China secured $20 bn for green hydrogen production projects
Image: the solar-wind-green hydrogen integration project in Inner Mongolia
Produced by using renewably generated electricity that splits water molecules into hydrogen and oxygen, green hydrogen holds significant promise to help meet global energy demand while contributing to climate action goals.
Yet, to date, only a few green hydrogen projects have been successfully brought to market. According to new report from the Hydrogen Council, More than 1,000 renewable and low-carbon hydrogen projects requiring $320m of investment by the end of 2030 have been announced globally, although less than 10% have reached final investment decision.
Most analysts blame the high production cost for the slow adoption of green hydrogen. Producing hydrogen from low-carbon energy is costly at the moment. IEA analysis finds that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production.
However, China seems to be exceptional for the investment into green hydrogen production projects now. According to our statistic, China has secured over $20 bn for its green hydrogen or low carbon emission hydrogen production projects as of 1Q2023. Among these projects, $15 bn is for domestic projects and $5 bn is for an international green hydrogen project (China Energy’s Egypt project).
For the $15bn domestic green hydrogen projects, $7.9 bn (22 projects) was announced in 2022 and $7.1bn (30 projects) was announced in 1Q2023, signaling acceleration of green hydrogen adoption in China.
While the regulation shift and carbon market are generally regarded as the major stimulations for developments of green hydrogen production, China now hold another two powerful instruments incentivizing its green hydrogen industry—low price electrolyzers and low interest rate.
China is renowned globally for cost advantages of its electrolyzer products due to low manufacturing cost, recently unveiled procurement data in 1Q2023showed that the unit price of alkaline electrolyzer fell in the range of 1,350 to 1,500 Rmb/kw ($200 to $220/kw), this figure is 80% lower than their western peers in North American and Europe.
The green hydrogen projects owners or investors are also enjoying the low interest rate environment now. According to latest data of China’s National Interbank Funding Center, the 1-year and 5-year LPR (Loan Prime Rate, the lending benchmark of China’s interest market) stand at 3.65% and 4.3% respectively this week, these figures are substantially lower than that of US, Europe and Canada, which significantly reduce the burden for green hydrogen projects owners and investors and increase the economic viability of these projects.