Keywords

Hydrogen production from renewable energy is one of the most promising clean energy technologies in the twenty-first century. In February 2022, the Beijing Winter Olympics set a precedent for large-scale use of hydrogen in international Olympic events, not only by using hydrogen as all torch fuel for the first time, but also by putting into operation more than 1,000 hydrogen fuel cell vehicles with more than 30 hydrogen refueling stations. Compared with pure electric vehicles, hydrogen fuel cell vehicles are highly favored by consumers because of their cold resistance, high energy density, long driving range and shorter refueling time. On March 23, 2022, the National Development and Reform Commission and the National Energy Administration of China jointly issued the Medium- and Long-term Plan for the Development of Hydrogen Energy Industry (2021–2035) (hereinafter referred to as “the Plan”), which sets out three milestones for the development of China's hydrogen energy industry. (1) By 2025, a more complete institutional policy environment for the development of the hydrogen energy industry will be formed, the industrial innovation capability will be significantly improved, the core technology and manufacturing process will be basically mastered, and a more complete supply chain and industrial system will be initially established. The demonstration application of hydrogen energy will achieve obvious results, along with the greater progress of clean energy hydrogen production and hydrogen energy storage and transportation technology, so that the market competitiveness of the industry will be greatly improved, and a hydrogen energy supply system mainly based on industrial by-product hydrogen and hydrogen from renewable energy will be initially built. The number of fuel cell vehicles will reach 50,000, and a batch of hydrogen refueling stations will be deployed and built. The amount of hydrogen production from renewable energy will reach 100,000 to 200,000 tons/year, becoming an important part of the new hydrogen energy consumption and achieving CO2 emission reduction of 1 million to 2 million tons/year. (2) By 2030, a more complete hydrogen energy industry technology innovation system and clean energy hydrogen production and supply system will be formed, and the reasonable and orderly industrial layout and the wide application of hydrogen from renewable energy will strongly support the achievement of the goal of peak carbon emissions. (3) By 2035, the hydrogen energy industry system will be formed, developing a diversified hydrogen energy application ecology covering transportation, energy storage and industry. The proportion of renewable energy-produced hydrogen production in end-use energy consumption will be significantly increased, which will play an important role in supporting the development of green energy transformation.

Hydrogen energy can be divided into gray hydrogen, blue hydrogen and green hydrogen according to different production sources.Footnote 1 Compared with grey hydrogen and blue hydrogen, green hydrogen hardly produces carbon emissions in the production process. In the modern energy system featuring multi-energy complementarity and the new power system coordinating power source, grid, load and storage, green hydrogenplays a very prominent role and value. Green hydrogen is not only an important secondary energy source to help achieve deep decarbonization in the difficult-to-reduce-emissions field, but also an important transformation vehicle for the efficient use of renewable energy, promoting the optimal allocation of green low-carbon energy across regions and seasons, and enhancing the diversity, flexibility and stability of the energy system.

The Practical Significance of China's Active Development of the Renewable Energy-to-Hydrogen Industry

The Plan clearly points out the strategic positioning of China's hydrogen energy industry development: “hydrogen energy is an important part of the future national energy system,” “hydrogen energy is an important carrier for the green and low-carbon transformation of energy-using terminals,” and “the hydrogen energy industry is a strategic emerging industry and the key development direction of future industry.” In this context, the strategic significance of accelerating the development of renewable energy hydrogen industry can be interpreted from the following three perspectives.

Firstly, to promote the development of the renewable energy-to-hydrogen industry and explore the wide application of green hydrogen in polymorphic scenarios is a necessary way for China to realize the vision of peak carbon emissions and carbon neutrality. Figure 14.1 depicts the production, conversion, transportation and end-use of green hydrogen in the energy system. It shows that green hydrogen, as a zero-carbon secondary energy source, is an important carrier for renewable energy consumption and an ideal alternative fuel for smelting, chemical industry, long-distance transportation, heavy trucks, aviation and other fields where decarbonization is difficult to be achieved through electrification. Promoting the layout of the whole industry chain of green hydrogen covering production, storage, transportation, refueling and utilization links in order to realize its batch and large-scale production can not only give full play to the role of hydrogen as a carrier for the large-scale and efficient utilization of renewable energy and increase the supply of low-carbon energy, but also help to promote the transformation of energy consumption at energy-consuming terminals such as industry, transportation, heating and power generation, thus reducing greenhouse gas emissions. This is of great significance to the overall improvement of the cleanliness of the energy system and the formation of a modern energy supply system with multi-energy complementarity.

Fig. 14.1
A block flow diagram. It goes through production with electrolysis and sustainability to conversion with synthetic fuels, transportation involving shipping, trucking, pipeline, and storage, and finally end use. The end use is in industry, transportation, heat supply, and power generation.

