This article will be under regular update to reflect progress. Recently Updated at 2020/Nov/11.
Chinese energy companies recently show growing appetites for green hydrogen project investments.
A collective mindset change has occurred among the energy giants comes after Beijing’ series policy measure to kick start the country’s hydrogen and fuel cell development.
The change of scenery in China’s hydrogen market, in our views, would lead to opportunities for international technology providers and investors.
However, to tap into the blue-ocean alike market, identifying the proper Chinese partners to work with and understanding their business interest and strategy remains a critical step–and a barrier for many.
In the following summary, we provide a list of ten Chinese green hydrogen companies which are–in our view–with the most potentials to become the Chinese market leaders and the likely partners. Their energy strategy and recent green hydrogen moves are detailed in the piece.
Top-10 Chinese Green Hydrogen Players to Look into
- State Power Investment Corp (SPIC)
- China Petroleum & Chemical Corporation (Sinopec)
- China Huaneng
- China Energy Investment Corp (CEIC)
- China National Offshore Oil Corp (CNOOC)
- China Three Gorges (CTG)
- China Huadian
- China Datang
- China General Nuclear (CGN)
- China National Nuclear Corp (CNNC)
SPIC: All-Rounded Green Hydrogen Player Interested in Frontier Tech
One of China’s five largest power utility (“Big Five”), SPIC has been in clear transition to embrace frontier energy technology.
Especially after current Chairman Qian Zhiming took charge in 2018, SPIC has gradually established the ambition to pursue “the next-generation clean energy technology solutions.” Under the new strategy, the firm’s R&D spendings on the next-generation nuclear reactor, hydrogen, and energy storage have all been increasing.
The mega energy group currently has several subsidiaries working on hydrogen technology development, including the Central Research Institute (SPICRI), State Nuclear Power Planning Design & Research Institute (SNPDRI) as well as a newly formed SPIC Hydrogen Technology Development Corp.
SPIC is clearly in a better position—compared to other power utilities and petroleum companies— in developing green hydrogen, as the firm owns the world’s largest solar power portfolio as well as sizable hydrogen, nuclear, and wind assets—it is the only one among the “Big Five” whose clean power capacity accounts for over 50% of its power portfolio.
SPIC is, therefore, the most active in developing green hydrogen projects. Its efforts mostly focused on investing in/ partnering with green hydrogen-related technology companies.
- 2020/08: purchased the German company’s skid-mounted proton exchange membrane (PEM) electrolysis system “Silyzer 200,” for its hydrogen industry park at Yanqing, Beijing. The project is set to complete by 2021 May.
- 2020/08: entered into an agreement with Hainan government to invest in the island province’s hydrogen infrastructure as well as offshore wind projects.
- 2019/11: a subsidiary of the power generation group secured approval for a 30MW distributed wind project in Ji’an, Jiangxi province. The wind farm will deploy a power-to-gas device.
- 2019/10: led a five-party consortium to develop a clean energy (hydrogen) industry park which includes 40MW wind power, hydrogen production, and fuel cell equipment manufacturing
- 2019/09: kicked off a flagship demonstration in terms of mixing green hydrogen with natural gas at Chaoyang district, Beijing
- 2019/09: signed a framework agreement with Beijing-based local tech company Fuhai Cryo to jointly develop electrolysis and liquified hydrogen devices
- 2019/08: entered into cooperation of intent with Germany’s Siemens Energy to jointly explore green-hydrogen cooperation in China.
- 2019/07: a regional subsidiary of the utility in Jilin province reached an agreement with Jilin local government, turbine provider Goldwind and China Shipbuilding Industry Corp to jointly develop a mega 20GW wind power-to-gas base.
- 2019/07: reached a milestone to develop a 100KV fuel cell stake with full IP right.
- 2019/06: its listed subsidiary entered into an agreement with Yanqing government of Beijing to develop a basket of hydrogen projects including green-hydrogen production
Sinopec: Top Refiner’s Transition to Green Hydrogen Production
The national oil company is one of the world’s largest refiner and the second-largest hydrogen producer in China. However, so far, most of its production is grey hydrogen—as a byproduct from the petrochemical process.
Early 2020 the group embrace a new corporate strategy which encourages investment into “new energy, new economics and new industries.”
The new strategy is merely a summary of its activities in recent years, where the firm began to invest in various non-fossil-fuel sectors.
Among different “new” areas, the booming hydrogen and fuel cell market has won most of its attention.
On hydrogen infrastructure, the firm shows clear ambition to lead the country’s construction of a hydrogen refuelling network. The ambition is backed by its 30,000 operating gas stations, some of which the firm plans to turn into hybrid stations combined with EV charging and H2 refuelling business.
On hydrogen source, Sinopec is poised to become a major gas supplier, currently with 3 million/year production.
Although the firm is gas-sufficient, recent actives indicate that the firm is taking the initiative to move from grey to green hydrogen.
