Yao Ting, You Yuxiang, Roland Berger

Fast growth of hydrogen energy market

1. Market scale

The global hydrogen energy market has been developing rapidly in recent years. China, as the largest market segment,is expected to see its national hydrogen energy output value exceed RMB1 trillion by 2030, providing a big number of opportunities for the regional hydrogen energy industrial chain. Figure 1 shows the hydrogen energy output value and capacity target in China from 2016 to 2050.

Figure 1: Hydrogen energy output value and capacity target in China 

from 2016 to 2050

The White paper on China's Hydrogen Energy and Fuel Cell Industry put forward the general target of China's hydrogen energy and related industries (see Figure 2 for details), that is, the proportion of hydrogen energy will hit 10% in the long term, the output value will exceed RMB12 trillion, as well as the holdings of hydrogen refueling stations, fuel cell vehicles, stationary power, fuel cell system and other related devices will increase.

Figure 2: General target of China's hydrogen energy and related industries

In addition, several core driving forces will shore up the rapid development of the hydrogen energy market: first, the hydrogen production scale will expand rapidly with a reduction in the cost of electrolytic water hydrogen production technology; secondly, the industry will break bottleneck in the industrialization of hydrogen energy in light of continuously lower production cost of fuel cell system, and hence the industry is expected to embrace a bright future for commercialization; third, the demand for hydrogen energy’s derivatives is increasing, so the energy consumption in key downstream sectors such as transportation, industry and construction and the proportion of hydrogen energy in the energy structure continue to rise.

For example, in the industrial field, it is estimated that the total consumption of hydrogen energy in iron and steel, as well as chemical industry will exceed 160 million tons of standard coal in 2050; at the same time, hot spots and industry-related policies will promote the rapid application of hydrogen energy. The upcoming Olympic Winter Game is a good example. China is actively developing the hydrogen energy industry by expanding electrolytic water-to-hydrogen capacity and hydrogen refueling stations, as an effort to welcome the Game; the central government has also consecutively issued policy documents to optimize the energy structure and ensure energy security so as to continuously promote the commercialization level of local hydrogen energy industry.

2. Supportive policies

The central government has been strongly supporting the development of hydrogen energy industry in recent years. Since hydrogen energy was written into the government work report for the first time on March 15, 2019, top-level policies have been continuously put on the table to promote the development of hydrogen energy industry.

The White Paper on China's Hydrogen Energy and Fuel Cell Industry was published on June 26, 2019, specifying the standard system, laws and regulations, pilot demonstration and other supportive policies required by the hydrogen energy and related industries.

Status quo and prospect of hydrogen energy materials

1. Hydrogen-manufacturing materials

There are multiple technical routes to produce hydrogen, including fossil fuel-to-hydrogen production, electrolytic water-to-hydrogen production, and chemical tail gas-to-hydrogen production. Among them, fuel-to-hydrogen production route has a big competitive edge in cost and hence it will remain the mainstream technology for a certain period in the future. Electrolytic water-to-hydrogen production technology has been well developed, which is beneficial from its characteristics - small investment, flexibility in expansion scale, zero pollution and high purity of the products, so it will become an important supplement to hydrogen capacity. However, the development of chemical tail gas-to-hydrogen production and new-type hydrogen production technology is restricted by insufficient raw materials supply and unmature technologies.

The selection of hydrogen production processes in different regions is specifically carried out based on the natural resource endowment in the regions. For example, in Shanxi, a province abundant with coal resources, coal-to-hydrogen production process is a more economical way because of the lower price of coal. On the contrary, in regions abundant with wind power, photovoltaic and hydropower, electrolytic water-to-hydrogen may be the most economical and environmentally-friendly method to produce hydrogen due to the lower electricity price. In regions in absence of special resource endowment, cost performance is the primary factor to consider before the production of hydrogen.

