It was another epic week for the hydrogen industry, as four Chinese cities, including Beijing, unveiled their official plans to develop hydrogen fuel cell industry for the next decade. The hectic hydrogen policymaking agenda of the local government–a trend since earlier this year– would continue in the next months, as cities are eager to take part in an upcoming fuel-cell subsidy program provided by the central government.
Our take of the four local polices announced this week:
- Beijing: a “mainstream” plan with emphasis on fuel cell vehicle employment. The plan envisions 10,000 FCV on the road by 2025
- Zhoushan: a new focus on applying hydrogen with the shipping industry; another city emphasizing on low-carbon hydrogen production (natural gas and wind)
- Liu’an: a similar target is set to use fuel cell technology in the shipping sector, the plan envisions to launch 100 fuel cell ship demos by 2030
- Wuhai: the traditional coal-to-chemical city is aiming to support the energy transition of its coal, chemical, and rare-earth mining sectors by combing them with hydrogen
However, the collective policy agenda–motivated mainly by Beijing’s subsidy promises– could be a dangerous sign.
Besides progress in hydrogen sector, State Grid’s recent statistics and forecasts regarding the electricity demand from the “New Infrastructure” sectors (5G, Data Centre, NEVs) is also worthy of notice.
Scroll down for nine major updates of last week’s wind, solar, hydrogen, battery and the power markets.
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A senior official of Ministry of Finance (MoF), Song Qiuling, confirmed earlier this month that China would roll out a new package of policies to support hydrogen fuel cell vehicles to improve the industry’s supply chain and technologies. The “Ten Cities, Thousand Vehicles” program is included in the package. Three key messages from Song’s speech:
- “To Foster Supply Chain” with Intellectual Properties: The new policy would provide incentives to companies with IPs in breakthrough technologies.
- To Promote Alliance among Cities: the policy aims to “break” the regional fragmented market separation, by encouraging several cities to form alliances based on the same critical hydrogen companies. Companies–instead of local governments–should be the nexus for such partnerships.
- H2 Heavy-Duty Trucks Oriented: New supportive policy will focus on vehicles for long-distance logistics such as heavy-duty trucks.
Energy Iceberg Note: an unconfirmed document on Apr. suggests that the Ministry is drafting a financial incentive (reward) policy for the hydrogen sector. Song’s speech is the first time an official of the Ministry confirms the reward scheme. The industry expects the release of the final decision soon.
Yunnan Provincial Energy Administration announced recently in an industry conference that the province will speed up green energy industry development during the 14th Five-Year-Plan (2021-2025). The southwestern province sets to:
- Complete the construction of existing hydropower plants such as Wudongde and Baihetan hydropower plants on Jinsha River, and Tuoba hydropower plants on the upper reaches of the Lancang River.
- Build 8GW of wind power projects.
- Build 3GW of PV projects.
- Build “hydro+wind+solar” multi-energy and flexible power bases
- Construct new thermal power projects such as the Xiaolongtan and Xinshao project.
By 2025, the province’s installed power capacity is expected to reach 130GW with green power (including hydro) contributing more than 86%.
Energy Iceberg Note: Yunnan is one of the wind-rich areas in China. Right now Chinese state-owned developers are zooming into the province for the next wave of development.
Deputy chairman of China Photovoltaic Industry Association, Wang Bohuo, last week, revealed the latest industry information at 2020 the 3rd China International PV Industry Summit Forum. Three key messages to take away:
- In H1 2020: Solar PV sector added 11.52 GW new grid-connected capacity, of which 7.082GW is mounted centralized PV capacity, and 4.435GW is from distributed units. Of the total amount of distributed solar capacity, residential sector (such as rooftop solar) contributed 3 GW from Jan-Jul.
- The weighted average subsidy for PV projects dropped by 49.2% from ¥0.065/kWh in 2019 to ¥0.033/kWh 2020.
- In 2020, there are over 33GW of zero-subsidy solar projects are approved, more than double the amount in 2019 (14.78 GW).
Some of the key slides in Wang’s PPT:
Hydrogen Storage & Fuel Cells
Beijing Municipal Government last week issued a Hydrogen FCV Industry Plan (2020-2025). The plan laid goals for FCV industry development in two phases.
The first-phase goals:
- Beijing will strive to have 3,000 FCVs run on roads by 2023 and achieve an accumulated output value of ¥8.5 bn for the full FCV industrial chain.
- Three to five leading FCV-related enterprises with global influence are set to be launched by 2023.
