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Hydrogen energy is hailed as the "ultimate energy source of the 21st century." Among the three hydrogen production routes of grey hydrogen, blue hydrogen, and green hydrogen, green hydrogen is the only method that can break away from fossil energy and achieve clean decarbonization. It can also serve as an ideal carrier for the storage and conversion of renewable energy, making it considered the mainstream route for future hydrogen energy.

Among the four major green hydrogen production routes, which one represents the future trend? How will the path to reducing the cost of green hydrogen be advanced? This article will analyze and discuss these key issues in conjunction with exclusive interviews with industry experts.

There are four main technological routes for producing green hydrogen through water electrolysis: Alkaline Electrolysis (ALK), Proton Exchange Membrane Electrolysis (PEM), Solid Oxide Electrolysis (SOEC), and Anion Exchange Membrane (AEM).

Alkaline Electrolysis (ALK) technology is currently the most mature in the field of water electrolysis. The basic principle is that water is decomposed into hydrogen and oxygen through electrochemical reactions under the action of an electric current, with the two gases being released at the cathode and anode of the electrolysis cell, respectively.

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The working principle of PEM electrolysis is that water is decomposed into oxygen and hydrogen ions (H+) at the anode through a catalytic action. The hydrogen ions then cross the electrolyte membrane to reach the cathode, where they gain electrons to form hydrogen gas. After the reaction is completed, hydrogen and oxygen are collected and transported through the bipolar plates of the anode and cathode. This technology is currently in the early stages of marketization, with core components including polymer membranes with excellent proton exchange capabilities and cathode and anode catalytic layers that are closely attached to both sides of the electrolyte membrane.

AEM electrolyzers, as a new type of electrolysis equipment, use cation exchange membranes as separators and can operate over a broader pH range.

SOEC electrolyzers are high-temperature electrolysis devices. Their hydrogen production principle involves using solid oxides as electrolytes and operating under high-temperature conditions to achieve the electrochemical decomposition of water or carbon dioxide.

What are the advantages and disadvantages of these four technological routes at their current stage of development? During an exclusive interview with China Energy Construction North China Electric Power Design Institute, Senior Engineer Tian Jiangnan analyzed and compared the four technological routes for water electrolysis hydrogen production.

He stated that ALK is currently the most mainstream technological route, with a market share of about 95%. It mainly uses nickel mesh as the electrode and PPS material as the separator. Although this technology has a history of over a hundred years, it has structural limitations, such as a large gap between the electrode and the separator, low current density, poor pressure resistance of the separator, and a larger volume. PEM technology was proposed to address the low current density issue of ALK. It uses zero-gap membrane electrode technology, with advantages such as high current density and faster response speed. However, it also has drawbacks, such as the need for precious metals like platinum and iridium for catalysts, and reliance on imported materials for the separator, which limits its development. AEM technology combines the advantages of ALK and PEM, with benefits like zero-gap, high current density, and greater separator pressure resistance. It has seen rapid development in the past six months, with manufacturers already starting to introduce AEM products. SOEC technology is still in the laboratory stage. Due to the need to maintain a high-temperature state of around 800°C, its application scenarios are limited, mainly suitable for scenarios with waste heat generation, and it is far from commercialization.The Advantages and Market Potential of PEM Technology Are Gradually Becoming Apparent

Overall, PEM technology is the route most likely to achieve industrialization after alkaline water hydrogen production. So, what are the characteristics of this technology compared to alkaline water hydrogen production?

Shandong Sikesaisi Hydrogen Energy Co., Ltd. is one of the earliest national high-tech enterprises engaged in PEM pure water electrolysis hydrogen production equipment in China, with a history of more than 30 years, and has conducted in-depth research on PEM technology and equipment. In an exclusive interview with Yicai, Ding Xiaotao, the deputy general manager of Sikesaisi, said that PEM technology has three major advantages over alkaline water hydrogen production: it has full life cycle economy, better coupling with renewable energy, and high hydrogen purity that extends the life of fuel cells.

Firstly, from a cost perspective, the reason why alkaline water hydrogen production currently dominates the mainstream is mainly due to the low cost of equipment. However, when comparing the full life cycle cost, although the initial investment cost of PEM technology is relatively high, about 3-5 times that of alkaline water hydrogen production, its later maintenance cost is low and its service life is long, so the full life cycle operating cost can be equal to that of alkaline water hydrogen production.