Production, conversion, transportation and end-use of green hydrogen

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Secondly, optimizing the industry layout of renewable energy-to-hydrogen technology and expanding the scale of green hydrogen production and storage is an objective need for China to enhance the security level of energy system and power system. At present, China's renewable energy consumption is mainly in the form of electricity, and due to the intermittent and volatile characteristics of wind power, PV and other new energy sources, large-scale and high-ratio grid connection brings a greater challenge to the safe and stable operation of the power system. On the occasion of the construction of nine clean energy bases and five offshore wind power bases,Footnote 2 an appropriate amount of renewable energy-to-hydrogen projects can not only further enhance the level of renewable energy consumption, but also reduce the impact of renewable energy volatility on the power system, thus optimal allocation of renewable energy across regions and seasons. This is of great significance for preventing systemic risks in energy supply and promoting safe and reliable alternatives to new energy sources.Footnote 3

Finally, to accelerate the upgrading and growth of the renewable energy-to-hydrogen industry and to realize the virtuous cycle and innovative development of the industry chain is in line with the development trend of the new round of global scientific and technological revolution and energy industry change. Hydrogen production from renewable energy is one of the key development directions of strategic emerging industries and future industries. Strengthening the construction of innovation system for the hydrogen energy industry, accelerating the breakthrough of hydrogen energy core technology and key material bottlenecks, and accelerating the cultivation of new products, new industries and new modes (such as ammonia, methanol and synthetic liquid fuels) will not only help China's green and low-carbon industry achieve high-quality development, but also help China maintain its competitive advantage of leading technology in the future international energy market.

Development Status of Hydrogen Production from Renewable Energy in China and Abroad

The history of human discovering hydrogen and applying hydrogen can be traced back to several centuries ago. In the middle of the eighteenth century, mankind began to study hydrogen in depth and named this combustible gas “hydrogen.“Footnote 4 In 1970, the term “hydrogen economy” was creatively coined by electrochemist John O'M. Bockris during a discussion at the General Motors Technical Center, followed by the publication of the book Energy: The Solar-hydrogen Alternative. After the first oil crisis in 1973, hydrogen energy was seen as an ideal alternative fuel to oil, and more attention was paid to hydrogen research and the application of hydrogen fuel cell technology. In 1974, the International Association for Hydrogen Energy (IAHE) was founded. Subsequently, hydrogen fuel cell technology gradually became one of the power sources for automobiles, airships, airplanes and rockets. Along with the rapid development of hydrogen fuel cell technology, the hydrogen energy industry has gradually grown.

Development Status of Hydrogen Production from Renewable Energy Around the World

In the current carbon neutral action sweeping the world, hydrogen energy as a key part of the energy system to achieve in-depth decarbonization has attracted much attention from various countries, and the hydrogen energy industry has entered a new stage of development. Not only China, but also the US, EU, Japan, Korea, India, Canada, Australia, Chile, Norway, Germany, France, Spain, the Netherlands, Portugal and other countries or regions have released their national hydrogen energy strategies (China Z-Park Hydrogen Fuel Cell Industry Alliance 2021), elevating the development of hydrogen energy industry to a national strategic level. Depending on the situation of each country or region, the models of developing hydrogen energy industry can be broadly divided into the following four categories. (1) Carbon neutrality-oriented (represented by EU countries and the UK): By supporting the development of hydrogen production from renewable energy on a large scale, the countries help industry and transportation sectors to reduce their dependence on fossil energy, thus helping to achieve the goal of carbon neutrality. (2) Technology reserve-oriented (represented by the United States and Canada): These countries are rich in oil and gas resources, and shale gas, which has economic and low-carbon advantages, has more competition with hydrogen energy in terms of application, resulting in relatively slow expansion of hydrogen energy market. (3) Export-oriented (represented by Russia and Australia): Relying on the resource advantages of fossil energy in their countries, they produce grey hydrogen and blue hydrogen on a large scale and use them as new growth points for export trade. (4) Import-oriented (represented by Japan and South Korea): These countries have scarce energy resources and are highly dependent on imports for energy supply. By encouraging hydrogen consumption and expanding hydrogen imports, they can optimize their energy consumption structure and energy import channels, improve energy security, and resolve the risk of energy supply disruptions and price fluctuations.

According to the Hydrogen Projects Database of the International Energy Agency (IEA) (IEA 2021), as of October 2021, there are 202 hydrogen projects in operation worldwide, including six hydro-to-hydrogen projects, 19 onshore wind-to-hydrogen projects, and 16 PV-to-hydrogen projectsFootnote 5; in addition, there are 67 hydrogen projects under construction, including seven onshore wind-to-hydrogen projects, three offshore wind-to-hydrogen projects, and eight PV-to-hydrogen projects. In China, nine hydrogen energy projects have been put into operation, including two onshore wind-to-hydrogen projects (Hebei Zhangjiakou Hypower Wind-to-Hydrogen Project Phase I; Hebei Guyuan Wind-to-Hydrogen Project Phase I) and two PV-to-hydrogen projects (PV-to-Hydrogen Project for the Fine Chemical Industry Park in Lanzhou New District; Liaoning Dalian Tongji-Xinyuan Hydrogen Refueling Station); in addition, there are six hydrogen energy projects under construction, including Hebei Guyuan Wind-to-Hydrogen Project Phase II, and the Chongli PV-Wind-to-Hydrogen Demonstration Project.

