【Policy Landscape and Industry Prospects of Hydrogen Fuel Cell Cogeneration Technologies in China】
In recent years, hydrogen fuel cell industry has gained its popularity in China following the accelerated development of commercial FCEV and hydrogen refueling stations. Hydrogen fuel cell application is trending diversified and soon will welcome its prime time. The year of 2020 has witnessed a key move made by the Chinese government in a major application, stationary fuel cell (FC). In March, Ministry of Science and Technology (MOST) for the first time proposed FC cogeneration as one of the key hydrogen-energy technologies.1 The MOST policy points out technological advancement directions for hydrogen fuel cell applications, which indicates a promising start to FC cogeneration industry.
What is the existing policy landscape of FC cogeneration and how this industry grows in China? To answer this question, this article examines policies issued at national and provincial level, then analyze industry prospects considering policy and social trends.
【Status quo of policies and projects for FC cogeneration】
At national level, policies for hydrogen fuel cell disproportionately focus on mobile applications, while a comparatively small number of policies for stationary applications are guidance- and technology-oriented provided that the industry remains at the initial R&D stage.
In March 2020, MOST issued one of the most important policy reference for China’s hydrogen technology future, the Application Guidance for 2020 Key National Specialized Projects of Renewable Energy and Hydrogen Energy Technology (“可再生能源与氢能技术”重点专项2020年度项目申报指南),1 which elaborates on performance indicators of three FC co-generation technologies (see Table 1):
Proton Exchange Membrane FC Combined Cooling, Heat and Power Generation (PEM FC-CCHP).
Solid Oxide Electrolysis Cell FC Combined Heat and Power Generation (SOEC FC-CHP).
Technologies of simulation, system assembly and energy management for FC-CCHP.
Table 1. Technology performance indicators of PEMFC-CCHP and SOEC FC-CHP
Unlike previous government policies that show general intension to develop FC cogeneration technologies but without further policy work done, the MOST guidance can be the first effective national policy to attract investment in advancing specific FC-CHP/CCHP technologies.
At provincial level, FC cogeneration has been trending popular since late 2018 in view of policies issued and demo application projects launched. So far, 19 provinces and cities have issued policies related to stationary FC (see Fig.1), which focus on two major applications:
FC-CHP system for household-use, public-use (i.e. school, hospital) and commercial-use (i.e. shopping mall, office building).
Distributed resources and back-up power for power plants and telecom stations.
Fig 1. 19 provinces with related policies for FC cogeneration
To compare, governments of coastal provinces/cities are more active in promoting FC cogeneration and other stationary applications compared to inland governments. One possible reason is that coastal areas are resourceful of by-product hydrogen (see Fig.2), which governments intend to reutilize to increase total energy efficiency and reduce emissions of the industry sector.
Fig 2. Distribution of byproduct hydrogen production by region in China in 2017
Aligned with government plans, demonstration projects of FC cogeneration applications have landed in some coastal provinces. For example, in Yingkou, Liaoning, a 2MW PEMFC-CHP demo project sponsored by EU-funded program was launched by a Chinese chemical company (Ynnovate) and other European enterprises (Nedstack, AkzoNobel, MTSA Technopower etc.). The project is designed for reusing by-product hydrogen produced from chlor-alkali factory to generate electricity, heat and water for self-supply. In Zhejiang, a similar project is under planning and will be jointly developed by a Chinese enterprise (Juhua Group) and two Japanese enterprises (Marubeni Corporation, JGC Holdings Corporation) to decarbonize caustic soda production of Juhua Group.2
Regarding to financial supports for FC cogeneration, two inland provinces, Sichuan and Guizhou, issued specific subsidies for developing demonstration projects while other provinces/cities have no specialized fiscal plans. This is probably because these two provinces intend to encourage more sectors than transportation to consume the huge amount of hydrogen produced from curtailed hydropower via water electrolysis in the future.
The emergence of FC cogeneration policies at both national and provincial levels shows governments increasing attention to diversified hydrogen FC applications in different sectors in addition to transportation sector.
【Existing issues and prospects for FC cogeneration industry】
Although the Chinese government have taken its step in leading the growth of FC cogeneration industry, many issues need to be resolved for the prosperity of this industry. The two predominant issues are the absence of specific implementation measures and financial incentives. Without effective policy guidance, private enterprises are unwilling to be the first mover in FC cogeneration industry due to uncertainty of future returns. Likewise, without government subsidies, low electricity prices discourage private enterprises to adopt FC cogeneration to generate electricity. More than that, a lack of knowledge about FC cogeneration and insufficient energy conversion rate lead to a small consumer market at current stage.
Despite of existing obstacles, FC cogeneration is anticipated to be the next-generation technology of stationary FC and will be widely applied in industry sector in light of policy and social trends.
Firstly, adopting FC cogeneration technology follows the national strategy of energy conservation and emissions reduction for industry sector, which is the second largest emitter in China. Particularly, FC cogeneration can help chemical manufacturers reutilize by-product hydrogen to generate self-used electricity and heat and increase total energy efficiency of chemical production. Accordingly, FC cogeneration realizes green production of electricity and heat, which reduces total emissions caused by chemical production and long-distance electricity transmission.
Secondly, FC cogeneration can serve as a solution to electricity deficiency in South and East China during the transition period from coal-fired power to clean energy power generation. In late 2020, industrial manufacturers in some southern provinces (i.e. Zhejiang, Hunan) has suffered from electricity supply shortage.3 This is caused by governmental electricity consumption plans as a result of control over coal-fired power generation and limited power generated by alternative energy sources. Hence, governments have encouraged industrial players to adopt distributed resources to tackle electricity deficiency. As an ideal distributed generation technology, FC cogeneration can be popular with industrial manufacturers, particularly those by-product hydrogen suppliers located in coastal areas where electricity supply is most likely to be insufficient.
Thirdly, FC cogeneration technology aligns with global sustainable development goals. Driven by China’s carbon-neutral goal by 2060 and the global trend of sustainable development, large-sized chemical manufacturers tend to adopt FC cogeneration system to demonstrate their social responsibility and corporate image as an eco-friendly manufacturer.
In short, the steady growth of FC cogeneration industry can be anticipated after the promising start in 2020 in consideration of policy guidance at national and provincial level, carbon-neutral goal and global sustainability cause. Should you have further questions about hydrogen fuel cell applications and related topics, please feel free to drop us an email at firstname.lastname@example.org.