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1、August 2023A Joint Report by Boston Consulting Group and the Team of Academician Minggao OuyangChina Hydrogen Industry OutlookContentsExecutive Summary 11.The Necessity of Developing Hydrogen Energy 41.1 Energy Crisis and Energy Structure Transformation 41.2 Advantages of Hydrogen Energy 61.3 Chinas
2、 Favorable Environment for the Development of Hydrogen Energy 82.End Uses of Hydrogen 122.1 Transportation 142.2 Energy Storage 212.3 Industrial Applications 273.Key Technologies Along the hydrogen Industry Chain 333.1 Hydrogen Production Innovation 333.2 Hydrogen Storage and Transportation 393.3 Hy
3、drogen-to-Power Conversion 423.4 Hydrogen Safety 48Conclusion 52Boston Consulting GroupAugust 2023Executive SummaryThe development of the hydrogen industry has attracted growing attention in recent years.With the frequent occurrence of extreme weather,governments are putting more effort into effecti
4、vely responding to climate change,and thus carbon neutrality is on the agenda for many countries.Meanwhile,the fossil energy crisis demonstrates the urgency for clean energy transition around the world,calling for a truly sustainable,net zero emission energy system.Hydrogen is a clean energy source
5、that widely exists in nature.The booming renewable energy with its volatile and intermittent nature has granted hydrogen a unique value in the context of carbon neutrality.Through power-to-hydrogen conversion,renewable electricity can be easily converted into hydrogen at a large scale for long-term
6、storage,transportation,and energy usage,which makes hydrogen an indispensable energy source in the future energy structure.In March 2022,Chinese authorities issued the Medium-and Long-Term Plan for the Develop-ment of the Hydrogen Energy Industry(20212035)(hereinafter referred to as“Plan”).As a nati
7、onal industrial plan,it clarifies the strategic positioning of hydrogen in Chinas future energy structure and details the development goals by phase for the hydrogen industry in China.The Plan systematically maps out hydrogens large-scale applications outside the transportation sector for the first
8、time,including energy storage,power generation,and industrial uses.The Plan has pointed out a clear direction and strengthened confidence in Chinas hydrogen industry.China Hydrogen Industry OutlookBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook2This report is a joint work of Boston
9、 Consulting Group(BCG)and the team of Minggao Ouyang,who is an academician of the Chinese Academy of Sciences and the Chairman of the International Hydrogen and Fuel Cell Association.The report reviews the develop-ment trends of the global and Chinas hydrogen industry from both industrial and tech-n
10、ological perspectives,with an in-depth discussion on hydrogens large-scale applications,the development path,and key technology innovation directions.The report also intends to shed light on the prospects of the hydrogen industry.The development of the hydrogen industry relies on the“pull effect”fro
11、m the scalable consumption of hydrogen downstream.Such high potential uses include hydrogen-fueled transportation,hydrogen energy storage,and industrial applications.Hydrogen in the transportation sector has made notable progress in fuel cell electric vehicles.With continuous technology breakthrough
12、s and business model innovations,hydrogen-fueled transportation serves as the“leading”application of green hydrogen by connecting the processes in the hydrogen industry chain and boosting the development of the whole hydrogen ecosystem.Hydrogen as an energy carrier is the most promising application.
13、When used for long-term energy storage,hydrogen can enable the application of renew-able energy,and significantly improve the adoption of renewable electricity in the global energy structure.Hydrogen used as an industrial feedstock is where most hydrogen is consumed today.With the development of the
14、 hydrogen industry chain and continuing cost reduction,green hydrogen is expected to gradually replace gray hydrogen and thus decarbonize the global industrial sector.The above development cannot be realized without technology innovations across the hydrogen industry chain.For hydrogen production,to
15、 cope with various large-scale green hydrogen production scenarios,improvements in system efficiency,safety and intelligent features are still required for all technology routesincluding alkaline electrolysis cells(AECs)of higher commercial readiness,proton exchange membrane(PEMEC)in develop-ment,an
16、d anion exchange membrane(AEMEC)and solid oxide electrolysis cells(SOECs)in the laboratory stage.For hydrogen storage and transportation,compressed gaseous hydrogen has dominated the Chinese market,with ongoing R&D efforts on increasing the working pressure while ensuring safety;liquefied hydrogen s
17、torage and transportation have been commercialized at scale overseas;other hydrogen carriers are also being explored in commercial applications.Hydrogen-to-power conversion is essential to hydrogen utilization.Among the technology routes,fuel cells are theoretically more suited for dis-tributed powe
18、r,while gas turbines and boilers perform better in larger-scale power plants.All three technologies have respective development routes and demonstration scenarios,and commercial products can be launched and applied before 2030.Hydrogen safety management has become an emerging field in recent years.T
19、he large-scale hydrogen Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook3adoption poses new challenges to safety management,hence requiring systematic safety management of all processes combined with digital tools in terms of intrinsic safety,active safety,and passive safety.A new e