- 2020/10: Sinopec Star Co. Launched a 20MW distributed wind project in Shaanxi province—the oil company’s first wind power project. The small project could be the firm’s testing case into wind power as part of its effort to develop renewable sources for green hydrogen production.
- 2020/10: Sinopec Capital and Cummins Investment–a subsidiary of the US fuel cell supplier Cummins– concluded a Letter of Intent to jointly promote green H2 production based on electrolysis tech.
China Huaneng: Carbon Capture Player Looking into Power-to-Gas
Huaneng has ample motivations to catch the green hydrogen train.
Formerly the largest power group in China, the firm has dropped to “second place” after two of its former competitors China Guodian, and China Shenhua merged in 2018.
Since then, the firm—previously focused on developing clean coal and a leader in the field—has been seeking to catch up in other new energy areas.
Battery, hydrogen and CCS are the three main areas.
The firm so far has reached several green hydrogen-related agreements—however, mostly early-stage cooperation of intents where further details are not yet clear.
- 2020/09: the Clean Energy Research Institute (CERI) of Huaneng has developed a hydrogen Electrolysis system which secured a certification from TUV SUD.
- 2020/03: the group inked a framework agreement with Jilin provincial government to develop “integrated wind-solar-coal-power bases” as well as hydrogen applications from now to 2030. 2019/12: CERI s own MCFC technology which can be used to distributed hydrogen generation system.)
- 2018/04: an MoU is signed with local technology company Honshu to explore hydrogen technology and renewable power utilization.
CEIC: Hydrogen Leader Shy in Green Hydrogen Moves
CEIC is the largest hydrogen producer in China. But almost all production is “grey” gas, which comes from the coal-to-chemical projects.
As the largest power utility, CEIC is built up a 2017 merger between China Guodian and China Shenhua—two firms with distinctly different focuses on the energy business.
As a result of the merger, the new energy conglomerate inherits Shenhua’s world-leading coal mining and coal-to-chemical asset and also Guodian’s massive thermal, hydro and wind power projects (largest in the world).
Whether CEIC would eventually establish a coherent corporate strategy between its coal and renewable portfolio still remain to be seen. However, so far, the merger did not seem to strengthen the group’s position in the renewable market—but does help the firm’s competitiveness in coal.
That may explain the firm’s current emphasis on utilizing coal as feedstock for hydrogen production—instead of its renewable asset, despite the fact that it is a pioneer in China’s hydrogen market.
The firm is much more vocal of its plans to utilize hydrogen and fuel cell as a mean to transform its coal assets. In contrast, activities in exploring renewable-based green hydrogen production remain relatively “shy”.
Nevertheless, the firm has quietly kicked off two green hydrogen-related projects:
- 2019/05: CEIC’s National Institute of Clean-and-Low-Carbon Energy kicked off a “large-scale wind/solar hybrid power-to-gas” research & demonstration project. Detailed of the demo has not been announced publicly, but it looks to build MW-size renewable power plant to generate green hydrogen. The gas will be utilized in the fuel cell vehicles embarked in the 2022 Winter Olympic at the hosting city Zhangjiakou, Hebei province.
- 2019: a hydropower subsidiary of CEIC (Dadu River Corp, formerly of China Guodian) in Sichuan has launched an R&D to utilize the hydropower for H2 production.
CNOOC: Offshore Hydrogen Production Focused
Hydrogen is not the offshore oil major’s key focus for energy transition—unlike for Sinopec. However, the firm’s ambition in the offshore wind may lead to spill-over effects on green hydrogen.
CNOOC has a keen interest in offshore wind, likely because the firm saw a natural fit between offshore wind investment and its experience in marine engineering. As a latecomer to China’s offshore wind market, CNOOC has one operating offshore wind farm in Jiangsu (as of 2020) and is looking at Guangdong, Hainan, and Guangxi for the new project opportunity.
The firm—and other wind developers— clearly believe that the massive offshore turbines to be built in China’s east coast could lead to some severe curtailment and shortage of connection issues. One direction to look into, thusly, is to utilize the power for hydrogen production.
Notably, CNOOC is also a key player in China of natural gas, LNG production and transportation, with significant experience in LNG terminal operation. It is not surprising, thusly, to see the firm already look into a frontier area like producing hydrogen offshore.
- 2020/09: CNOOC’s Shanghai subsidiary (also known as China Eastern Petroleum Bureau) kicked off a tender to seek a contractor to conduct technical and economic research of an offshore wind power-to-gas project.
- The research scope includes: 1) selecting an optimal electrolysis technology; 2) selecting the optimal electrolysis solution for offshore wind projects; 2) offshore hydrogen storage and transportation.
China Three Gorges: Wind Giant’s Green Hydrogen Roadmap
World’s largest hydropower producer, CTG is a leading offshore wind developer in China. [READ MORE: Our Zoom-in Company Profile of China Three Gorges’ clean energy activities]
Backed by its cash flow position, CTG is keen on investing in new energy sectors—and hydrogen appears to attract the firm’s interest recently.
