China’s renewable market in 2022 sees robust capacity growth, laying a solid ground for the upcoming green hydrogen investment growth. According to National Energy Administration (NEA), between 2022/01-05:
- 121GW of photovoltaic power projects are under construction.
- 108GW of photovoltaic capacity is expected to connect to the grid in 2022, up 95.9% YoY in actual grid-connected capacity.
The cumulative wind and photovoltaic capacity are expected to reach 2152GW in 2030.
A significant portion of the renewable power will sell to the eastern economic developed areas via the grid, while a smaller part would need to seek local consumption plans. An estimated 1200 GW projects are provided with “guaranteed grid-connection” promises when the projects are approved. That means up to 952GW of renewable might need to seek alternative consumption from local users near the plants.
Chinese local media AsiaChem, therefore, concluded that “half of the 952GW capacity would seek (battery or other energy-storage) solutions, and the other half will be used to produce green hydrogen.” That means some165.2 billion Nm3/h green hydrogen production capacity.
Energy Iceberg’s Note: we believe that the estimation is oversimplified and way too bullish on the green hydrogen production size. The conclusion is based on several assumptions, including 1) the existing renewable projects (built before 2021) are also required for storage solutions; 2) half of the renewable projects without grid connection will become green hydrogen production units. We do have different opinions on these assumptions:
Firstly, renewable projects connected to the grid before 2021 are with 20 years of fixed feed-in tariffs, of which a small portion has already covered the investment cost. These projects are under less pressure to develop storage units.
Secondly, it might be too bullish to assume that half of the renewable capacity without grid connection would develop power-to-gas. Instead, a majority is most likely to embark on battery and shared energy storage. Only a tiny amount would consider green hydrogen.
The driving factor for green hydrogen is the downstream demands from the FCV, petrochemical, and chemical markets.