Renewable energy-to-hydrogen is one of the most active areas of investment in the new energy industry. Thanks to the dramatic cost reductions in onshore wind power and solar PV power over the last decade, the cost of renewable energy has fallen rapidly and its economics have become more apparent. Over the past two years, global investment in renewable energy-to-hydrogen has continued to climb. In Europe alone, there are currently hundreds of projects under construction (Qian et al. 2022). In July 2021, PosHYdon, the world's first green hydrogen project on an offshore oil and gas platform, received €3.6 million in funding from the Dutch government (Energy Development and Policy 2021). In addition to government departments, some international energy giants have also invested heavily in green hydrogen as a new business, such as BP (CWEA 2022a), Total Energy, Saudi Aramco, Chevron, Ørsted (CWEA 2022b), Siemens Energy (CWEA 2022c), etc.

Development Status of Hydrogen Production from Renewable Energy in China

China is the largest hydrogen producer in the world, with an annual production of about 33 million tons of hydrogen, and has the basic conditions for large-scale popularization of the main technologies and production processes, such as hydrogen energy preparation, storage and transportation, hydrogen refueling, fuel cell and system integration. There are more than 300 industrial enterprises above the scale in the whole industry chain, which are concentrated in Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Beijing-Tianjin-Hebei Region, etc. However, it is important to note that the production of hydrogen in China is dominated by grey hydrogen, with green hydrogen production accounting for about 1.5% of the total hydrogen production.Footnote 6

China's abundant and widely distributed renewable energy resources have laid a solid foundation for the development of renewable energy-to-hydrogen industry. After years of unremitting efforts, the installed capacity of renewable energy in China has been the first in the world for many years, and the cost of onshore wind power and PV power generation has been equal to the cost of coal-fired power generation, and even lower than it in some areas. The abandonment of hydropower, wind power and PV power generation technologies has been effectively mitigated throughout the country. Due to the distribution of renewable energy and its electricity price, the existing renewable energy-to-hydrogen projects in operation in China are mainly concentrated in the western regions such as Xinjiang, Inner Mongolia and Ningxia, accounting for 80.68% of all green hydrogen production, while such projects in coastal areas are moving more slowly.

In view of the important role of hydrogen energy for the green transformation of energy system, hydrogen energy was mentioned in China's Five-Year PlanFootnote 7 for the first time. Since the 14th Five-Year Plan period, a number of policy documents related to the development of hydrogen energy industry have been issued at the national level, including the Plan for Implementation of Cleaner Production in China During the 14th Five-Year Plan Period, the Plan for Development of Integrated Transport Services During the 14th Five-Year Plan Period, the Plan for Development of Green Transportation During the 14th Five-Year Plan Period, the Plan for Modern Energy System During the 14th Five-Year Plan Period, the Plan for Development of New Energy Storage During the 14th Five-Year Plan Period, and the Plan for Scientific and Technological Innovation in the Energy Sector During the 14th Five-Year Plan Period (Guanyun et al. 2022).

Under the above policies, the planning and development of renewable energy industry in each region began to speed up. In September 2021, the joint debugging test of the megawatt-level demonstration station for the comprehensive utilization of hydrogen energy in Lu’an, Anhui province was successfully completed. The demonstration project adopts PEM water electrolysis for hydrogen production, designed to produce 723,000 Nm3 of hydrogen per year and generate 1,278,000 kW-h of hydrogen for peak shaving and valley filling in the power system. On November 30, 2021, the construction of Sinopec Green Hydrogen Demonstration Project in Kuqa, Xinjiang, the first 10,000-ton PV green hydrogen demonstration project in China, was officially launched (Sinopec 2022). The project will build a 300,000-kilowatt PV power plant (with an average annual power generation capacity of 618 million kW-h), an electrolytic water-to-hydrogen plant with an annual capacity of 20,000 tons, a hydrogen storage spherical tank with a storage capacity of 210,000 Nm3, a hydrogen transmission pipeline with a capacity of 28,000 Nm3/hour, and supporting transmission and substation facilities. After the project is put into operation, the annual production capacity of green hydrogen is expected to reach 20,000 tons, making it the largest green hydrogen production project in the world. In January 2022, the first hydrogen energy storage project in Shanxi Province was officially signed. The first phase of the project will build 6 × 25 MW distributed PV power stations and 100 MW wind power stations, supported by 150 MW electrode boiler heating systems and 10 MW high-pressure hydrogen storage systems for electrolytic water-to-hydrogen; the second phase is expected to build 1000 MW PV power stations, supported by 50 MW liquid hydrogen storage systems for electrolytic water-to-hydrogen. After the completion of the two phases, 10,000 kg of high purity hydrogen will be produced every day, which meet the demand of twenty 500 kg hydrogen refueling stations at the same time. On May 17, 2022, Huadian Darhan Muminggan 200,000 kW new energy-to-hydrogen demonstration project, a large-scale integrated project for PV-wind-hydrogen storage in Inner Mongolia, was won by China Energy Engineering Group Guangdong Electric Power Design Institute Co., Ltd. (China Energy Engineering Group 2022). The project is expected to build 120,000 kW of wind power generating capacity, 80,000 kW of PV power generating capacity, 20,000 kW-h of electrochemical energy storage capacity, and 12,000 Nm3/hour electrolytic water-to-hydrogen, using 100% green electricity methods to produce hydrogen. The project is expected to produce 0.78 million tons of green hydrogen per year. Up to now, a large number of green hydrogen projects have been planned in Inner Mongolia, Gansu, Jilin and Shandong (IN-EN.com 2022). The second half of 2022 is expected to see a rapid increase in construction or bidding new renewable energy-to-hydrogen projects nationwide.

