Experts predict that during the "14th Five-Year Plan," green hydrogen will achieve price parity with fuel. The major issue to be resolved is the proportion of engineering construction costs.

Question AI · Why is the chemical standard a bottleneck for reducing the high cost of green hydrogen?

Reporter Pan JunTian

“The 14th Five-Year Plan period will be a critical window for China’s hydrogen energy industry to transition from pilot exploration to scaling, industrialization, and commercialization.” On March 25, at the China Hydrogen Energy Exhibition and International Hydrogen Energy Conference hosted by the China Hydrogen Energy Alliance, Professor Yu Zhuoping from Tongji University, and director of the expert committee of the China Hydrogen Energy Alliance made the above judgment.

Yu Zhuoping suggested that during the 14th Five-Year Plan period, the main goals for green hydrogen development should be: hydrogen production costs below 15 yuan/kg, transportation and storage costs reduced to 3-5 yuan/kg per 100 kilometers, transportation hydrogen costs below 25 yuan/kg to be on par with fuel; industrial hydrogen production costs to be on par with natural gas; under the carbon tariff mechanism, marine green fuel to be on par with heavy oil.

Green hydrogen mainly refers to hydrogen produced from wind and solar energy through water electrolysis, with some green hydrogen further processed into more easily stored and transported products like synthetic ammonia and methanol.

Academician Zheng Nanfeng from the Xiamen University School of Energy stated that when calculating only the hydrogen production costs, the unit cost of green hydrogen is about 15.23 yuan/kg, which is approaching a critical point for scaled applications; however, in engineering practice, costs can rapidly increase, with the current production-side green hydrogen cost at approximately 26 yuan/kg.

He cited an example where a typical 150,000-ton green ammonia project has an investment of around 3-4 billion yuan, with wind turbines accounting for 25%, water electrolysis equipment approximately 9%, and construction installation projects, utilities, land, etc., accounting for about 65%.

He further analyzed that wind power equipment only needs 1.2-1.5 yuan/W, with EPC quotes around 3-4 yuan/W; hydrogen production equipment is about 1.2 yuan/W, with EPC quotes around 4.5-6 yuan/W; synthetic ammonia equipment is around 400 yuan/(t/a), with EPC quotes approximately 3000 yuan/(t/a). CAPEX (capital expenditure) raises the cost of green ammonia by 2000-3000 yuan/ton, while the price of ordinary liquid ammonia is about 2800 yuan/ton.

Zheng Nanfeng expressed that the reason for the high CAPEX is that hydrogen production facilities are built according to chemical industry standards, which have high safety requirements.

For a long time, hydrogen, as a hazardous chemical, has been categorized under chemical projects, and its manufacturing process must be included in the unified management of chemical parks.

In recent years, some provinces and cities have gradually relaxed restrictions on water electrolysis hydrogen production plants. For instance, in early 2024, the Inner Mongolia Autonomous Region’s energy bureau and other departments issued a notice on accelerating the development of the hydrogen energy industry, clearly stating that projects for water electrolysis hydrogen production using renewable energy sources such as solar and wind are allowed to be built outside chemical parks; and that such projects do not need to obtain hazardous materials production safety permits.

Zheng Nanfeng stated that current water electrolysis hydrogen and ammonia-methanol projects still follow chemical standards, with construction and utility costs having reached over three times that of process equipment, and there is a lack of construction standards for hydrogen energy projects.

He cited examples where certain construction fire separation distances are set too large, resulting in excessive land use; and in some utility projects, the design of auxiliary systems (which provide public auxiliary services such as water, electricity, gas, cooling, and heating directly for industrial enterprises) is generally configured redundantly for extreme conditions, leading to oversized capacities and thus higher initial investments and operating costs.

According to the reporter’s understanding, in some regions’ water electrolysis hydrogen production and synthetic ammonia production, to ensure continuous, stable, and safe electricity supply, it is necessary to use dual power sources to guarantee seamless switching in case of faults, requiring projects to apply for larger backup access capacities from the power grid.

Zheng Nanfeng suggested that intelligent operation and maintenance is an important path for further reducing the costs of green hydrogen, including improving equipment reliability, reducing fixed asset investments, cutting operational expenditures, and eliminating additional compliance costs.

Specifically, Zheng Nanfeng suggested that auxiliary system designs should achieve modularization and integration; and a dedicated standard system for hydrogen energy should be established, defining hydrogen energy based on its energy properties, replacing the current chemical standards.

Yu Zhuoping stated that during the 14th Five-Year Plan period, hydrogen energy needs to solve the high overall supply chain costs, the dilemma of “demonstration usable, but large-scale unusable,” as well as issues such as insufficient infrastructure construction, disconnection between production and use, mismatched scenarios, and storage difficulties.

Regarding production cost reduction, Yu Zhuoping indicated that green hydrogen should focus on large-scale wind and solar bases as core supply sources. Integrated bases for wind, solar, hydrogen, and ammonia in Yunnan, Xinjiang, and Northeast regions should account for over 70% of total production capacity, while production capacity from the Bohai Rim, East China, Sichuan-Chongqing, and Shanxi regions should account for about 20%, and supporting capacity from ports and zero-carbon parks should be kept within 10%.

On the construction of storage and transportation infrastructure, Yu Zhuoping stated that existing oil and gas pipelines, railway trunk lines, and port channels should primarily be reused, supplemented by auxiliary storage and transportation pipelines along the corridors.