The second-phase goals:
- Beijing will strive to put over 10,000 FCV on roads by 2025 and expects the cumulative output value of the full FCV industrial chain to exceed ¥24 bn.
- Five to ten leading FCV-related enterprises with global influence are set to be launched by 2025.
Yet another Chinese municipal government– Zhoushan City in Zhejiang Province– last week released a hydrogen energy development plan (Feedback invitation draft). As a coastal city famous for its marine industry, Zhoushan City emphasized the application of hydrogen fuel cell in the maritime industry. This plan envisions:
- By 2022: the city would see more than one hydrogen refuelling station (including integrated energy stations); the city would have more than 5 demo fuel cell buses and more than 10 newly built or renovated fuel-cell-based ships.
- By 2025: the city would have more than 5 refuelling stations up and running; the city would see more than 50 FCVs in operation and more than 50 ships will be built or renovated.
The plan mentioned that it would make use of its natural gas, wind energy, petrochemical byproduct hydrogen resources to attract international and domestic hydrogen enterprises with advanced technology. The city will focus on the development of liquid hydrogen storage and transportation equipment. Besides, it will support the international and domestic research cooperation on hydrogen energy in ship applications, and strive to become a domestic hydrogen energy application demonstration in the marine field.
Energy Iceberg Note: the emphasis on international cooperation and fuel-cell application in the shipping industry stands out.
In the same week, Liu’an City of Anhui Province reveals its development arrangements for the hydrogen industry. Goals are set for two-phase:
- By 2025, the city would have: 600 FCVs in operation and 10 fuel cell ship demo applications; 5 hydrogen refuelling stations and 1 integrated hydrogen-electric load-regulating power station built up; 100 stationary fuel-cell power plants in operation.
- By 2030, it would have: 3000 FCVs in operation and 100 fuel cell ship demo applications; 15 hydrogen refuelling stations and 3 integrated hydrogen-electric load-following power station established; 1000 stationary fuel-cell power plants operating.
EV & Battery
Contemporary Amperex Technology (CATL), China’s largest automotive lithium-ion battery maker, last week denied a recent suspicion that it would abandon the high-nickel 811 battery. The 811-battery comprises of 80% nickel, 10% cobalt and 10% manganese.
Concerns about GAC New Energy will eschew the Aion S equipped with 811 batteries due to safety problems have slashed the CATL’s market cap by 11%, counting over ¥40bn. Some media reports claimed that CATL has largely suspended or rejected the 811-battery route.
CATL responded that 811 would remain as its main strategy in the near term, and it is developing a new type of electric vehicle battery that contains no nickel or cobalt.
Ministry of Industry and Information Technology (MIIT) officers recently announced at an internal seminar that MIIT would mobilize local governments to formulate relevant policies and create pilot projects to support and encourage enterprises to develop battery-swapping vehicle models. This action aligns with previous policies that promote NEV battery swapping:
- In Apr., MoF announced to shelve subsidy for new energy vehicles (NEVs) at more than ¥300,000 sales price. However, NEVs that support battery-swapping schemes are exempted and still enjoy financial supports. The policy move is deemed to promote battery swapping as a business model.
- In Jul., MITT announced to advance the construction of battery swap infrastructure. The battery swap mode will be piloted in regions including Beijing and Hainan.
The State Grid Research Institute recently released an article stating that the ‘New Infrastructure’ will become an essential driving force for the growth of electricity demand.
In 2025, the electricity consumption of China is expected to reach 9100 -9500 TWh, and the electricity consumption of the ‘New Infrastructure’ will account for more than 8% of this amount, far exceeding that of traditional industries.
5G base stations, data centres and NEVs are representatives of the ‘New Infrastructure’. The article projected that:
- 5G Base Stations: As of the end of Jun. this year, China has built a total of 410,000 5G base stations. It is estimated that between 2020 and 2025, there will be 5 to 6 million 5G base stations. Electricity consumption of 5G base stations will rapidly rise from less than 20 TWh in 2020 to about 350 TWh in 2025.
- Data Centers: By the end of this year, the electricity consumption of data centres may account for 2.7% of the total electricity. Electricity consumption of data centres in China will exceed 200 TWh by the end of 2020, accounting for 2.7% of the total consumption and will reach 350 TWh by 2025.
- NEVs: In 2019, electricity consumption for direct charging and swapping services was 6.82 TWh, up 128% YoY. The number of new energy vehicles is expected to jump from less than 4 million units in 2020 to more than 25 million units in 2025. Accordingly, the electricity consumption of charging and swapping services in 2025 is expected to exceed 50 TWh.