20、ra of hydrogen has arrived.Fueled by the joint efforts of policy,technology,demand and investment,all-around breakthroughs along the hydrogen industry chain can be expected.The hydrogen industry is on track to grow into a trillion-dollar market in the next decade,and ultimately to enable the zero-ca
21、rbon transformation of the global energy structure.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook41.The Necessity of Developing Hydrogen Energy In July 2023,the world experienced its hottest month on record,with extreme heat waves sweeping across China,Europe,and parts of the US.T
22、he frequency of extreme hot weather has increased since 2015,warning that global warming is intensifying.To avoid the devastating consequences of climate change,we urgently need to reduce carbon emissions through a clean energy transition.In this context,hydrogen,as a green energy source with multip
23、le advantages such as zero emissions and high energy value,has received increased attention in the past decades.As a responsible country and one of the leaders in addressing climate change,China is creat-ing a favorable environment for the hydrogen industry to realize the 3060 decarbonization vision
24、.1.1 Energy Crisis and Energy Structure TransformationOver the past 200 years,the world has undergone three energy structure transformations.(See Exhibit 1.)The first was the transition from traditional biofuels to coal,which hap-pened with the first industrial revolution in the late 19th century.Th
25、e second transition 32Global primary energy consumption,18002022(EJ)02RenewablesOil and gasCoalTraditional biomassRenewables are expected to replace fossil fuels in the third energy transitionEnergy consumption of oil and gas exceeded that of coalEnergy consumption o
26、f coal exceeded that of traditional biomassSource:BP Statistical Review of World Energy;Our World in Data;BCG analysis.Exhibit 1|Global primary energy consumptionBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook5from coal to oil and gas occurred in the first half of the 20th century,
27、driven by the widespread application of internal combustion engines.We are now in the third energy transition,with renewable energy expected to replace fossil fuels in the future.The energy crisis is one of the major factors of the third energy transition.During the past 60 years,the global primary
28、energy consumption has almost quadrupled1.It is doomed to be unsustainable by solely relying on fossil fuels in the long term.In recent years,the inequality of energy resources among countries and the geopolitical tensions further exac-erbated the impact of the energy crisis,accelerating the energy
29、transition momentum.Carbon neutrality is another driver for the energy transition.In 2015,196 Parties of the United Nations signed the Paris Agreement at COP21,targeting to limit the increase in the global average temperature to below 2C above pre-industrial levels,preferably below 1.5C.To achieve t
30、his goal,at least 65%of the total final energy consumption would be or come from renewables in 20502.(See Exhibit 2.)1 Our World in Data https:/ourworldindata.org/grapher/global-primary-energy.2 International Renewable Energy Agency(IRENA),Global Energy Transition:A Roadmap to 2050 https:/www.irena.
31、org/publications/2019/Apr/Global-energy-transformation-A-roadmap-to-2050-2019Edition.CO2 budget is expected to be exhausted in 2037 if the current carbon emission level remainsReference case:Maintaining the current carbon emission level,warming at 2.63.0C by 2050Low-carbon roadmap:Reducing carbon em
32、issions to keep warming below 2C by 20501,2001,500200302035204020452050Cumulative energy-related carbon emissions,20152050(Gt CO2)Energy-related CO2 budget 2C,20152050:760 Gt1Source:IRENA;BCG analysis.1 At 66%probability.Exhibit 2|Cumulative energy-related carbon emissions fore
33、castBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook6In the third global energy transition,hydrogen will be playing an important role.Hydrogen is a key pathway to achieve carbon neutrality,as the energy releasing process of hydrogen is carbon free.Hydrogen can empower the large-scal
34、e applications of renewable energy.Power gen-eration from renewables(e.g.,wind,solar power)is by nature more volatile than that of conventional fossil fuels,which makes it difficult to match the power supply with the load of demand.Hydrogen can address the challenge as a long-term and scalable energ
35、y storage carrier.As the energy transition continues,the share of hydrogen in global final energy consump-tion is expected to reach 10%to 15%in the net zero emissions scenario in 20503.(See Exhibit 3.)1.2 Advantages of Hydrogen EnergyAlthough hydrogen only accounts for less than 1%of global final en
36、ergy consumption today4,it has huge potential for wider application owing to its unique advantages.(See Exhibit 4.)3 International Energy Agency(IEA),Global Hydrogen Review 2021 https:/www.iea.org/reports/global-hydrogen-review-2021.4 International Energy Agency(IEA),Global Hydrogen Review 2021 http
37、s:/www.iea.org/reports/global-hydrogen-review-2021.202020302050100%HydrogenRenewables1ElectricityNatural gasOilCoalGlobal final energy consumption by source:2020,2030&2050(in 2050 net zero emission scenario)1%50,000 units of FCEVs stock globally,accounting for 0.03%of total hydrogen consumption At a
38、n early stage,very small share of current hydrogen demand,while pilot projects are landing and expanding globally Largest and the most mature application,99%of total hydrogen demand,yet currently dominated by gray hydrogen As a clean energy source Explored in the energy sector as a clean carrier for
39、 energy storage(via energy conversion between electricity and hydrogen)to generate power or transported and consumed for other use cases As an industrial feedstock Widely used in refining,chemical(production of ammonia and methanol),iron and steel(DRI1 production)sectors,etc.The energy utilization o