Secondly, the ability to adapt to the variability of renewable energy is a key advantage of PEM technology. Ding Xiaotao said that PEM technology can quickly respond to the fluctuating, intermittent, and cyclical characteristics of green electricity such as wind and photovoltaic power, thus achieving better coupling and matching. This is mainly because the pressure difference separation process of alkaline hydrogen production will produce hydrogen-oxygen intermingling under power fluctuations, causing safety hazards, and the cold start of alkaline hydrogen production equipment requires more than 1 hour, with a slower response, while PEM has obvious advantages in these two aspects. The characteristic of PEM's adaptation to renewable energy determines that it can make greater use of wind and photovoltaic green electricity, thus enjoying the benefits brought by the decline in green electricity prices.

Thirdly, the purity of hydrogen produced by PEM equipment is high, and the types of impurities are few, making it the best hydrogen supply method for fuel cells or other high-quality hydrogen use scenarios. Studies have shown that the hydrogen produced by PEM equipment does not contain impurities such as carbon monoxide and sulfides that can cause irreversible damage to fuel cells, which can significantly extend the service life of fuel cells.

In addition, the research report of CICC also pointed out the advantages of PEM in load range and later maintenance. From the perspective of load range, the power of alkaline electrolyzers needs to be maintained at more than 30% (30%~100%) of the rated power, which will cause a certain waste when the renewable energy generation suddenly decreases; the power load range of PEM electrolyzers can reach 5%~125%, and the lower power limit can save electricity cost when the wind and photovoltaic power generation is small, while overload operation at the most effective time of wind and photovoltaic resource power generation can maximize the utilization rate of renewable energy.

In terms of maintenance cost and environmental protection, thanks to its smaller volume and weight, the transportation, installation, and equipment replacement and maintenance of PEM electrolyzers are more convenient and convenient, and forklifts can be used for operation, while alkaline electrolyzers need to be replaced with large lifting equipment; at the same time, alkaline electrolyzers use alkaline solutions, which need to be regularly maintained and treated, with higher maintenance costs, and the alkaline solutions themselves will cause environmental pollution, and the discharge problem needs to be considered.

Why is the scale of PEM technology, which has many advantages, still far less than that of alkaline water hydrogen production? Ding Xiaotao said that one of the important reasons why the market has not widely adopted PEM at present is that the hydrogen industry chain as a whole is still in the early stage of development, and the subsequent costs such as hydrogen storage and transportation are still relatively high, and the economic consumption methods after large-scale hydrogen production are still being explored, so most enterprises still prefer to choose alkaline water hydrogen production out of conservative considerations. However, with the development of the hydrogen energy industry and the maturity of downstream applications, the market potential of PEM technology in the future is huge. Ding Xiaotao estimated that the market share of PEM technology will reach more than 20% by 2026, and the cost of green hydrogen and gray hydrogen may be equal around 2030. At the same time, he also emphasized that the large-scale implementation of PEM requires not only the reduction of equipment costs but also the decline of green electricity prices and the reduction of the entire industry chain costs.

In terms of PEM applications, the CICC research report shows that the transportation field is the scenario with the highest application proportion. CICC predicts that PEM electrolyzers will achieve a wider application in the overseas chemical industry field with their strong wind and photovoltaic coupling characteristics, and the installed capacity in the chemical industry field will rise rapidly.Regarding AEM and SOEC technologies, Ding Xiaotao stated that AEM combines the advantages of alkaline water electrolysis and PEM technology, with costs falling between the two; while SOEC, although potentially promising in specific applications such as steelmaking, is more in the early stages overall, and both lack the capability for large-scale industrialization in the short term.

Key to Green Hydrogen Affordability: Reducing Equipment Costs and Electricity Prices

For hydrogen energy to ultimately become a cost-competitive energy source like photovoltaics, the focus is on cost reduction. Tian Jiangnan indicated that the industrialization and scaling of green hydrogen require the joint promotion of multiple factors. From the perspective of hydrogen production, reducing electricity prices and equipment costs are the most critical points.

