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ISSN 2753-7757 (Online)

China solidifies lead in global electrolyser market


Row of three hydrogen tanks with blue sky behind Photo: Adobe Stock/ImageFlow
China is installing new electrolyser capacity at a world-leading pace every year, a similar trajectory to that seen in the solar PV and wind industry, which the country continues to lead, according to the latest analysis from Rystad Energy

Photo: Adobe Stock/ImageFlow

China’s national plan identifies hydrogen as a key element in its low-carbon energy transition strategy, targeting 200,000 t/y of green hydrogen production by the end of 2025. However, the latest analysis from Rystad Energy suggests China will exceed that volume by the end of 2024. It forecasts that about 2.5 GW of hydrogen electrolyser capacity will have been installed by the end of the year, producing 220,000 t/y of green hydrogen, some 6,000 t/y more than the rest of the world combined.

Mainland China installed a total 1 GW of electrolyser capacity in 2023, ‘cementing its position as a world leader in the technology’s adoption’, according to Rystad Energy. The country already dominates not only the global solar panel supply chain, but also the wind turbine market.


However, a substantial portion of China’s hydrogen supply is derived from grey hydrogen, produced through coal gasification or steam methane reforming (SMR). If China intends to achieve its dual carbon objectives of peaking emissions by 2030 and achieving carbon neutrality by 2060, switching to low-carbon hydrogen production methods will be crucial, according to Rystad Energy.


It will also need to meet the stringent benchmarks set by European counterparts. Minh Khoi Le, Head of Hydrogen Research, Rystad Energy, notes: ‘The ambiguity surrounding the definitions of ‘low carbon’ and ‘renewable’ hydrogen within China’s policies is a notable concern. To truly catalyse meaningful change, it is imperative for China to adopt clear and stringent definitions that align with global best practices, such as those seen in Europe.’


The Rystad analysis also notes a geographical dislocation between China’s hydrogen demand centres in the east (currently met by grey hydrogen) and its abundant solar and wind energy resources in the north, which could be used to develop green hydrogen production. For example, Inner Mongolia and Gansu have set ambitious targets of 480,000 t/y and 200,000 t/y of renewable hydrogen production by 2025, but need pipelines to move this hydrogen out to the east of the country to meet demand there. Their efforts, combined with other provinces, would collectively surpass 1mn t/y, a five-fold increase compared to China’s national target. This supply-demand mismatch is prompting China to explore the expansion of its network of hydrogen pipelines.


One notable project highlighted by Rystad is the development of a 400 km pipeline by Chinese state-owned oil and gas company Sinopec, connecting Ulanqab in Inner Mongolia to Yanshan in Beijing. With initial capacity of 100,000 t/y, and plans to scale up to 500,000 t/y, this pipeline marks China’s first long-distance hydrogen conduit. Rystad also points to the 737 km hydrogen pipeline in Hebei province from Zhangjiakouto the port of Caofeidian via Chengde and Tangshan that is being developed by Tangshan Haitai New Energy Technology at a cost of some $845mn. If realised, it would be the world’s longest hydrogen pipeline. China Petroleum Pipeline Engineering Corporation, a Sinopec subsidiary, aims to expand this network to 6,000 km by 2050.


China has significant solar and wind power potential in its north and north-west regions, including Xinjiang, Gansu and Inner Mongolia. The nation’s solar photovoltaic (PV) capacity surged to 217 GW of new installations in 2023, 2.5 times the amount installed in 2022, according to Rystad’s latest figures. For wind installations, 76 GW was added in 2023, double that of 2022. Most new wind installations were in Inner Mongolia, with more than 24 GW of new capacity, and Xinjiang and Gansu, each with over 5 GW of new capacity. As such, it is unsurprising to see most green hydrogen projects being announced in these regions, says the market analyst.


However, despite commissioning multiple projects recently, challenges remain in ensuring electrolyser facilities can run at full capacity in China, notes Rystad. A major bottleneck is the significant renewable energy capacity required to power the electrolysers. For example, producing 1mn t/y of green hydrogen requires roughly 20 GW of onshore wind capacity. Consequently, hydrogen projects compete directly with other substantial electrification needs throughout China.


Despite these challenges, Rystad Energy expects the share of green hydrogen to continue to grow in China. By 2030, China’s four largest projects are expected to account for up to half of the country’s total green hydrogen production capacity.


To find out more about China’s energy transition, visit the Energy Institute Statistical Review Country Transition Tracker. See also New Energy World’s feature article ‘China’s solar eclipse of US and European PV’.