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■ Date: April 1, 2020
【Four reasons why China promotes hydrogen energy (Part 1)】
 
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The number of FCVs in China will exceed 6,000 at the end of 2019, (【China's FCEV sales amount in 2019 was released】), and it is expected that Chinese hydrogen energy industry, especially in the area of FCV, will grow up. Why is the Chinese government promoting the development of hydrogen energy? In this article, I would like to discuss not only the general idea of promotion of hydrogen energy but also the four actual reasons for this promotion from a Chinese perspective.
 
  1. Optimization of energy supply and demand (after the spread of renewable energy)
  2. Improvement of energy use efficiency (Utility 3.0, hydrogen fuel cell vehicle, stationary fuel cell, etc.)
  3. Improvement of access to energy (off-grid environment)
  4. Energy security ( in China and in East Asia)
 
This article is introducing the first one.
 
1. Current status of China’s renewable energy
The background behind the promotion of hydrogen energy in China is related to the rapid development of renewable energy in China. In order to understand the first reason correctly, it is necessary to grasp the current status of China’s renewable energy development. Firstly, I will explain the current state of China’s renewable energy on a fact base.
 
1) Current state of renewable energy spread in China.
In China, the share of renewable energy in total install capacity is 37% and the total generation capacity of renewable energy is about 711GW, which is about 2.8 times the power generation capacity of Japan (approximately 250GW).  In detail, solar energy (photovoltaic power and solar thermal) accounts for 9% of total installed capacity, wind power 10%, and hydro power 18%.
In terms of shares in the total generation of electricity in China, the share of renewable energy is 25% and the total electricity generation by renewable energy is 1,775TWh. Looking at the breakdown, solar energy accounts for 3%, wind energy 5%, and hydro power 18%. Given the total electricity generation amount in Japan is 1,000TWh, only hydro power ( Annually 1259 TWh ) in China can make up for Japan’s annual electricity demand.
 
Also, considering that the share of renewable energy generation amount in the total electricity generation amount accounts for 30.6 % in Germany, which is a renewable energy-promoting country, it does for 13.6% in the U.S., and it does for 15.6% in Japan,  it can be said that China is relatively advanced among the major countries in terms of the spread of renewable energy.
2) Growth rate of installation of renewable energy
The following graph shows changes in the cumulative installed capacity of renewable energy in major nations. While major foreign countries such as the U.S., which are growing at an average annual rate of 7 to 8%, China is growing at about twice the rate, 14 to 15%.
Let's have a look at the breakdown of generation capacity of newly insatlled facilities. The following pie chart expresses shares of each country in newly installed capacity of renewable energy electricity in 2018. In 2018, 181GW has been installed in total in the world, 41% of which is by China. Roughly speaking, it can be said that half of newly installed renewable energy power generation facility is introduced in China. The right bar graph below shows that installation of photovolataic power stands out all over the world. This is because each country's supporting policy like FIT for photovoltaic power projects and reduction of introduction cost of photovoltaic power facilities has encouraged power generators to join photovoltaic power generation business.
 
3) Chinese government’s target for introduction of renewable energy
Lastly, let’s take a look at the Chinese government's target for introduction of renewable energy and its achievement status. According to the chart below, until 2010 the majority of renewable energy was hydro power. Between 2010 and 2015, hydro power and wind power increased by about 100 GW each, and solar power started to be introduced and increased by about 40 GW.
In 2016, China has set the targets to introduce 340GW of hydro power, 210GW of wind power, and 105GW of solar power by 2020. In fact, the introduction of renewable energy in China has been proceeding smoothly since 2015. As of the end of 2018, hydro power and sola power have already reached their targets.
 
2. Problem of RE curtailed electricity
As described above, China’s renewable energy seems to be growing steadily, but there are some challenges.  The first is the lack of transmission line infrastructure due to the rapid development of renewable energy power generation facilities. The second is the gap of peak time of supply and demand, caused by the natural variability of power generation, which is the characteristic of renewable energy. Excessive generated electricity in a certain period cannot be transported to and be consumed in areas that have high demands.  
 
In other words, although lots of generation capacity of renewable energy have been developed, there is a shortage of the electric grid infrastructure that transmit generated power. Even if there is an electric grid, the amount of power generation exceeds the actual power demand required by an area within which grid can transmit, generating a large amount of surplus electricity. In this way, though having the power generation capacity of renewable energy in China, power generation facilities may not actually be utilized (the facilities are actually stopped.) . Such a loss of power generation opportunity is called “curtailed electricity (including curtailed wind power, curtailed photovoltaic power, and curtailed hydro power)” , becoming the major issue for renewable energy in China.
 
The figure below shows the curtailed rate of photovoltaic power and wind power occurring in all provinces of China in 2017. They are particularly high in the western and northeastern regions where the amount of renewable energy is large.
 
Although as of 2020 the more rapid construction of a transmission infrastructure network than that in 2017 has been gradually improving the curtailed rate of photovoltaic power and wind power (Nationwide average abandoned rate of photovoltaic power: 6% in 2017, 3% in 2018, Nationwide average curtailed rate of wind power: 12 % in 2017, 7% in 2018 *Source: NEA), the above-mentioned gap between power supply and demand due to the natural variability of renewable energy is becoming more apparent as the scale of renewable power generation equipment increases.
 
In the future, the share of renewable energy in the total generated power in China will increase to 30% or 50%, even these small fluctuations of several percent will generate enormous amount of curtailed electricity.
 
One candidate to solve this problem is the storage of abandoned electricity by batteries. However, the current technology has a limit on the energy storage capacity of batteries. It is not practical to use them as a storage facility for a renewable energy farm whose capacity exceeds GW. Also, batteries naturally discharge, so they are not suitable for long-term power storage.
 
3. Hydrogen for curtailed electricity
On the other hand, hydrogen is an ideal candidate to solve the problem. Hydrogen has the highest volume energy density among gaseous fuels and has no energy loss such as natural discharge unlike batteries. It is possible with hydrogen to store a large amount of energy for a long time. Additionally, unlike other gaseous fuels, hydrogen does not emit any carbon during the process of extracting energy. Thanks to such characteristics, a huge amount of curtailed power by renewable energy can be stored for a long time, then can be transported to an area with its high demand, and can be converted to electricity when needed. In other words, hydrogen is indispensable for the construction of an optimal energy management system in the future when renewable energy has widely spread and is paid attention to as an ideal energy carrier for renewable energy.
 
Thus, in the future when renewable energy becomes widespread, curtailed energy derived from the energy gap is temporarily converted into hydrogen, which is then transported and consumed via hydrogen grid in an area which has demand when needed. The hydrogen grid is not in conflict with the power grid. It is expected that they will coexist in a future optimal energy management system while complementing each other.
 
As mentioned above, Optimization of energy supply and demand (after the spread of renewable energy) is the first reason why China promotes hydrogen energy. Three other reasons are as follows
2. Improvement of energy use efficiency (Utility 3.0, hydrogen fuel cell vehicle, stationary fuel cell, etc.)
3. Improvement of access to energy (off-grid environment)
4. Energy security ( in China and in East Asia)
 
In particular, when figuring out the fourth reason correctly, you can realize that promoting hydrogen energy in China is not just about a cultivation of emerging industries but also related to a national strategy.  The following discussion on the details will be mentioned in Part 2 of the article.
 
Currently, we are updating the popular two reports Hydrogen and Fuel Cell Industry in China in 2019 and Hydrogen Supply Chain in China in 2019. When completing it, we will announce via website or LinkedIn Corporate Page.
 
 
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