In 2022, the policy side vigorously encouraged hydrogen energy deployment, but “structural disagreements” upstream and downstream.
Hence, the low-carbon chemical industry transformation corresponds with the increased demand for high-purity hydrogen and fuel hydrogen in transportation and energy. Hydrogen demand outweighs production.
Simple logic. China’s hydrogen industry is chemical-related. Hydrogen produces ammonia for fertilizers and refines petroleum (55%). The chemical industry’s desulfurization process (25%) and the two together use 80% of the nation’s hydrogen.
My country is the world’s largest hydrogen generator, producing 35-40 million tons per year, but only a small part can be separated and purified for “energy supply.” Hydrogen was never deemed “energy” in my country before 2020. China buys 500 million tons of crude oil for 1.6 trillion yuan. Energy security and carbon neutrality are needed by 3060. Converting most fossil fuels to non-carbon energy. Hydrogen’s 20-30% market share will be significant.
Like electric vehicles and photovoltaics, hydrogen energy’s future hinges on upstream and downstream cooperation: upstream production drives downstream demand, while downstream demand lowers upstream prices. In 2023, supply and demand may make the upstream hydrogen production connection more important to the hydrogen energy breakthrough, so investors should focus on relevant new technologies.
by-product Hydrogen is cheap and carbon-free, but chlor-alkali and coking limit its scalability. “Produced and consumed in the factory” limits production. It’s hard to grow, therefore hydrogen energy won’t use it. China is “coal-rich,” hence coal-to-hydrogen (gray hydrogen) is cheaper than green and blue hydrogen. Hydrogen from coal costs 8-10 yuan/kg, but green hydrogen from electrolysis of water by renewable energy costs 20 yuan/kg.
Industry used hydrogen most. Low-profit firms charge low prices. Gray hydrogen dominates. The Chinese Hydrogen Energy Association reports that 67% of my country’s annual hydrogen output is gray hydrogen from coal, and less than 3% is green and blue hydrogen. Hydrogen energy is contentious since it increases carbon emissions with consumption.
Photovoltaic power generation costs have plummeted 90% worldwide in the past decade. Perovskite, heterojunction, and distributed PV will reduce renewable energy costs. Yet, coal and oil cannot be ignored. Hence, like electric automobiles replacing fuel cars, hydrogen energy must use sustainable energy and electrolyzed water.
From this perspective, reducing green hydrogen production cost to 8~10 yuan/kg as soon as possible to equal gray hydrogen is the key to solving the current challenges (due to high coal price fluctuations, temporarily utilize 600 yuan/kg Ton average price calculation). Power costs 70% to 90% of electrolysis-produced hydrogen if disassembly continues. Lowering power prices will be necessary when electrolyzer equipment costs fall. Carbon prices and clean energy development may help.
My country’s wind and photovoltaics installed capacity will reach 102.5 million kilowatts in 2021, and its total electricity generation will be 978.5 billion kilowatt-hours, up 35% from 2020. Wind and photovoltaic power will supply 11.7% of society’s electricity for the first time. The National Energy Administration’s “Guiding Opinions on Energy Work in 2022” mandate 12.2% of society’s electricity from wind and photovoltaic power by 2022.
2021 will see 20.61 billion kwh of abandoned wind and 6.78 billion of solar electricity. Power will be wasted, but electrolyzed water can store at least 550,000 tons of green hydrogen per year by converting hydrogen into hydrogen.
Owing to this, China has about 100 water electrolysis hydrogen production projects in petroleum refining, chemical synthesis, steel smelting, and transportation under construction or planning. Longji, Envision, Huadian, State Power Investment Corporation, and Sinopec participated.
In August 2020, the China Association for Science and Technology recruited over 20,000 domestic experts to vote on the “10 scientific concerns that have a leading function in scientific progress” and “10 issues that are crucial to technology and industry” from 490 subjects. Role-engineering”.
The top ten engineering challenges are “large-scale,” “low cost,” and “high stability” hydrogen production from electrolyzed water. Three metrics at once are difficult. Water electrolysis generates hydrogen four ways. Only the first two can be commercialized; the last two are in labs.
NASA created PEM in 1960s. Hydrogen-oxygen fuelled spacecraft. Electrolyzing water generates hydrogen. Small size, high current density, instant start and stop, and theoretically suitable for wind and solar energy storage, but the catalyst requires platinum and iridium.
Rare, small iridium ore. Globally, only South Africa can provide. If it uses iridium as a catalyst widely, China will be “stuck neck.” The 22-year lithium price increase shows that once rare metals are used in mass manufacturing equipment, costs would rise rapidly, making “large scale” and “low cost” requirements difficult to meet.
