Nearly a quarter of all new renewable power capacity deployed by China over the next five years will be dedicated to electrolytic hydrogen production, according to the IEA.

This compares with 5–10pc in Europe, Australia, Mena and Chile, and 5pc in the US. Globally, 2pc of renewables capacity growth, or about 50GW, will be aimed at green hydrogen production over 2022–2027, the IEA says in its Renewables 2022 report.

China is expected to deploy more than 18GW of hydrogen-related renewables capacity by 2027, prompted by the central government’s goals to decarbonise industry and transport as well as an industrial policy on electrolyser manufacturing, according to the IEA.

“While the central government announced renewable hydrogen production targets in its 14^th Five-Year Plan, the main catalysts for growth are provincial and local-level policies,” the report says.

“The main catalysts for China’s growth are provincial and local-level policies” IEA

Expansion in China is expected to be concentrated in provinces with good renewable resources and specific targets for renewable hydrogen production—such as Inner Mongolia, which aims to produce 500,000t/yr of renewable hydrogen, more than twice the national target.

Other key drivers include access to affordable financing and industrial clusters for new project development.

“Many new electrolyser projects are large demonstration plants located in industrial hubs that can offer economy-of-scale savings, lower unit manufacturing costs and access to local offtakers,” the IEA says.

Uncertainty

But renewable hydrogen demand in China remains a “forecast uncertainty”, the IEA says.

While many provinces include hydrogen in their industrial development strategies and identify production targets, not all specify that production must be from renewable energy sources.

“Furthermore, demand-side policies such as fuel-cell vehicle targets are emissions agnostic, and therefore do not guarantee new demand creation specifically for renewable hydrogen— especially if it costs more than hydrogen made from non-renewable resources,” it says.

Transport infrastructure limitations may also slow the pace of hydrogen industry development as provinces rich in renewable resources are located far from new demand centres, the report concludes.

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Author: Stuart Penson