The Development and Trend of the Renewable Energy-to-Hydrogen Technology

The Development and Trend of the Electrolytic Water-to-Hydrogen Technology

At present, the main technologies of hydrogen production from electrolytic water are alkaline water electrolysis (ALK or AWE), proton exchange membrane (PEM) electrolysis, anion exchange membrane (AEM) electrolysis and solid oxide electrolysis (SOE) (see Table 14.1).

Table 14.1 Four characteristics of water electrolysis technologies (Hongmei et al. 2021)
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Alkaline water electrolysis technology has achieved industrial-scale hydrogen production, and is the most mature technology with relatively low cost to produce hydrogen, suitable for electrolytic hydrogen production on the grid.

PEM electrolysis technology is advancing faster in Europe and the United States, which produces high-purity hydrogen, with higher energy efficiency than AWE technology, higher flexibility in plant operation, faster response to power changes, and good compatibility with wind power and PVs, which are more volatile and stochastic. However, due to the use of precious metal catalysts such as platinum (Pt), iridium (Ir) and ruthenium (Ru), the cost is high.

AEM technology combines the advantages of traditional AWE technology and PEM electrolysis technology, but it is still in the stage of development and improvement at home and abroad, and the research and development mainly focuses on alkaline solid polymer AEM and highly active non-precious metal catalysts.

SOE technology has a lower power consumption than AWE technology and PEM electrolysis technology, but it has not been widely commercialized yet, and only validation demonstrations have been completed on a laboratory scale in China. Because of the high temperature environment required, this technology is more suitable for systems such as concentrated solar power generation that generate steam under high pressure and temperature.

The Development and Trend of Hydrogen Energy Storage and Transportation Technology

In terms of hydrogen storage, there are four main technologies that are more mature and have better prospectsFootnote 8: high-pressure gaseous hydrogen storage, low-temperature liquid hydrogen storage, solid alloy hydrogen storage and organic liquid hydrogen storage (see Table 14.2). Among them, high-pressure gaseous hydrogen storage is the most mature way, but there are still technical problems to be addressed such as improvement of storage structure, hermeticity and fast loading and unloading.Footnote 9

Table 14.2 Advantages and disadvantages of the four hydrogen storage technologies (Cuiwei et al. 2022)
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In terms of hydrogen transportation, the main technical solutions suitable for large-scale hydrogen transportation are tube-bundle transportation, pipeline transportation and transportation by liquid hydrogen tanker. Compared with the tube-bundle transportation and transportation by liquid hydrogen tanker, the technical requirements of pipeline transportation are moderate, with relatively high technical maturity and low sensitivity to the market price, so that it will not fluctuate greatly due to the market changes. Therefore, only by accelerating the planning and construction of pipeline network for hydrogen transportation can we fundamentally solve the problem of long-distance transportation of hydrogen energy. According to the phase state of transport medium, hydrogen energy pipeline transportation can be divided into gaseous hydrogen transportation and liquid hydrogen transportation.

There are two types of gaseous hydrogen pipeline transportation: hydrogen-doped transportation and pure hydrogen transportation. Hydrogen-doped transportation refers to the method to incorporate hydrogen into natural gas in a certain proportion (15%-20% hydrogen), and use existing natural gas pipelines or pipe networks for transportation, with the possibility of direct combustion of this mixture at the destination or isolation of pure hydrogen using membrane technology. However, hydrogen-doped transportation has certain requirements for the pipeline network material: plastic pipes cannot be used for hydrogen transmission, while mild steel is more suitable for pure hydrogen transportation. There are three pure hydrogen transportation pipelines designed and constructed in China, which are in Inner Mongolia, Henan and Shaanxi. When converted into electricity, the cost of pure hydrogen transportation pipeline is about 0.3 yuan/kW-h, lower than the cost of extra-high voltage electricity transmission, 0.7 yuan/kW-h (CCTV 2022).