40、f hydrogen lays the foundation for renewable grids,facilitates the adoption of clean energy,and promotes the transformation of a green energy system Replace the current gray hydrogen with green hydrogen to decarbonize the mature industryPositioningStage of developmentUse caseTransportationIndustrial
41、EnergySource:IEA;BCG analysis.1 DRI=direct reduced iron.Exhibit 6|Use cases of hydrogentransportation,energy and industrialIn the transportation sector,hydrogen directly used as a power resource can be one of the important components and key technology pathways of zero-emission transportation.This u
42、sage is emerging,especially fuel cell electric vehicles(FCEVs)for heavy-duty long-haul road transportation,driven by the advancement of fuel cell technology,expansion of hydrogen infrastructures,and accelerations from policies.More importantly,hydrogen-fueled transportation serves as the pioneering
43、application of green hydrogen by connecting the processes in the hydrogen value chain and boosting the development of the whole hydro-gen ecosystem.Once the economic viability is proven,FCEVs are expected to become the growth engine for hydrogen demand in the short to medium term.The most promising
44、use of hydrogen is believed as a carrier for energy storage and power generation.Hydrogen is an ideal long-term energy storage solution for renewable power grids,as well as a clean energy source for flexible power generation.Nowadays,there have been various explorations and practices,including hydro
45、gen-fueled gas tur-bines,hydrogen or ammonia blending in boilers,and fuel cells for combined heat and power(CHP).Despite the challenges in technologies and cost,the energy applications of hydrogen are rapidly expanding and driving massive growth in the industry.Boston Consulting GroupAugust 2023Chin
46、a Hydrogen Industry Outlook13Hydrogen-fueled transportation and fuel cells have been the most active areas of investment and financing in the hydrogen industry chain in the past,fully reflecting the leading position of transportation uses of hydrogen.Meanwhile,with the transportation sector driving
47、the commercialization of the entire industry chain,other applications and upstream industries have also begun to attract more financing and investment,indicating that Chinas hydrogen industry has entered a full-blown stage of development.In this context,many new companies are emerging,and those who
48、excel in technology,supply chain integration,and commercial resources will gain first-mover advantages and are expected to grow into global leaders in the hydrogen industry.Statistics show that in 2021,70%of the disclosed financing deals in Chinas hydrogen industry were related to fuel cells and hyd
49、rogen-fueled transportation,including the fuel cell and its key component manufacturing and vehicle manufacturing.The rest focused on the key steps of the hydrogen industry chain,such as electrolyzers,storage and transportation.In 2022,although half of the investment deals still went to fuel cells a
50、nd hydrogen-fueled transportation,deals in upstream sectors increased rapidly,indicating that both strategic and financial investors started to pay more attention to the upstream key processes and other use casesfrom core materials to electrolyzers,from hydrogen storage to hydrogen consumption.Inves
51、tment and Financing of the Hydrogen Energy Industry in ChinaDisclosed investment of hydrogen industry in China,20212022#of deals642Others10Fuel cell stack1Bipolar plates12022MembraneFuel cell compo-nentsFuel cell systemTransportation equipment1826Fuel cells and hydrogen-fueled transportat
52、ionOther sectors252452652022Hydrogen equipmentcomponents21Hydrogen refuelingElectrolyzer1020211Storage and transporationHydrogen gas turbineEnergy operation826Source:China Renaissance;BCG analysis.Note:Only the number of deals is available;the total funding raised is not disclosed.1 Gas-liquid separ
53、ators,compressors,electrical equipment,etc.2 Components of hydrogen production,storage,transportation and refueling equipment,such as mechanical and electrical equipment/gas-liquid separation equipment.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook14Hydrogen is not new to industri
54、al applications,as it has been widely used as an indus-trial feedstock of various sectors for decades.In recent years,decarbonization has started driving the development of green hydrogen as the replacement for gray hydrogen.The existing infrastructures for hydrogen transmission,storage,and utilizat
55、ion will effectively promote the rapid implementation of green hydrogen adoption in the industrial sector.To realize the large-scale replacement of gray hydrogen,the cost competitiveness of green hydrogen is crucial.2.1 Transportation2.1.1 The Role of Hydrogen in the Transportation SectorTransportat
56、ion has been an emerging sector for hydrogen usage.During the past decades,the transportation sector has witnessed huge efforts and notable progress in decarbonization through electrification.While in those hard-to-electrify segments(e.g.,long-haul heavy-duty trucking,shipping,and aviation),hydrogen
57、-based fuels become another pathway.Despite the limited demand today,hydrogen-powered transportation is meaningful to the energy structure evolvement,as it marks an expansion of hydrogen application from an industrial feedstock to a power source.Beyond the end application in transportation itself,th
58、e hydrogen application demonstration in transportation will also drive the whole hydrogen industry chain(including hydrogen production,storage and transportation,and fuel cell components)to scale up and prosper.Among the transportation modes,road transportation represented by fuel cell electric vehi