- 2019/06: the firm has teamed with manufacturer Dongfang Electric to develop a Dongfang CTG Industry Investment Fund and a unique hydrogen investment fund.
- 2019/06: the firm is in talks with Ulanqab government of Inner Mongolia to develop a “hydrogen industry demonstration project,” of which a detailed development plan is not disclosed. Notably, CTG is building a 3.1GW wind/solar/battery hybrid farm in the city. Green hydrogen could be combined into the flagship project.
China Datang & China Huadian: Thermal Players Trying to Catch the Transition Train
We have mentioned two other utilities of the “Big Five” generation conglomerate that have kicked off power-to-gas projects.
The duo, China Datang and China Huadian, so far only tip-toped into the green hydrogen scene with two power-to-gas projects announced:
- China Datang: a regional subsidiary of Datang, Yungang Thermal Power Co (大唐云冈热电有限责任公司), announced to invest in a solar-wind-heating-hydrogen hybrid project in the Datong City of Shanxi Province. The project consists of 150MW solar, 100MW wind,100MW electrolysis system as well as 50MW liquid hydrogen storage unit. Gas production capacity is expected to reach 10,000kg per day.
- China Huadian: a lesser-known figure among the “Big-Five,” Huadian has been quietly proceeding its plan to set foot in the hydrogen value chain. The firm recently unveiled that it has concluded a deal with China’s auto equipment maker Weichai to jointly develop a 100MW solar project in Weifang of Shandong–the fuel cell vehicle maker’s home base. The power generation will incorporate green hydrogen production.
The duo are smaller players among the “Big Five” power conglomerates. They are also in a lesser advantageous market position compared to their peers SPIC, CEIC, and China Huaneng. That is because both had adopted business strategies that are heavier in coal or thermal.
For Datang, the firm has a higher percentage of coal-fired power asset (in its total power portfolio), which has led to a serious financial challenge for the firm under Beijing’s coal-capping policy. Many of its coal power assets are also less advanced in technology (compared to those of China Huaneng).
Around 2010, Datang has opted for a transition strategy that focuses on coal-to-chemical. However, as Beijing decided to deviate from coal-to-chemical, Datang’s decision turned out to be a questionable one–if not a total flop, leading to a heavy financial burden for the group.
Last year, Datang is under the spotlight with several of its regional coal-fired subsidiaries declaring bankruptcy–a highly symbolic event in the Chinese power market. The firm is under massive pressure to reshape its energy-transition focuses and is now–in spite of being a latecomer–stepping into renewable and emerging clean techs.
For Huadian, the pressure of transition is a bit less serious. The firm has adopted a strategy that emphasized on natural gas value chain–especially on upstream gas exploration and production. The strategy makes it stand out from the others–though its long-term financial results remain to be seen.
Given its experience in gas infrastructure, its ambition in the green hydrogen sector is certainly logical.
CGN: Renewable Leader’s Green H2 Bids
China General Nuclear (CGN) has two roles in the Chinese clean power sector. It is both the leading nuclear power developer in the country and one of the top-6 renewable developer.
It is one of the two only power developers in China whose power portfolio is +90% based on”clean power.”
Such unique market position renders CGN’s keen interest in green hydrogen as well. The firm recently inked a framework agreement in 2020 with Ningxia East to establish renewable P2G projects in the region.
Besides this P2G project, CGN owns two private investment funds that are noteworthy:
- 2017/04: teamed with China’s sovereignty wealth fund CICC, Tsinghus Sichuan Energy Institute to establish a hydrogen private equity fund. The AUM of the fund is at ¥3Bn.
- 2019/04: asset management subsidiary of the group, CGN Capital, set up a Shenzhen Bailu Equity Investment Fund that specifically focuses on fuel cell technology investment.
CNNC: Nuclear Giant’s Power-to-Gas
China National Nuclear Corp may be an unexpected player in the green hydrogen scene. However, the firm’s interest in P2G is ramping up fast, due to the policy challenges facing its nuclear power and renewable business.
In fact, the nuclear powerhouse has looked into reactor-based P2G as early as in 2018. CNNC’s subsidiary China Nuclear Engineering Corp (CNEC) is a key investor and developer of China’s inaugural High-Temperature Gas-cooled (HTGR) technology.
HTGR is deemed as a safer option for nuclear P2G. As a result, CNNC has quietly teamed with Tsinghua and Baosteel to develop an HTGR based green hydrogen project for the iron&steel producer. A pilot project of 100NL/h H2 production capacity has passed the experiment. The firm is now eyeing on embark P2G in its future 600MW HTGR project, which would have 50000Nm3/h H2 production capacity.
Upon that pilot project, CNNC would continue working with Baosteel for using nuclear power to generate green hydrogen.
Meanwhile, the firm–also owning a sizable asset of wind power–is also looking to combine its renewable asset with P2G. It also set up an ambitious business plan to establish its downstream gas subsidiary for H2 transportation, storage, and fuel cell development by the end of 2030.