There are also two ways to transport liquid hydrogen by pipeline, one is to add hydrogen to organic liquid through chemical reaction to form liquid hydrogen oil and then transport it by pipeline, and the other is to liquefy hydrogen and then transport it by pipeline. The Opinions on Improving Institutional Mechanisms and Policy Measures for Green and Low-carbon Energy Transition issued by the National Development and Reform Commission and the National Energy Administration in 2022 states that, on the premise of meeting the safety and quality standards, we should explore the efficient ways of hydrogen transportation such as hydrogen-doped transportation via gas pipeline, pure hydrogen pipeline transportation and liquid hydrogen transportation.

Economics of the Renewable Energy-to-Hydrogen Technology

The cost of hydrogen production from renewable energy mainly includes two parts: production cost and storage cost.

Production Cost

The production cost of green hydrogen is determined by various factors, including energy cost (renewable energy electricity prices), equipment cost such as electrolysis equipment, land cost, construction cost, labor cost, maintenance cost, water cost, etc. Among them, energy cost accounts for the largest share, followed by equipment cost. Column 1 compares the cost of green hydrogen production under two technical pathways—AWE technology and PEM electrolysis technology. It can be seen that the cost of green hydrogen production is mainly influenced by the cost of electricity, so reducing the electricity prices and electrolysis power consumption are key factors to improve the economics of green hydrogen production.

Technological innovations regarding reducing electrolysis power consumption, improving electrolyzer efficiency, and increasing equipment durability can effectively reduce the amount of electricity required to produce a unit of hydrogen. The system for producing hydrogen via water electrolysis consists of an electrolyzer and an auxiliary system. The electrolyzer is the main place where the electrolysis reaction takes place, while the auxiliary system includes modules for power conversion, water circulation, gas separation, gas purification, etc. The cost and performance of the equipment will vary depending on the choice of electrolyzer. The alkaline water electrolyzer has the lowest cost; the PEM electrolyzer has a smaller footprint and higher current density and output pressure; and the solid oxide electrolyzer has the highest electrical consumption rate. Typically, the cost of alkaline water electrolyzer is 40% to 50% of the total equipment cost. In the future, the gap in cost and performance between different electrolytic technologies will narrow with technological innovation and large-scale adoption (Table 14.3). The learning rate for electrolyzers is expected to be similar to that of PV, which can reach 16% to 21%; based on this level of learning rate and taking into account the actions needed to achieve the climate target of 1.5 °C, electrolyzer cost is expected to be reduced by more than 40% by 2030 (International Renewable Energy Agency (IRENA) 2020a).

Table 14.3 Economics of the four water electrolysis technologies in 2020 and 2050
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In addition, standardization and scale application are important factors to improve the economics of green hydrogen production. According to IRENA (International Renewable Energy Agency (IRENA) 2020b), green hydrogen is expected to be as economical as blue hydrogen in many countries and regions by 2030 and to reduce the cost of production by up to 85% by 2050 (see Fig. 14.2), while China will be a lowest-cost production place for green hydrogen in the world (see Fig. 14.3). In China, solar energy is considered more suitable as a green power source for hydrogen production. The cost of hydrogen production from PV power in China is expected to decrease from $1.24/kg in 2020 to $0.7/kg in 2050; and the cost of hydrogen production from onshore wind power is expected to decrease from $1.24/kg in 2020 to $0.85/kg in 2050.

Fig. 14.2
A water fall graph of hydrogen production cost versus factors. The bar for current is the highest and reaches 2.9 dollars per kilogram. Future lies in between 0 to 1 dollars per kilogram.

Breakdown of factors that reduce green hydrogen cost (Tianyin et al. 2022)Footnote

Figure 14.2 depicts the “optimal level” and “average level” for “Current.” “Average level” indicates an investment of $770/kW, an efficiency of 65% (LHV), an electricity price of $53/MWh, 3200 full-load hours (onshore wind power), and a weighted average cost of capital (WACC) of 10% (relatively high risk). “Optimal level” indicates an investment of $130/kW, efficiency of 76% (LHV), an electricity price of $20/MWh, 4200 full-load hours (onshore wind power), and WACC of 6% (roughly comparable to current renewable energy power generation costs).

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Fig. 14.3
A horizontal stacked graph of region versus projected cost of green hydrogen in 2050. The data is for optimistic scenario and pessimistic scenario. Republic of Korea has the highest bar that approximately reaches 4 dollars per kilograms. It has a smaller proportion of pessimistic scenario.