59、cles(FCEVs)is the major source of hydrogen demand and the most significant appli-cation of hydrogen energy in the transportation sector.Demonstrations of hydrogen fuels in rail and shipping are ongoing as well.For example,2022 saw the worlds first hydrogen-powered train fleet in Germany10 and the wo
60、rlds first liquid hydrogen-powered ferry in Norway11.Regarding aviation,Airbus has set a target to launch the hydrogen-fueled ZEROe aircraft by 203512;however,so far there is no available commercial application.In the following part we will focus on FCEVs,the most discussed hydrogen transportation e
61、nd use.10 France24,“WhistleblowsinGermanyforworldsfirsthydrogentrainfleet”https:/ OffshoreEnergy,“BallardfuelcellsfortheworldslargestLH2-poweredferry”https:/www.offshore-energy.biz/bal-lard-fuel-cells-for-worlds-largest-lh2-powered-ferry/.12 Airbusofficialwebsitehttps:/ Consulting GroupAugust 2023Ch
62、ina Hydrogen Industry Outlook152.1.2 Hydrogen-Powered VehiclesHydrogen-powered vehicles mainly refer to fuel cell electric vehicles(FCEVs),which use a fuel cell that generates electricity using oxygen from the air and compressed hydrogenin combination with a small battery,or supercapacitorto power t
63、he motor.Another technical route is hydrogen internal combustion engine(H2-ICE)vehicles that burn hydrogen instead of gasoline or diesel in a modified internal combustion engine to power vehicles.Although H2-ICE technology is even at an earlier stage of development compared with fuel cells,it is als
64、o being pursued by some automakers like Cummins,Toyota,Weichai,and BAIC,for potential cost advantages by leveraging existing ICE tech-nologies,and better performance competitiveness under high loads and harsh working conditions13.Along with the rapid rise in zero-emission vehicle adoption,the global
65、 FCEV market wit-nessed strong growth.With more than 17,000 FCEVs sold in 2021(over 70%year-over-year growth),global fuel cell vehicle stock exceeded 50,000 units by the end of 2021.Passenger vehicles dominate the global FCEV stock by 2021,partially because automakers in Japan and South Korea are ea
66、rly starters in FCEV development with passenger vehicle models already sold globally,represented by Hyundai Nexo and Toyota Mirai.Meanwhile,the mainstream FCEV market in China is commercial vehicles and buses,and Chinese OEMs efforts are focused on developing fuel cell commercial vehicle models.(See
67、 Exhibit 7.)Four key drivers of FCEV development are listed below.Fuel cell technology development.R&D efforts on precious metal catalyst reduction or replacement,together with the scale-up of the fuel cell component value chain,are driving fuel cell systems to be more efficient,durable,and cost-eff
68、ective.The fuel cell system cost has rapidly declined to USD 700 per kilowatt(RMB 5,000 per kilowatt)in China in 202114.The Energy-Saving Vehicle and New Energy Vehicle Technical Roadmap 2.015 further targets fuel cell system cost to be USD 300 per kilowatt(RMB 2,000 per kilowatt)in 2025 and USD 85
69、per kilowatt(RMB 600 per kilowatt)in 2030 to 2035,which is also in line with the US target of USD 80 per kilowatt16 around 2030.13 Cumminsofficialwebsitehttps:/ WANGHewu,OUYANGMinggao,LIJianqiu,&YANGFuyuan.(2022).“Hydrogen Fuel Cell Vehicle Technology Roadmap and Progress In China.”Journal of Automo
70、tive Safety and Energy,13(2),211.15 China Society of Automotive Engineers(SAE),Energy-Saving and New Energy Vehicle Technology Roadmap 2.0.16 US Department of Energy,Fuel Cell Technologies Overview(2021)https:/www.hydrogen.energy.gov/pdfs/review21/plenary8_papageorgopoulos_2021_o.pdf.Boston Consulti
71、ng GroupAugust 2023China Hydrogen Industry Outlook16 Supporting infrastructure development.The hydrogen infrastructure for FCEVs spans across hydrogen production,storage and transportation,and distribution,in which hydrogen refueling stations(HRSs)are currently the major bottleneck of FCEV developme
72、nt.Therefore,players in the public and private sectors are encouraged to invest in HRS networks in order to pave the way for FCEV adoption.With the contin-uous push for HRS construction,nearly 1,000 HRSs have built globally by the middle of 2022.(See Exhibit 8.)The HRS operation relies on a stable a
73、nd economical hydro-gen supply either from a centralized production facility or a distributed onsite hydro-gen production system at the HRS.Some believe that the onsite hydrogen production at HRS can be a promising solution,as it avoids fuel storage and transportation from the production site to the
74、 HRS,which can be costly and inefficient17.Hydrogen fuel cost reduction.Fuel costs account for more than half of the TCO for a Class 8 fuel cell truck,hence expensive hydrogen price has been another constraint on FCEV adoption.Currently,typical hydrogen pump prices exceed USD 10 per kilo-gram in Jap
75、an,the EU and the US,and range around RMB 40 to RMB 70 per kilogram 17 International Council on Clean Transportation(ICCT),Cost of Renewable Hydrogen Produced Onsite at Hydrogen Refuel-ing Stations in Europe(2022)https:/theicct.org/publication/fuels-eu-onsite-hydro-cost-feb22/.+64%+64%740
76、2040603k unit2025202020213552Fuel cell electric vehicle stock by segment,20172021Fuel cell electric vehicle stock by region,206890k unit2201812019315t GVW,assumed annual driving distance of 100,000 km to 160,000 km(depending on jurisdiction).2 I
77、ncluding vehicle purchasing subsidies(until 2030)and toll waiver(until 2030),if applicable.3 Energy costs assumptions:2023 actuals;from 2025 to 2028,return to pre-crisis levels by extrapolating historical growth rates with 2019 as the starting point.Exhibit 9|Fuel cell HDTs likely to reach TCO parit
78、y vs.diesel HDTs before 2030 in all major marketsBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook19The2022BeijingWinterOlympicshasbeenthe first Olympic event that achieved carbon neutrality.It also marked the worlds largest demonstration of the FCEV application and its infrastructur
