supported by the government

Energy is a critical issue in China, regularly mentioned amongst the development priorities in the five-year plans – the most recent one being the 13th (2016-2020). Hydrogen power, and more specifically fuel cells, are the subject of a roadmap of the 13th Five-Year Plan that aims to build more than 1000 new hydrogen charging stations that will have to be operational by 2030. Hydrogen power is also part of the “Made in China 2025” Initiative, which aims for China to be technologically independent.

The government offers substantial financial support to implement the plans, with generous subsidies from both central and regional windows. In 2018, governmental subsidies were as high as 85 billion RMB – over 11 billion euros – for fuel cell vehicles. China intends to boost fuel cell powered vehicles industry the same way it did for the photovoltaic and the electric vehicles industries. These strategies helped create national “champions” such as BYD and CATL for electric vehicles, but also eliminated foreign competitors on the domestic market. China set the production target to one million fuel cell powered cars for 2030. By contrast, Japan’s objective is 800000 fuel cell powered vehicles in 2030 and France’s between 20000 and 50000 in 2028.


Technological focus: the choice of electrolysis

Hydrogen power can be industrially produced in several ways. Organic components rich in hydrogen, such as hydrocarbons (natural gas), coal, or biomass (methanization), are the most widely used. The production process is different for each feedstock. The total production for these processes counts for over 90% of the world hydrogen production. Another family of solutions is water splitting also known as electrolysis. It consists in splitting oxygen and hydrogen of water molecules using electricity. Electrolysis is an energy-intensive and low-efficiency process, yet it is preferred by China. During the last decade, the frenzy of construction of solar and wind farms stimulated by governmental incentives led to high electricity production in the northern and central regions. The overproduction created a waste of power because it could not be stored and transported to the eastern areas where the demand is the highest. According to Bloomberg, the Chinese power market was oversupplied by 35% by the end of 2016. However, this overproduction is an incredible opportunity for electrolysis.

Some key players

The National Institute of Clean and Low Carbon Energy (NICE) was created to support China Energy Group, created itself by the merger of Shenhua Group and China Guodian at the end of 2017, two of the largest electric power companies in China. Although in the beginning, NICE was only an R&D institute, it is now the R&D and commercialization arm of China Energy Group.

In February 2018, automotive manufacturers (SAIC Motors, Dongfeng Motors), industrial companies from other sectors (Baosteel), state companies (CRRC, State Grid Corporation of China), universities (Tsinghua University, Shanghai Jiaotong University, Zhejiang University), and research institutes (China Iron & Steel Research Institute Group) united to form the China National Alliance of Hydrogen and Fuel Cell, also called China Hydrogen Alliance, that combines the most significant players in hydrogen power on all the value chain in China. The alliance is also strongly supported by the central government.

The 13th Five-Year Plan promotes international collaboration with foreign companies. Many agreements have been signed since, such as Air Liquide, long established in China, with the startup STNE (Shanghai Sinotran New Energy), Sichuan Houpu Excellent Hydrogen Energy Technology, and Yankuang Group.

What about startups?

Chinese company information platforms list more than 7000 startups with hydrogen-related activities in China while Crunchbase only lists less than 500 in the world. The Chinese startup pool is vast, and its scientific and technological level gets higher every year. Collaboration potential is strong; and the evaluation and the qualification steps are crucial to identify the adequate partners on the technological level as much as on the business model, particularly in a country where seeking information is known as complicated.

Whether you are interested in information on the Chinese market or would like to identify players in China (startups, laboratories, research institutes), Erdyn can offer you a customized solution. Feel free to get in touch with us!







2019-05-21T17:18:34+00:00Tuesday 21 May 2019|Non classé|0 Comments

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