Projected cost of green hydrogen in 2050 ($/kg)

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Column 1

Comparison of Green Hydrogen Production Costs for Two Technical Pathways.

Assume that a station for hydrogen production via water electrolysis covers an area of 9 mu (6,030 m2) and has a rated hydrogen production capacity of 1000 Nm3/h.

  1. 1.

    Fixed Inputs

    Land cost: The general land acquisition cost is 60,000 yuan/mu, and the land cost is about 540,000 yuan. The cost of construction is calculated at 10 million yuan.

    Equipment cost:

    1. (1)

      When an alkaline water electrolyzer is selected, the total investment of equipment purchase and installation is estimated to be 19 million yuan, of which the cost of alkaline water electrolysis system accounts for 53% and hydrogen compressor accounts for 32% of the total equipment investment. The equipment depreciation is based on 25 years (at the current benchmark interest rate of 4.35%), and the annual equipment depreciation cost is 1,261,600 yuan.

    2. (2)

      When a PEM electrolyzer is selected, the total equipment purchase and installation cost is 79 million yuan, of which the cost of PEM electrolysis system accounts for 89%. The annual equipment depreciation cost is 5,245,700 yuan.

  2. 2.

    Operation and Maintenance Inputs

    Electricity cost: The initial power consumption of the electrolytic system is assumed to be 5 kW-h/Nm3, which linearly decays to 80% of the initial performance during the full life cycle of 25 years of service, and the combined power consumption increases to 6 kW-h/Nm3 when it reaches its expected life. The electricity price shall be 0.5 yuan/kW-h.Footnote 11

    Water cost: Theoretical water consumption for green hydrogen production is 0.8 L/Nm3, and the actual water consumption is 1 L/Nm3 assuming the production efficiency is 80%. The price of industrial water is 4.1 yuan/m3.

    Labor cost: 12 people (3 people per shift in 3 shifts), with annual salary of 80,000 yuan per person. For full life cycle accounting, labor costs are assumed to increase based on the prime rate.

    Maintenance costs. Calculated at 3%, excluding heavy repairs. VAT rate is 9%.

  3. 3.

    Economic Comparison

    Assuming that the hydrogen plant operates at 100% load, the annual green hydrogen output is 8803805 Nm3.

    1. (1)

      When alkaline water electrolyzer is selected, the LCOE is 3.15 yuan/Nm3. Among them, the cost of electricity accounts for 89.1%, labor cost accounts for 6.1%, and equipment input accounts for 4.6%.

    2. (2)

      When PEM electrolyzer is selected, the LCOE is 3.60 yuan/Nm3. Among them, the cost of electricity accounts for 77.9%, labor cost accounts for 5.3%, and equipment input accounts for 16.5%.

Storage and Transportation Cost

At present, the cost of green hydrogen storage and transportation is still very high. The following are four types of scenarios with specific cases [21]. (1) Hydrogen is produced in wind power/PV farms and transported to the hydrogen refueling station by a 20 MPa high-pressure gas-hydrogen long tube trailer.Footnote 12 Given the electricity price of 0.2 yuan/kW-h, the transportation cost and green hydrogen cost are 5.2 yuan/kg and 40.1 yuan/kg for a distance of 100 km (Table 14.4); 7.8 yuan/kg and 42.6 yuan/kg for a distance of 200 km; 10.7 yuan/kg and 45.6 yuan/kg for a distance of 300 km; and 49.3 yuan/kg for a distance of 400 km. (2) The hydrogen is produced on site at the hydrogen refueling station, and the cost of storage and transportation is not included. The cost of green hydrogen under different electricity prices is shown in Table 14.4. (3) Hydrogen is produced at the wind power/PV farm and injected into the natural gas pipeline network. The cost of green hydrogen under different agreed electricity prices is shown in Table 14.4. (4) The equipment that uses PEM electrolyzer for hydrogen production and hydrogen power generation in one unit is involved in peak shaving and valley filling, and can arbitrage from the peak-valley electricity price difference. It is found that the cost of electricity per kW-h of hydrogen production and storage for repowering is higher than the peak electricity price in most of the country, except for Beijing, and thus the possibility of arbitrage from hydrogen production and storage is available only in Beijing. The above scenario analysis shows that pipeline transportation of green hydrogen is more economical, while the long tube trailer is only economical in short-distance transportation (within 100 km).