79、e,where Chinas commitment to developing the FCEV value chain was showcased.During the event,more than 1,000 hydrogen vehicles were in operation demonstration with 11 hydrogen production sites,over 30 hydrogen refueling stations,and a data center which oversaw the operation of the full chain.Case Stu
80、dy 1:Hydrogen-Fueled Transportation in the 2022 Beijing Winter Olympics 1,000+FCEVs,including 800+buses,140 passenger vehicles,some trucks and catering vans Vehicles from automakers including Beiqi Foton,Geely,Yutong and Toyota;and fuel cell systems from SinoHytec and Toyota FCEVs tested in Zhangjia
81、kous wintry climates,where temperatures during competitions have plummeted to-17C 11 hydrogen production sites The Shell-Zhangjiakou City Transport production facility with a 20-MW capacity of green hydrogen production,being one of the largest green hydrogen electrolyzers in the world 30+hydrogen re
82、fueling stations for demonstration with a daily refueling capacity of 23.5t Most of the stations constructed by Sinopec and PetroChina Combined data for hydrogen production,transportation and vehicle operation in order to ensure safety during production and operation Scientists to analyze the effect
83、s of carbon emission reduction based on the dataHydrogenproductionTransportationand distributionData center forhydrogen energyand FCEVsFCEVs Source:Literature research;BCG analysis.2022 Beijing Winter Olympics:worlds largest demonstration of fuel cell vehiclesBoston Consulting GroupAugust 2023China
84、Hydrogen Industry Outlook20Xiongan New Area is Chinas national strategic developmentzoneannouncedin2017.Basedonthe guiding principle of“prioritizing ecological conservationandboostinggreendevelopment”,Xiongan has set a target to become“the highland of hydrogen industry research and innovation”.In202
85、2,ChinaSinopecGroupannounced to build the first advanced onsite hydrogen production and refueling station in Xiongan,sponsored by the Ministry of Science and Technology of China.The onsite hydrogen production and refueling model will reduce about 30%of the total station cost and realize around 20%ec
86、onomic promotion of the hydrogen produced.This national lighthouse project will also witness innovations like hydrogen production systems,hydrogen safety management,and intelligent management.Case Study 2:Advanced Onsite Hydrogen Production and Refueling Station in XionganElectrolyzer system innovat
87、ion to enhance efficiency Innovative cartridge stack design to realize onsite cell replacement and upgrade Worlds first pressurized and standardized alkaline stack to realize 80%electrolysis efficiency levelSmart and safety system to achieve digital management Hydrogen leak detection for the whole h
88、ydrogen filling station Digital management and predictive maintenance for key equipment in the stationOnsite hydrogen production model to reduce cost Reduce hydrogen cost by 20%via onsite hydrogen production and eliminating transportation processA national lighthouse project sponsored by the Ministr
89、y of Science and Technology of ChinaSafe andintelligentEconomicalInnovative First intelligent onsite hydrogen production and refueling station of Sinopec in Xiongan New Area Expected start of operation in 2025Source:Ministry of Science and Technology of China;China Sinopec Group;BCG analysis.Xiongan
90、,China:Intelligent onsite hydrogen production and refueling stationBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook212.2 Energy Storage2.2.1 The Role of Hydrogen in Energy StorageThe intermittent nature of renewable energies brings new challenges to the conventional power grid syste
91、m.To accommodate the variability,the power grid requires an energy storage solution capable of absorbing the surplus renewable electricity produced during off-peak hours,and storing the energy for a longer duration at scale to smooth out the seasonality issue.Also,it must be green.(See Exhibit 10.)L
92、oad(demand)Solar generationExcessShortageSeasonal energy storage0.70.50.60.80.91.01.11.21.31.41.5Normalized electricity generation and demandMonthJanAprJulOctDecSource:Gabrielli,P.,Poluzzi,A.,Kramer,G.J.,Spiers,C.,Mazzotti,M.,&Gazzani,M.(2020).“Seasonal energy storage for zero-emissions multi-energy
93、 systems via underground hydrogen storage.”Renewable and Sustainable Energy Reviews,121,109629.Exhibit 10|The intermittency of renewable energyHydrogen energy storage system(HESS)hereby attracts attention for its huge potential in renewable energy intensive power grids because of its big capacity,lo
94、ng period,and clean and efficient nature.(See Exhibit 11.)Hydrogen is an efficient and clean energy carrier as it is energy-dense and carbon-free.As a form of chemical energy storage,HESS can preserve energy over long periods(months or seasons)and can be scaled up without geo-graphical limitations(u
95、nlike pumped storage hydropower).Its energy storage capacity can be expanded independently from the power and hydrogen production rates by increasing Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook22the size of the tanks or reservoirs with low marginal costs.Additionally,hydrogen c
96、an be easily transported across regions(which is almost impossible for stationary batteries)and utilized as a commodity in versatile end uses.All these advantages make HESS a promis-ing solution in an era of decarbonization,with demonstrations ongoing around the world.Looking ahead,we will see diver
97、sified technologies emerging in the energy storage market as energy structure shifts and various forms of energy storage systems are expected to supplement each other.By the end of 2021,global energy storage capacity exceeded 200 gigawatts,in which pumped storage hydropower was still the most widely