Manganese, cobalt, and cluster structures are being used to circumvent iridium in experimental studies. Innovations. Large-scale hydrogen production is still an engineering problem since science stresses “possibility” while engineering emphasizes “practicability”.
ALK may be more engineering-friendly. Long-standing ALK. 200 years ago, chlor-alkali made it. Saltwater electrolysis produced chlorine gas and caustic soda. Hydrogen and NaOH were cathode products. World War I and II followed New York’s first electrolyzed water chlor-alkali facility in 1893. Wartime demand for chlorine gas for bleaching, sterilizing, and chemical weapons boosted the chlor-alkali industry.
All water electrolysis uses the “mercury method” with a flowing mercury sheet as the cathode. Mercury pollutes. Inefficient 1960s Dutch “diaphragm method” Japan developed the “ion diaphragm method” in the 1970s. Mercury’s “ion diaphragm method” has high production, low energy consumption, and no pollution. It improves diaphragm material and industry technology.
Under dynamic conditions, the pressure is inconsistent, making it easy to lose balance and cause the hydrogen and oxygen in the electrolytic cell to cross each other, especially the hydrogen molecules with small molecular weight and fast movement speed, which can penetrate the diaphragm and run to the anode side. Electrolytic hydrogen synthesis is risky because hydrogen and oxygen molecules are not equal.
Some companies cannot find approved materials since diaphragm production is difficult and must meet these standards. Only Agfa-Gevaert Group makes this diaphragm. This European material technology company controls 95% of the overseas alkaline separator market. China cannot supply Agfa’s composite diaphragm, thus domestic manufacturers must use PPS. Composite diaphragms outperform PPS. Composite diaphragms are being tested by PPS giant Toray and domestic hydrogen manufacturers. Replaced diaphragm. Hydrogen from water electrolysis has long been specialized. Agfa is huge. Composite membranes contribute 400 million yuan (4% of 1.7 billion euros) annually. Strong government to develop industry.
China is a key energy transformation hub, and demand for all types of clean energy equipment is significant. For example, many photovoltaic/wind power sites will need hydrogen synthesis machines. Wind energy will accelerate hydrogen production.
China will create 100,000 tons of renewable energy hydrogen by 2025, according to the national “Hydrogen Energy Industry Development Medium and Long-term Plan (2021~2035),” however the present industry development speed is expected to exceed this amount. Hydrogen demand is rising rapidly, thus supply is not enough.
In 2022, China will ship 800MW of electrolyzers, mostly alkaline hydrogen. A 1,000-square-meter electrolyzer consumes 1,200 square meters of diaphragm, therefore 5MW = 1 set of 1,000 standard square Equals Based on 800 tons of annual production, 160 million composite diaphragms are sold domestically.
Shiyin predicts 100GW electrolyzer capacity in 2030 for China. In 10 years, the domestic composite diaphragm market will grow 100-fold to over 20 billion. Hence, “domestic replacement of composite diaphragm” gives Chinese tech companies great potential. First, its demand is guaranteed if it can be made and sold. Selling long-term is difficult. Fast-track the high-tech bonus.
Several Chinese entrepreneurial teams pursue this. Due of stringent performance requirements, few domestic enterprises can create small batches. “Kewoke Technologies” was angel-funded. “Ambiguity in the middle and determination at both ends” describes the hydrogen energy industrial chain from an investment standpoint.
Hydrogen doping in pipelines, organic solvents, or on-site hydrogen generation in the midstream storage and transit connection may become routine. Industry, fuel cells, and energy storage agree. Upstream hydrogen production is dominated by halving green hydrogen costs.
As long as green hydrogen is cheaper than blue hydrogen and somewhat more expensive than gray hydrogen, all downstream uses can be immediately done and the national energy strategy can transition peacefully.
Hydrogen energy will debut in 2022. It’s upcoming. Before then, even if the upstream made good products, they couldn’t sell them, and talents and money weren’t interested because there was no downstream market. Several innovations were only available in academics due to the “frozen” industry cycle.
China’s energy cars may make domestic lidar $700 by 2022. Lidar, a non-semiconductor optical machine, defies Moore’s Law. Chinese enterprises only use upstream and downstream efforts, decreasing production costs by 100.
Hydrogen energy sector innovations in essential materials and gadgets will certainly follow a similar logic, so we are excited. These fields suit Chinese IT startups. The company’s moat is our huge market and cost advantages.
So, China’s carbon-neutral development trend is hydrogen energy. Regardless of psychological acceptance. Change is unavoidable for early investors. The world only changes.