Table 14.4 Costs of green hydrogen under different electricity prices
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The Main Challenges for the Development of Renewable Energy-to-Hydrogen Industry in China

The Plan puts forward the phased goals and tasks for the development of China's renewable energy-to-hydrogen industry. The near-term goal is to actively carry out demonstration applications and improve the technical level of renewable energy-to-hydrogen production and hydrogen energy storage and transportation, so as to promote the continuous reduction of production and storage costs. The medium-term goal is to promote the scale development of renewable energy-to-hydrogen industry nationwide and form a reasonable and orderly industrial layout. The long-term goal is to promote the diversified application of green hydrogen in order to increase the proportion of green hydrogen in the terminal energy consumption. It is a long way to go and a lot of challenges to address to really achieve the above goals. Some challenges are common to the whole hydrogen energy industry, such as reducing cost and increasing efficiency, accelerating the construction of hydrogen infrastructure, and expanding the applications of hydrogen energy. Some other challenges are unique to the renewable energy-to-hydrogen industry, including industrial innovation capability, equipment technology level, industrial chain and supply chain construction, supporting industrial policies, construction of institutional guarantee system, etc. The following is an analysis of the main challenges faced by green hydrogen at the present stage, i.e. demonstration application stage, from three aspects—industrial layout, technological innovation, price and subsidy.

Firstly, it is urgent to make systematic and global planning for the layout of renewable energy-to-hydrogen industry and hydrogen transmission pipeline networks. Hydrogen energy has not received enough attention from the state and the energy industry until 2020, when the national energy law included hydrogen energy in the energy category for the first time and industrial plans and policies were introduced one after another, thus the development of hydrogen energy industry entered the fast lane. However, the existing plans and policies do not distinguish green hydrogen from gray hydrogen and blue hydrogen, and there is still no special plan and industrial policy for the development of renewable energy-to-hydrogen industry in China, so the implementation and operation of renewable energy hydrogen projects are largely restricted. For example, green hydrogen belongs to the same hazardous chemical as grey hydrogen and blue hydrogen in China, which must be produced in the chemical park according to the requirements, resulting in the promotion of hydrogen production and hydrogen storage is seriously restricted in the renewable energy project sites. Secondly, the long-distance transmission of green hydrogen is greatly restricted due to the relatively weak infrastructure such as hydrogen transmission pipeline network in China and the lack of comprehensive and detailed design and planning. For example, China's Xinjiang, Gansu, Inner Mongolia and Northeast provinces are rich in renewable energy resources with low renewable energy electricity prices, and these areas have high potential and low cost for green hydrogen production, but there is a spatial dislocation between these areas and the central and eastern regions where hydrogen energy consumption is concentrated. Therefore, these regions especially need a systematic and scientific layout of hydrogen pipeline network, taking into account local consumption and cross-regional transmission.

Secondly, the development of renewable energy-to-hydrogen industry needs to accelerate the construction of industrial technology innovation system and promote the rapid reduction of green hydrogen cost by technology innovation. The green hydrogen industry is technology-intensive, and technology innovation is an important driving force to reduce the cost of green hydrogen. In the water electrolyzer, electrodes, diaphragms, bipolar plates, etc. occupy a high cost, so the technological transformation of the core components of key materials should be strengthened, and the formation of batch preparation technology with completely independent intellectual property rights and the establishment of product production lines should be accelerated to fully realize the localization and batch production of the core components. Secondly, hydrogen energy storage and transportation has great potential for cost reduction, so local governments, enterprises and scientific research institutions should pay attention to the innovation of hydrogen energy storage and transportation technology. In addition, the construction of demonstration projects and the leading role of demonstration projects are important ways to establish industrial technology innovation system. Once wind power and PV concession projects played an active role in promoting the localization of wind power and PV equipment, exploring the price rebate mechanism, promoting the standardization of the industry, and cultivating a professional talent team. The relevant policies and measures are worthy of reference and borrowing by the green hydrogen industry in the demonstration application stage.

Thirdly, there is a need to establish a sound scientific and standardized pricing and subsidizing system for the development of renewable energy-to-hydrogen industry. At present, many regions in China have experimentally launched local support policies such as investment subsidies and preferential electricity prices. For example, green power-to-hydrogen process projects will be given a certain amount of support for electricity costs, and enterprises specializing in high-pressure hydrogen/liquid hydrogen storage will be given a certain amount of subsidies for the construction, renovation or expansion of fixed standard hydrogen refueling stations with a daily hydrogen refueling capacity of at least 500 kg.Footnote 13 However, what cannot be ignored is that the green hydrogen price and subsidy system in China is still imperfect, non-transparent, non-standardized and unsustainable. Local governments should try more financial instruments such as tax reduction and rebate, green credit, green insurance, and carbon trading to promote the limited financial resources to benefit more enterprises.

Countermeasures and Suggestions

At present, China's renewable energy-to-hydrogen industry is at the early stage of industrial development. It is very necessary and urgent to adhere to the concept of innovative development, strengthen the coordination between the whole industry chain and the regions, optimize the layout of green hydrogen industry, accelerate the construction of hydrogen transmission pipeline network, expand the green hydrogen market, and guide the green hydrogen industry to maturity. In view of the large differences in renewable resource endowment, hydrogen consumption level and industrial structure in each region, this paper suggests that each region should formulate differentiated policy measures to promote the development of the renewable energy-to-hydrogen industry.