He analyzed that, first, electricity prices account for about 50%-80% of the cost structure of water electrolysis for hydrogen production, representing the largest variable cost. The proportion of electricity prices in green hydrogen costs is related to the system configuration, such as the selection of water electrolysis equipment and the proportion of power source investment, which offers room for cost reduction. Second, water electrolysis equipment for hydrogen production accounts for about 70%-90% of the total fixed investment in hydrogen production stations, making it the most significant fixed cost. Currently, equipment prices are high, and reducing equipment costs can effectively lower hydrogen production costs. In addition, the electrolysis efficiency of water electrolysis equipment for hydrogen production is generally low, and improving electrolysis efficiency means that more hydrogen can be produced with the same amount of electricity, which is also an important means of cost reduction and efficiency enhancement.

Cost reduction for alkaline electrolyzers has already shown results and still has room for further improvement. A research report from Zheshang Securities shows that alkaline electrolyzers have basically achieved domestic production, with prices in 2023 being approximately 1.51 million USD/MW and 2.4 million USD/MW domestically and internationally, respectively, with membrane/electrodes accounting for about 57% of the cost. Tian Jiangnan stated that green hydrogen projects are currently in the demonstration process, and the market price for a single 1000Nm³/h alkaline water electrolysis hydrogen production system has already decreased by 2-3 million USD compared to around 2020, and he anticipates there is still room for a reduction of 1-2 million USD.

In contrast, PEM electrolyzers have higher prices and a slower pace of cost reduction. The main cost sources for PEM electrolyzers include bipolar plates, membrane-electrodes, and catalysts. A research report from Zheshang Securities shows that PEM electrolyzers had prices of approximately 8.9 million USD/MW and 8 million USD/MW domestically and internationally in 2023, with bipolar plates accounting for 53% of the cost. The domestic production rate of PEM electrolyzers in China is relatively low, mainly due to two reasons: first, the scarcity of platinum and iridium required for catalysts, which relies on imports from overseas; second, the proton exchange membranes are mostly perfluorosulfonic acid membranes, which have complex manufacturing processes.

Electricity costs also have a significant impact on green hydrogen costs. According to a research report from Guotai Junan, as electricity prices decrease, the downward trend in green hydrogen production costs is evident. Compared to gray hydrogen and blue hydrogen, green hydrogen has a cost advantage when electricity prices are below 0.15 USD/kWh and 0.25 USD/kWh, with hydrogen production costs of 9.89 USD/kgH2 and 15.27 USD/kgH2, respectively.

In addition to cost reduction, the convenience and safety of water electrolysis for hydrogen production are also important issues in the industry. Tian Jiangnan stated that current hydrogen production equipment is large in volume and heavy in weight. Recently, some manufacturers have introduced alkaline electrolyzers with a capacity of 3000Nm³/h, with a load exceeding 100 tons, which is not convenient for equipment transportation and safe operation. On the other hand, the zero-carbon nature of green hydrogen requires integration with renewable energy sources such as wind and photovoltaic power generation, which have characteristics of volatility, randomness, and intermittency. These characteristics may lead to safety hazards in water electrolysis equipment for hydrogen production.

It is reported that the pressure-bearing capacity of the diaphragms in water electrolysis equipment for hydrogen production is limited. The pressure-bearing capacity of the membranes in alkaline hydrogen production equipment is about tens of kilopascals, and in PEM hydrogen production equipment, it is about one hundred kilopascals. When the power supply from renewable energy sources is unstable, it may exceed the pressure-bearing limit of the membranes, leading to hydrogen-oxygen intermixing, which is a safety hazard that also needs to be addressed.

Multiple companies are accelerating the layout of electrolyzers.Domestic alkaline electrolyzer technology originates from the 718th Research Institute of CSIC. In the early days, the "three old families" of enterprises, including Tianjin Continental, Suzhou Jingli, and Tianjin Continental, divided the market. Today, the main players in alkaline electrolyzers are divided into three categories: The first category is the "three old families" of enterprises, including Tianjin Continental, CSIC Paimei Hydrogen Energy, Cockerill Jingli, Cummins, etc.; The second category is new energy enterprises that have crossed over to the field, including Sunshine Hydrogen Energy, Longi Hydrogen Energy, Huaguang Hydrogen Energy, and Trina Hydrogen; The third category is new entrants, including Guangdong Shengqing (a subsidiary of Shenghong Technology), Shuangliang Energy Saving, Hydrogen Era, Jingdian Equipment, Changchun Green Power, and Hydrogen Brilliance Energy, etc.