98、 used technology(86%)for long-term and large-scale energy storage,followed by lithium-ion batteries(11%)for short-term and distributed renewable energy storage20.With the growing penetration of renewable energy,HESS is expected to play an increasingly important role in the large-scale seasonal stora
99、ge of renewable energy on the generation side,especially in regions with abundant solar and wind resources such as Northwest China.20 China Energy Storage Alliance(CNESA),Energy Storage Industry White Paper 2022.ElectricalMechanicalElectrochemicalHydrogen-relatedDischarge durationMonthsWeeksDaysMinu
100、tesSecondsHours1kW10kW100kW1MW10MW100MW1,000MWHydrogenCompressed airenergy storagePumped hydroSodium-sulfur batteries/Flow batteriesLithium-ionbatteriesFlywheelsSupercapacitorSystemcapacitySource:BloombergNEF.Note:System capacity and discharge duration are based on general use,rather than technical
101、limitations.Exhibit 11|Size and discharge durations by energy storage technologyBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook232.2.2 Applications of Hydrogen Energy Storage in Renewable Energy Power GridsA hydrogen-based chemical energy storage system encompasses hydrogen product
102、ion,hydrogen storage and transportation,and power production using hydrogen as a fuel input21.(See Exhibit 12.)The application of HESS centers around the energy conversion between hydrogen and other power sources,especially electricity.In a bidirectional “power-to-gas-to-power(P2G2P)”process,hydroge
103、n is produced from water with electrolyzers powered by surplus renewable electricity,then stored and fed back for generating electricity with gas turbines or fuel cells while giving off only water and heat as by-products with no carbon emissions.Alternatively,in the one-way“power-to-gas(P2G)”process
104、,the stored hydrogen can be transported and consumed as a commodity for various end uses,such as industrial and transportation sectors22.21 MIT,The Future of Energy Storage(2022)https:/energy.mit.edu/research/future-of-energy-storage/.22 US Department of Energy,Energy Storage Grand Challenge Roadmap
105、(2020)https:/www.energy.gov/energy-storage-grand-challenge/articles/energy-storage-grand-challenge-roadmap.GenerationTransmission&distributionConsumptionRenewables:Solar PV/windElectrolyzerHydrogen storageLocal generationusing fuel cells/engines/turbinesPower gridsHydrogen energy storage power stati
106、onsRefueling stations(potentially with onsite H2 production)IndustrialHydrogen transportationP2G1:CurtailmentreductionG2P2:Capacity firming and fluctuation mitigation Direct utilization in end usesPeak shavingDistributed generation/CHP/backup power3HydrogenElectricityLoad levelingSource:BCG analysis
107、.1 P2G=power-to-gas.2 G2P=gas-to-power.3 Household use included.Exhibit 12|The applications of hydrogen energy storage system(HESS)in renewable energy power gridsBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook24HESS may enhance and optimize the system flexibility and capacity of th
108、e energy power grids when deployed across generation,transmission and distribution(T&D),and con-sumption.On the generation side,with hydrogens participation in flexible power genera-tion,the P2G2P process with HESS reduces renewable curtailment and addresses capacity firming,which smoothes out the p
109、ower output and controls the ramp rate.HESS can also serve for load leveling of the transmission grid,as well as peak shaving or peak-valley spread arbitrage on the demand side as a buffer,backup power,and off-grid power supply.2.2.3 Progress and Challenges in Hydrogen Energy StorageHESS is in the p
110、rocess of being demonstrated in completion,with multi-megawatt scale integrated systems operating under real-world,grid-relevant operating conditions23.Ambi-tious project plans have been observed across countries.In China,HESS pilot projects are expected to soar for over 200 megawatts in the pipelin
111、e in the following three years.For example,in December 2021,megawatt-scale proton exchange membrane(PEM)electrolysis hydrogen production,hydrogen energy storage and fuel-cell power generation systems were put into operation in Luan,Anhui province,by a subsidiary of State Grid Corporation of China in
112、 collabo-ration with the Dalian Institute of Chemical Physics.The project has a hydrogen production capacity of 220 m3/h,equipped with a 200-kilogram storage container(20 MPa)and six sets of 200-kilowatt fuel cell power generation systems,marking the first megawatt-scale hydrogen energy storage powe
113、r station in China24.Besides that,a series of projects,such as the“Renewable electricityhydrogenelectricity and heat”demonstration in the Tibet Autonomous Region by the State Power Investment Corporation25 and the first HESS demonstration in Shanxi province by China Datang Corporation26,will also be
114、 put into operation in the next three years.As the demand for flexibility in the electricity grid increases,with ongoing upgrades of power plants,HESS is likely to see scalable applications in China in this decade.(See Exhibit 13.)While power generation by hydrogen-fueled gas turbines is more appli-
115、cable to regions rich in natural gas,a special case for China is that ammonia co-firing in coal power plants with minor equipment modifications can be more plausible,as China still relies heavily on coal for power generation and has a large base of coal-fire 23 US Department of Energy,Energy Storage
116、 Grand Challenge Roadmap(2020)https:/www.energy.gov/energy-storage-grand-challenge/articles/energy-storage-grand-challenge-roadmap.24 P http:/ Bhttps:/ Datong Government http:/ Consulting GroupAugust 2023China Hydrogen Industry Outlook25facilities.Clean ammonia converted from green hydrogen can be b
117、lended into coal to decarbonize conventional coal power plants,which was already demonstrated by China Energy Investment Corporation on a 40-megawatt coal-fire generator set with a 35%blending rate of ammonia27.In France,Smurfit Kappa Group has successfully completed the testing phase of an innovati
