Strong domestic demand for electrolysers in China amid a ramp-up in hydrogen projects could tighten Chinese exports of the key technology, limiting opportunities for other markets to accelerate development of their hydrogen infrastructure, industry experts say.

Electrolyser shipments in China are conservatively expected to reach the equivalent of 272MW in capacity this year, up from 119MW last year, and could quadruple to 1.1GW next year, according to research firm BloombergNEF (BNEF). Chinese electrolysers are some of the cheapest in the world, but all those made in China are sold domestically at present.

“The big challenge is the fast development of China. The Chinese market is big… [and] the international market, no matter how big it is, it cannot catch up,” said Ma Jun, general manager of Cockerill Jingli Hydrogen, at the BNEF Summit Shanghai this week.

1.1GW – China’s forecast electrolyser deployment for 2022

The company—a 56/44 joint venture between Belgium’s John Cockerill Group and Suzhou Jingli Hydrogen in eastern China—gets less than 10pc of its orders from overseas but will start increasing sales to Europe in 2022, according to Ma.

“We have some European stakeholders, so starting from next year, we are going to have more orders from Europe… contracts from Europe with higher prices,” Ma says, adding that international orders could account for 20pc of the company’s order book by 2023. Electrolysers can be sold at a higher price abroad than at home because there is less competition overseas, Ma notes.

Tipping point

Thanks to cheap electrolysers and massive renewable electricity buildout, China is on course to be the first country where newbuild green hydrogen will be cost-competitive with newbuild blue hydrogen, achieving this milestone as early as 2023. Most other countries, including Australia, Chile, the US and the UK, will not see this tipping point until 2026-2028—unless they get access to cheap Chinese electrolysers, Ma says.

The dramatic expansion of electrolyser demand in China has been underpinned by the scale of some projects in the country. State-owned Sinopec announced on Tuesday that it had started building a RMB3bn ($470mn) solar-powered green hydrogen plant in Xinjiang that will be the world’s largest. The project will have an annual production capacity of 200,000 t/yr and is expected to start production in June 2023.

The announcements mean China is set to be the only country with a gigawatt-scale market for clean hydrogen by next year. “Next year, we will have a market of 2GW… about 1.8GW based on plans already announced,” says Ma.

“The big challenge is the fast development of China” Ma Jun, Cockerill Jingli Hydrogen

This message was reinforced by Wang Yingge, deputy general manager of Longi Hydrogen Energy Technology, who forecast installed electrolyser capacity to reach 1.5-2GW next year.

Longi, the world’s biggest solar company by market value and sales revenue, is among a number of Chinese solar players entering the hydrogen market. Trina Solar, GCL-Poly Energy, Linyang Energy and Sungrow Power Supply have all also announced plans to build electrolyser factories, which will help costs fall in the same way as seen in the solar PV market in recent years.

Most electrolysers in China are alkaline, which is the most commercialised electrolyser technology. Proton-exchange membrane (PEM)  electrolysers are more efficient but less widely used—accounting for just 10-20MW of China’s electrolyser capacity, or less than 10pc of the domestic market, according to Ding Xiaotao, deputy general manager of Shandong Saikesaisi Hydrogen Energy.

“Because all the [electrolyser] solutions for producing hydrogen are water-based, when our client base gets bigger, the whole market size gets bigger and that will further drive our PEM process as well,” said Ding, adding that he believed hydrogen transport refuelling would be a major customer of PEM technology.

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Author: Shi Weijun