China’s electrolyser market is poised to pick up momentum next year as hydrogen projects delayed by Covid-related supply chain disruptions are finally completed, delegates heard at a conference in early December.

Electrolyser sales will at least double next year in China, executives at manufacturers including Longi Hydrogen Energy Technology and Sungrow Hydrogen Science and Technology said in a virtual panel at the BloombergNEF Shanghai Summit.

About 600MW of equipment will be sold domestically in 2022, with demand likely to rise to 1,500–2,000MW in 2023, according to Eric Lin, a board member at Cockerill Jingli Hydrogen. The company—a joint venture between local player Suzhou Jingli Hydrogen Production Equipment and Belgium’s John Cockerill Group—has received c.300MW of electrolyser orders this year and expects to ship around c.230MW, with a doubling of both order and shipment volumes anticipated for 2023, Lin says.

“Demands on electrolysers have risen a lot” Chaocai, Sungrow

Market demand for electrolysers this year will stand at 650–750 MW, rising to 1,000–1,500MW, says Longi Hydrogen vice-president Wang Yingge. Two key factors have weighed on electrolyser sales this year, she adds.

Firstly, hydrogen projects slowed to a halt due to China’s stringent zero-Covid strategy as lockdowns, testing and other restrictions affected transportation, logistics and supply chains. Some of next year’s demand increase can be attributed to projects that were delayed this year, says Wang.

Secondly, the cost of building solar-powered green hydrogen plants has risen due to a polysilicon supply crunch since this summer that has squeezed China’s solar panel makers. Rising costs have rippled through the supply chain and reversed years of falling prices for solar panels. But manufacturers will be able to massively increase output as new polysilicon supplies become available next year—lowering costs again.

China’s biggest hydrogen players are central state-owned enterprises, which have delayed their projects until 2023 because of these factors.

Creating demand

The new surge is driving investments in factories to make electrolysers. Longi’s hydrogen unit plans to increase its annual manufacturing capacity from 1.5GW now to more than 5GW around 2025, Wang says.

The market has seen a surge in orders from the petrochemicals sector this year as energy companies—especially those overseas that produce ammonia and ethanol—seek to substitute grey or blue hydrogen with the green variety.

For petrochemical projects with a captive off-grid power plant, the relatively lower cost of electricity means green hydrogen output can be competitive with grey or blue hydrogen, according to Lin.

Chinese manufacturers can produce alkaline electrolysis systems at one-quarter of the cost of US and European competitors, BloombergNEF said in a report in September. A Chinese electrolyser costs about $343/kW, compared with $1,200/kW in Europe and the US.

Expectations for proton-exchange-membrane electrolysers, a competing production technology, are high for 2023, with shipments forecast to triple from 10MW this year to 30MW, said Huang Fang, project director at PEM manufacturer Saikesaisi Hydrogen Energy.

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Author: Shi Weijun