118、ve hydrogen P2G2P project,Hyflexpower,in 2022,marking the first industrial-scale facility in the world to introduce an integrated hydrogen gas turbine demonstra-tor28.In this project,hydrogen was produced by the electrolyzers and used in a gas turbine with a mix of 30%hydrogen and 70%natural gas for
119、 power generation.In the US,the most representative project,the Advanced Clean Energy Storage(ACES)project in Utah,aims to develop one of the worlds largest HESS facilities.The storage facility will provide long-term seasonal energy storage to Intermountain Power Plant(IPP)near Delta,Utah,a coal-fir
120、ed plant that is slated to be repowered 27 P http:/ SmurfitKappaofficialwebsitehttps:/ Flexibility upgrades of coal power plants supplemented by energy storage Power generation with gas and hydrogen Distributed PVDemand Load optimization and demand response Microgrid based on backup power V2Gdistrib
121、uted energy storage by batteryNorthwest China:Solar PV and wind power+hydrogen energy storageSouthwest China:Hydroelectric power+pumped storage hydropowerEast China:Demand of load+distributed energy storageUHV transmissionPower generationSource:Literature research;BCG analysis.Exhibit 13|Electricity
122、 grid based on energy storage systems:a viable path for China Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook26as an 840-megawatt combined cycle power plant combusting up to 30%hydrogen by 2025,and 100%hydrogen by 204529.In Japan,the“Energy Carriers”project of Strategic Innovation
123、Promotion Program(SIP)30 initialized by over 70 related parties has been dedicated to developing and commercializing ammonia used as a zero-carbon fuel and an energy carrier of hydro-gen since 2014.The program has made significant progress in ammonia blending in gas turbines and coal-firing in boile
124、rs.Meanwhile,challenges exist for this rising application.The current economics of HESS is not satisfactory due to low round-trip efficiency and premature infrastructure.There is still much to improve in both technologies and commercialization.Constrained by the current technology and limited scale,
125、HESS is far from economically competitive compared with other energy storage systems.Studies show todays initial investment for HESS is as high as RMB 13,000 per kilowatt,whereas pumped storage hydropower only costs RMB 7,000 per kilowatt and battery energy storage at RMB 2,000 per kilowatt.The larg
126、est cost component of HESS is the stationary fuel cell system,which accounts for nearly 70%of the total investment.For wider adoption,HESS,especially the fuel cell system,is still in need of R&D to improve performance and reduce costs to a commercially competitive level.To address the concerns over
127、efficiency,gas turbine,boiler and fuel cell manufacturers are advancing their technologies and improving commercial viability through demonstrations.For example,the hydrogen-fueled combined heat and power(CHP)application is being explored for its higher energy efficiency potential(thermal efficiency
128、 included).New tech-nologies are being explored as well,such as high-temperature reversible fuel cells(RFC).Additionally,efforts have been made around the direct usage of stored hydrogen in down-stream applications,such as hydrogen refueling stations for FCEVs,which may alleviate the limitations of
129、round-trip efficiency and create additional revenue streams.An MIT study31 concludes that hydrogen could be more valuable for end uses compared with elec-tricity generation in the short term,as long as the cheap electricity remains on the grid.29 Power Magazine,“ACES Deltas Giant Utah Salt Cavern Hy
130、drogen Storage Project Gets$504M Conditional DOE LoanGuarantee”https:/ JapanScienceandTechnologyAgencyhttps:/www.jst.go.jp/sip/pdf/SIP_energycarriers2015_en.pdf.31 MIT,The Future of Energy Storage(2022)https:/energy.mit.edu/research/future-of-energy-storage/.Boston Consulting GroupAugust 2023China H
131、ydrogen Industry Outlook27Take a green hydrogen demonstration project in Northwest China that is about to be put into operation as an example.In this project,green hydrogen will be produced in an electrolysis system of 50,000 Nm3/h capacity,powered by upstream green electricity from a nearby solar p
132、ower plant,and then directly utilized in refining factories to realize large-scale hydrogen energy storage and comprehensive utilization of hydrogen energy.The cost of green hydrogen in this project is on par with gray hydrogen,and sometimes even cheaper,owing to the abundant renewable energy locall
133、y.Hydrogen storage and transportation infrastructure are also vital for the mass adoption of HESS.Todays various storage and transportation technologies are at different levels of maturity and cost,which will be discussed in section 3.2 of this report.To facilitate the broader application of HESS,it
134、 is necessary to seek the optimal combination of hydrogen storage and transportation methods,and most importantly,to build the hydrogen infra-structure at scale.Both top-level planning and implementation incentives are required for hydrogen infrastructure construction.2.3 Industrial Applications 2.3
135、.1 Applications of Hydrogen in the Industrial SectorHydrogen is widely used in the industrial sector.In 2021,global hydrogen demand reached more than 94 million tons,over 99%of which comes from the industrial sector32.(See Exhibit 14.)Refining is currently the largest application of hydrogen,consumi
136、ng over 40 million tons hydrogen per year globally,which is 42%of the total demand.Other uses of hydrogen in the industrial sector include ammonia,methanol,and direct reduced iron(DRI)produc-tion,where hydrogen is widely used either as a raw material or a reducing agent.(See Exhibit 15.)32 Internati
