“China has developed a world-leading industry in commercial vehicle applications for hydrogen fuel cell technology, with enterprises ranging from upstream raw materials to downstream products over the past decade,” said Robin Lin, chairman and president of Refire Group, a Chinese supplier of hydrogen fuel cell technologies.
China’s hydrogen economy is currently moving from a policy-driven one to a market-driven one, providing a huge boost to the entire industry, Lin said in an interview in Hong Kong last week.
“It’s hard to find another place in the world that has a large commercial vehicle market like China, a country that has huge demand for energy transition under the government’s carbon neutral goal,” he said.
Electric or hydrogen-powered buses? Hong Kong needn’t choose
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Nearly a third of its end-2023 fleet of 18,000 hydrogen fuel cell vehicles were sold last year alone, according to data from the China Association of Automobile Manufacturers, indicating the gathering pace. In a further sign of accelerating offtake, China targets to have at least 50,000 units on the road by 2025, according to its national plan.
According to Lin, China has seen significant reduction in the manufacturing cost of hydrogen fuel cell systems, which account for roughly half the cost of a hydrogen vehicle. The cost has dived from over 30,000 yuan per kilowatt in 2015 to less than 4,000 yuan per kilowatt now.
“In transport, heavy-duty trucks could be the first to achieve successful commercialisation of hydrogen fuel cell technology,” he said.
Shanghai-headquartered Refire submitted its prospectus with the Hong Kong stock exchange in February, aiming to raise more than US$100 million. The company’s backers include state-owned oil giant China Petroleum & Chemical, better known as Sinopec, Chinese venture capital firm Legend Capital, and Paris-based Cathay Capital.
Refire is a leader in China’s hydrogen fuel cell system market, controlling over 25 per cent of the pie. It currently powers more than 5,000 hydrogen fuel cell vehicles across China, the company said citing data from consulting firm Frost & Sullivan.
The company now has a broad spectrum of products and services covering the entire industrial chain of hydrogen, from upstream electricity-to-hydrogen production, to downstream hydrogen-to-electricity applications in commercial vehicles, power generation stations, and construction machinery.
Although current hydrogen-powered, heavy-duty trucks cost around 1 million yuan (US$138,400) in China, almost triple the price of traditional trucks, their life-cycle costs, after including the charges for refuelling, will reach parity by 2027 without subsidies, driven by rapidly declining production costs and falling costs of hydrogen fuel, according to Lin.
According to Frost & Sullivan, the global market for hydrogen consumption is expected to increase to US$186.3 billion in 2027, from US$134.5 billion in 2022. In China, the market for hydrogen consumption could reach 613 billion yuan in 2027 from 332.9 billion yuan in 2022, accounting for nearly half of the global consumption, it estimated.
In China, high-purity hydrogen generated as a by-product from industrial processes, such as Shanxi province, is around 25 to 40 yuan per kilogram at local hydrogen refuelling stations, while high-purity hydrogen in other regions, such as Shanghai, is around 50 to 70 yuan per kilogram at local hydrogen refuelling stations, according to Refire.
Hydrogen fuel can only compete with diesel vehicles if the price drops below 30 yuan per kilogram, according to Yi Baolian, an academician of the Chinese Academy of Engineering in a speech in 2023.