In recent years, the supply of electrolyzers has increased significantly. According to research and statistics by the High-tech Hydrogen and Electricity Industry Research Institute (GGII), the domestic shipment of electrolyzers for water electrolysis in 2023 reached 1.2GW (including exports, excluding R&D prototypes), a significant year-on-year increase of 61%. Among them, Paimei Hydrogen Energy ranks first in shipments, Longi Hydrogen Energy has entered the second place, and HuaDian Heavy Industry and Aerospace SiZhuo made it into the top five for the first time. The combined market share of the top five manufacturers is 54%, a significant decrease of 25% compared to 2022. The decline in concentration indicates that new players are entering the field, and the industry is in a stage of rapid development.

Compared to alkaline electrolyzers, PEM electrolyzers are currently more niche, with mainstream manufacturers mainly being foreign companies. The top five core manufacturers are Proton On-Site, Cummins, Siemens, Toshiba, and Shandong Saikex, accounting for about 70% of the market share, with a high degree of concentration. Among them, large and medium-sized PEM water electrolyzers occupy the first and second market segments.

In 2023, more than 40 domestic companies released new electrolyzer products, with electrolyzers continuously iterating towards the direction of large standard cubic meters, high current density, low power consumption, and lightweight. Industry insiders pointed out that after the initial bidding and small-scale construction and operation, the shipment of electrolyzers will enter a period of rapid implementation. It is expected that the demand will reach 3GW in 2024, and the demand for electrolyzers will reach 6GW in 2025, doubling year-on-year.

From the perspective of electrolyzer industry chain investment, the benefitting links are moving upstream due to the continuous decline in the price of complete equipment sets. Tian Jiangnan pointed out that before 2020, the first to benefit were the manufacturers of water electrolysis hydrogen production equipment, which have a larger profit margin. However, due to the influx of a large number of manufacturers in a short period, the profitability of the industry has been weakened. The supply chain of water electrolysis hydrogen production equipment, such as membranes, electrodes, machining, electroplating, etc., still has a larger profit margin.

Among listed companies, Huaguang Hydrogen Energy (600475.SH) successfully launched an alkaline electrolyzer hydrogen production equipment with a hydrogen production capacity of 1500m³/h in 2023 and completed performance testing and appraisal. The equipment's direct electricity consumption is 4.2 kWh per standard cubic meter of hydrogen at a standard current density and a pressure of 1.6MPa, which is at the leading level in the industry. At the same time, the company's new base construction plan for intelligent, green, and digital special equipment has also planned a production line for 500MW electrolyzers and hydrogen production systems.

Shuangliang Energy Saving (600481.SH) released a new JSDJ S1 series alkaline water electrolyzer in November 2023. The prototype of this product has a hydrogen production capacity of 1001.23m³/h, a direct energy consumption of 4.04kWh/Nm³@3000A/m², and a hydrogen purity of 99.99% at the gas-liquid separation outlet, with a service life of up to 20 years. Shuangliang's first phase of annual production of 300 sets of green electricity hydrogen production equipment was completed and put into production in September 2023, with an investment of 150 million yuan. The second phase of annual production of 700 sets of green electricity hydrogen production equipment has started, with an investment of 350 million yuan. After reaching production, the company's total production capacity will reach 1000 sets.

Yihuatong (688339.SH) mainly engages in the research and development and industrialization of hydrogen fuel cell engines. In 2023, the company began to enter the production of PEM electrolytic hydrogen production equipment through its subsidiary Yihuatong Hydrogen Energy Technology. Recently, Yihuatong built an alkaline-PEM hybrid hydrogen production platform in Zhangjiakou, which consists of four parts: wind and photovoltaic simulators, hybrid hydrogen production systems, hydrogen storage systems, and power grid simulators. This platform is a small-scale test verification platform for the upcoming 200MW wind-hydrogen integrated project in Zhangbei, aiming to make alkaline hydrogen production stable and smooth through scheduling algorithms, while PEM hydrogen production adapts to most fluctuations, and lithium batteries mainly play a frequency modulation role, with high-frequency charging and discharging to maintain the stability of the microgrid's frequency and phase. In an interview with First Financial, Yihuatong stated that the technical advantage of the company's electrolytic hydrogen production equipment lies in using the hybrid system to balance power grid fluctuations, maximizing the use of the characteristics of alkaline and PEM, and achieving complementary advantages.