First, the pilot demonstration of renewable energy-to-hydrogen projects should be promoted in accordance with local conditions to promote the formation of a modern energy supply system with multiple and complementary energy sources. Each region should make rational planning from various aspects based on their own resource endowment, industrial foundation, market space, local financial resources and other factors to avoid inappropriate planning. In the northwest, southwest, northeast, coastal and other regions rich in renewable resources, pilot demonstrations of hydrogen production projects from hydropower, wind power, PV power and PV-wind power generation should be actively carried out, priority should be given to areas with relatively high abandonment rates of hydropower, wind power and PV power generation technologies, and the application potential of green hydrogen in seasonal energy storage and grid peak shaving should be explored, and the integrated application mode of “PV-wind power generation + hydrogen storage” should be cultivated to improve the comprehensive utilization efficiency of energy. In regions where hydrogen energy is applied on a large scale and needs to be transported across regions, the planning and construction of hydrogen transportation pipeline network should be accelerated, and the pilot demonstration of direct hydrogen supply from green power should be actively adopted. We should promote the integration of electricity, hydrogen, gas, cooling and heating systems, and explore the multiple applications of hydrogen energy in transportation, energy storage, power generation, industry and other fields.

Second, we should coordinate the layout of hydrogen pipeline network and coordinate the whole chain covering green hydrogen production, transportation/storage, refueling and end-use. Based on the demand-oriented principle, the planning and construction of inter-regional hydrogen transmission pipeline network, intra-city hydrogen supply pipeline network and hydrogen refueling station network should be promoted in an orderly manner, so as to improve the efficiency of storage and transportation, reduce the cost and effectively improve the commercialization level. Both methods of hydrogen-doped natural gas pipeline and pure hydrogen pipeline should be adopted to enhance the capacity of long-distance and cross-regional transmission of green hydrogen. The planning and construction of pilot demonstration of renewable energy projects integrating hydrogen production, storage and refueling (including power farms and hydrogen production, hydrogen storage and hydrogen refueling facilities) should be encouraged, and value-added projects should be explored through hydrogen sales. We should encourage the use of existing gas stations and refueling stations to renovate or expand hydrogen refueling stations, and explore new models such as integrated hydrogen refueling stations with hydrogen production, storage and refueling in stations.

Third, we should increase the policy support for renewable energy-to-hydrogen technology innovation and develop a technology chain with completely independent intellectual property rights. Enterprises should be encouraged to actively participate in the research and development of key technologies of renewable energy-to-hydrogen production, and set up science and technology special projects for the research of technical equipment, key technologies, materials and industrialization application of scientific and technological achievements of green hydrogen production, in order to crack engineering technical problems such as low cost, high flexibility, high efficiency and large scale, and promote the connection between renewable energy-to-hydrogen production and upstream volatile renewable energy power generation, downstream chemical production process for green hydrogen and carbon capture. We should speed up the construction of technological innovation platforms for green hydrogen preparation above the provincial level, build the cooperation system covering industry, academia, research and use, and accelerate the industrialization and application of the latest research results from universities and research institutions. We should improve the construction of the management and standard system of renewable energy-to-hydrogen, clarify the authorities in charge of green hydrogen production, storage and transportation and application respectively, and improve the relevant management statutes and regulations.

Fourth, a sound, scientific and reasonable pricing and subsidy mechanism for green hydrogen should be established to guarantee the investment return of renewable energy-to-hydrogen projects within a certain reasonable range. The actual economics of green hydrogen production, storage, transportation and refueling locally should be comprehensively considered, and the transitional support policies for renewable energy-to-hydrogen projects in terms of investment and financing, tax and fee reductions, preferential electricity prices, preferential over-grid fees, consumer terminal subsidies, hydrogen storage price subsidies and electricity market transactions should be explored. The relationship between renewable energy power generation and renewable energy-to-hydrogen should be properly handled, and scientific guidance should be given to hydropower, wind power and PV power generation enterprises to actively participate in the pilot demonstration of renewable energy-to-hydrogen projects, and the minimum guaranteed annual utilization hours of green hydrogen in the region should be approved and adjusted in a timely manner to ensure the reasonable income of the projects.

Fifth, the vitality of green development finance should be stimulated to expand the investment and financing channels of renewable energy-to-hydrogen enterprises and related equipment manufacturers. The evaluation standard system of renewable energy-to-hydrogen technology should be established, the rules of information disclosure on the use of green project funds should be clarified, and the information disclosure level of the industry as a whole should be improved. Banking financial institutions should be encouraged to support the development of the hydrogen energy industry in accordance with the principles of risk control and commercial sustainability, and to use technological means for providing accurate, differentiated and diversified financial services to high-quality enterprises. Qualified hydrogen energy enterprises should be supported to register for listing and financing on the Science and Technology Venture Board and the Growth Enterprise Market.