China’s clean energy bases in the north are starting to develop wind and solar farms with integrated hydrogen production, as they look to make use of excess renewable generation while preparing for a future where there is less demand for their green electricity output.

A significant portion of China’s solar and wind capacity is sited in the deserts of Inner Mongolia and Gansu province in the north, where renewable energy resources are plentiful and projects can be built at scale in unpopulated areas. Inner Mongolia and Gansu together added 16.9GW of wind capacity in 2022, accounting for 34pc of last year’s new installations, according to industry group the China Wind Energy Association.

531,890t/yr – Combined hydrogen production capacity at approved Inner Mongolia projects

These regions are planning renewable hydrogen projects on a similar scale. Inner Mongolia had approved 31 integrated wind/solar-hydrogen production projects comprising 27 grid-connected and four off-grid facilities at the start of this year, according to the region’s solar industry association. The projects will have aggregate power generation capacity of 13.15GW and be able to produce a total of 531,890t/yr of hydrogen, with 216,000t of storage capacity.

Last week, state-owned Sinopec—Asia’s largest refiner—started building a 30,000t/yr green hydrogen project in the city of Ordos in Inner Mongolia that will be powered by 450MW of solar and 270MW of wind. This followed the official launch of a small-scale project in Jilin province’s Baicheng city—the so-called ‘hydrogen valley of north China’—that will use 10.6MW of solar and wind capacity to power an alkaline electrolyser and a proton-exchange-membrane electrolyser.

Changing demand

Renewable energy projects that integrate hydrogen production in these parts of China are starting to gain traction for two main reasons. The first is that hydrogen can be used to store surplus electricity, which partly addresses the intermittency downside of renewable power. Chinese developers have mostly turned to electrochemical batteries to bank excess power, but this is suitable only for short-term storage of 2.5–6 hours. Hydrogen, on the other hand, can serve as long-term energy storage.

The second reason is that the local hydrogen production can ease overcapacity and curtailment issues at the projects. Renewable electricity generated in Inner Mongolia and elsewhere in northern China is mainly transmitted across the country to demand centres on the eastern seaboard via a network of ultra-high voltage (UHV) transmission power lines.

As more gigawatt-scale clean energy hubs are built in northern China, more UHV power lines will be needed, but their construction is expensive and arguably strengthens the monopoly of the developer, State Grid Corporation of China. Complicating the situation is that the traditional consumers of this renewable electricity—industrialised coastal provinces such as Guangdong, Jiangsu and Zhejiang—are now building their own local solar and wind capacity.

Eastern China’s Zhejiang province, for instance, in 2022 installed grid-connected solar capacity amounting to 6.97GW, the fourth-highest addition among mainland China’s 32 administrative divisions and bringing its total up to 25.39GW. The neighbouring province of Jiangsu added 5.93GW for a total of 25.1GW, while Guangdong in southern China built 5.70GW to bring cumulative capacity to 15.9GW.

Guangdong is looking to bring grid-connected offshore wind capacity up to 18GW by 2025, further scaling up to 30GW by 2030. Jiangsu is targeting 15GW of offshore wind by 2025, while Zhejiang aims to have 5GW in place by then and 6.5GW by the end of the decade.

These provinces are likely to prioritise their own local renewable generation over electricity imports from northern China, limiting the future market for the clean energy bases.

Easing demand from these provinces means more renewable electricity generated in northern China would have to be used locally, but the region lacks energy-intensive industries. Using unwanted electricity to produce hydrogen could create new opportunities for developers, especially in the transport and chemicals sectors.

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Author: Shi Weijun