Hydrogen production by electrolyzed water – a kind of renewable energy will be taking the leading position of hydrogen supply in the longer term. At present, the proportion of fossil fuel-to-hydrogen production is decreasing because of a reduction in the fossil fuel production. A large amount of wind and light power is idled every year on the back of the government’s big subsidies on renewable energy, although the prices of wind power and photovoltaic power have fallen to the same level as those of coal power. The surplus power can guarantee lower cost for electrolytic water-to-hydrogen production, thereby increasing the proportion of hydrogen production by the process. In addition, the effective utilization of offshore wind power and the step-by-step breakthrough of seawater electrolysis technology will be another driving force for electrolytic water-to-hydrogen production.

Today, the main problem faced by the production route is big consumption of power, which keeps the production cost relatively high. Therefore, it is very important to reduce hydrogen evolution overpotential through advanced electrode materials, so as to the consumption of energy for electrolysis.High-performance electrode materials for electrolytic water are now a highly-concerned field of scientific research, as any technological breakthrough of advanced materials will fuel the development of the hydrogen energy industry in the long term.

2. Hydrogen storage materials

There are three main methods of hydrogen storage, gas-phase hydrogen storage, liquid-phase hydrogen storage and solid-phase hydrogen storage. Among them, gas-phase hydrogen storage has been dominant because hydrogen is convenient to be used by the method, the storage conditions are easily fulfilled and the cost is low. Liquid-phase hydrogen storage requires containers with double-layer vacuum insulation structure at extremely low temperature, which indicates a high technical threshold. However, the current technology causes big volatilization loss of liquid hydrogen. Therefore, liquid-phase hydrogen storage is less economical and is mainly used in the aerospace field. Solid-phase hydrogen storage is considered the most ideal method due to its advantages of safety, high efficiency and high density. The alloys used for the hydrogen storage method, such as titanium alloy and rare earth alloy, are the cutting-edge R&D direction in the field of hydrogen storage materials. With an improvement in the availability and a reduction in the cost of hydrogen storage alloys, solid-phase alloy hydrogen storage is expected to become the leading hydrogen storage method.

3. Hydrogen transportation materials

Among the various modes of hydrogen transportation, gas-phase hydrogen long tube trailer, gas-phase hydrogen pipeline and liquid-phase hydrogen tank truck are usually adopted in China. The technology of high-pressure long tube trailer is relatively mature, and hence it has been the major mode of hydrogen transportation by now. The technology of long-distance pipeline hydrogen transportation is still in the experimental stage, as some technological bottlenecks are yet to be tackled. For example, hydrogen is easily to leak through the weld junctions of pipeline materials, and there are some flaws such as hydrogen embrittlement and hydrogen corrosion. Once being debottlenecked, the mode will gain attention. Liquid-phase hydrogen tank tanker transportation is only used in the fields of aerospace and military because of the high consumption of energy liquefaction, high cost and high requirements on equipment.

Downstream applications of hydrogen energy

Hydrogen energy is widely applied in the fields of industry, electric power, heating, new energy vehicles and so forth. Hydrogen fuel cell market, as one of the key application fields, sees a continuous growth in recent years, as supported by the government’s subsidies, the booming of downstream hydrogen fuel cell automobile industry, and competitive endurance of fuel cells. It is expected that China's hydrogen fuel cell market will grow to RMB8.469 billion by 2022. Figure 3 shows China's hydrogen fuel cell market growth from 2017 to 2022.

Figure 3: China's hydrogen fuel cell market growth from 2017 to 2022        (RMB100 million)

Development opportunities and enlightenment

As a kind of clean, carbon-free, flexible, and efficient secondary energy with a wide range of sources and a variety of application scenarios, hydrogen energy has become an important driving force to promote the supply security and sustainable development of China's energy.

With the breakthroughs of electrolytic water-to-hydrogen production technology, the reduction in fuel cell cost, the emergence of downstream applications and the rollout of supportive policies, the whole hydrogen energy industry chain will enjoy faster development, with wide-scale commercialization on the cards. 

The production, storage, transportation and downstream applications of hydrogen energy all impose very high requirements on key materials. The continuous technological breakthroughs will create a large number of opportunities for key materials.

     The authors suggest that in the golden era of hydrogen energy market development, hydrogen-related enterprises should make diversification layout in proper timing according to the whole hydrogen energy industry chain’s core requirements for key materials, so as to gain competitive edge in the promising hydrogen energy market.