137、onal Energy Agency(IEA),Global Hydrogen Review 2022 https:/www.iea.org/events/global-hydrogen-review-2022.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook2899%of the globalhydrogen demandcomes fromthe industrial sector1(1%)5(5%)14(15%)32(36%)40(43%)20191(1%)5(5%)13(15%)33(37%)38(42%
138、)20201(1%)5(6%)15(15%)34(36%)40(42%)2021OthersDRIMethanol productionAmmonia productionRefining919094Global hydrogen demand by application,20192021(Mt H2)Source:IEA;BCG analysis.Note:Because of rounding,there may be instances where the sum of the sub-items does not equal the total.Exhibit 14|Over 99%
139、global hydrogen demand comes from the industrial sectorHydrogen productionHydrogen usageEnd applicationsHydrogen-related stepsRefiningAmmonia productionMethanol productionDRI productionGray hydrogen(fossil fuels)Blue hydrogen(fossil fuels with CCUS1)Green hydrogen(water electrolysis)Auto manufacturi
140、ngindustryFertilizer industryChemical industryRelatively mature processes by using hydrogen as feedstockHuge potential for green hydrogen to replace gray hydrogenWide downstream applicationsHydrogenOil,ammonia,methanol,etc.Source:BCG analysis.1 CCUS=carbon capture,utilization and storage.Exhibit 15|
141、Hydrogen applications in the industrial sectorBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook292.3.2 The Shift to Green HydrogenThe future development of hydrogen in the industrial sector is expected from the upstream hydrogen production process.Almost all hydrogen used in the indu
142、strial sector today comes from fossil fuels(also known as gray hydrogen),resulting in more than 830 million tons of CO2 emissions in 202133.The current emissions footprint,if sustained,is incompatible with the climate goals.Therefore,the industry is expected to gradually replace gray hydrogen with g
143、reen hydrogen,i.e.,more hydrogen will be produced by water electrolysis using power from renewable sources.The trend is clear,and the shift has started.The total installed capacity of electrolyzers has increased by 70%in 2021 and reached 510 megawatts34,but the penetration of green hydrogen is still
144、 low.The bottleneck of green hydrogen today is its economics.Currently,the levelized cost of hydrogen(LCOH)is much higher in green hydrogen than in gray hydrogen.A study by International Energy Agency(IEA)shows that the global LCOH of green hydrogen and gray hydrogen(coal to hydrogen)is expected to
145、converge in 2030 at around USD 1.5 to USD 4.0 per kilogram of hydrogen to meet the net zero emissions scenario in 2050,which calls for further technology and commercial breakthroughs of green hydrogen production.(See Exhibit 16.)33 International Energy Agency(IEA),Global Hydrogen Review 2022 https:/
146、www.iea.org/events/global-hydrogen-review-2022.34 International Energy Agency(IEA),Global Hydrogen Review 2022 https:/www.iea.org/events/global-hydrogen-review-2022.Gray hydrogen2020Green hydrogen2020Gray hydrogen2030Green hydrogen203002468To meet the net zero emission scenario in 2050,global LCOH o
147、f green hydrogen and gray hydrogen(coal to hydrogen)is expected to converge in 2030 at USD 1.54.0/kg H2LCOH(levelized cost of hydrogen)USD/kg H2Source:IEA 2021 report;BCG analysis.Exhibit 16|LCOH of green hydrogen and gray hydrogen in 2020 and 2030(under 2050 net zero emissions scenario)Boston Consu
148、lting GroupAugust 2023China Hydrogen Industry Outlook30The price gap between green hydrogen and gray hydrogen is expected to be narrowed driven by four factors.(See Exhibit 17.)Cost ofgreenhydrogenCost of grayhydrogen3Fixed cost(10%)Cost of electricity(80%85%)Power consumptionCost of electrolyzerRen
149、ewable electricity price2Fixed cost(20%)Cost of coal(45%55%)Coal priceCarbon taxOthers(30%)Others(5%10%)Cost items1Major factorsTrendsThe price gap expected to narrow in the future The cost of green hydrogen will decrease due to cheaper electrolyzers,lower power consumption,and lower renewable elect
150、ricity prices The cost of gray hydrogen will increase once the carbon tax is introduced,assuming a relatively stable coal priceSource:IEA 2021 report;literature research;BCG analysis.1 Renewable electricity and coal prices are based on actual prices in China in 2021.2 Final price after subsidy.3 Coa
151、l to hydrogen as an example.Exhibit 17|Cost structure of hydrogen production and major factors of future cost changes Cost reduction of electrolyzersAlkaline electrolysis cells(AECs)are the earliest and currently the most mature type of electrolyzer.Other technologies,such as proton exchange membran
152、e(PEM)elec-trolyzers,are less mature in commercialization with higher costs.The levelized cost will be lower in the future owing to economies of scale brought by the larger installed capacity of electrolyzers.The equipment price will fall once there are technological breakthroughs in process and mat
153、erials as well.Price decrease of renewable electricityAbout 80%to 85%of green hydrogen production cost comes from electricity,making the LCOH highly sensitive to the price of renewable electricity.Assuming that the coal price is RMB 800 per ton with no carbon tax charged,the LCOH of green hydrogen a
154、nd gray hydrogen(coal to hydrogen)is expected to break even when the renewable electricity price reaches around RMB 0.16 per kWh.(See Exhibit 18.)Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook31Some green hydrogen projects have already signed agreements with renewable elec-tricity
155、 suppliers to ensure low electricity prices,and the prices will continue to drop as the installed capacity increases.Power consumption optimizationPower consumption level is another factor affecting the total cost of electricity.Currently,the power consumption of the whole electrolysis system to pro
156、duce green hydrogen using AEC is 5.1 to 5.2 kWh/Nm3 for most players.With the technological improvement in the future,it is expected to reach 4.3 to 4.5 kWh/Nm3 around 2030 and will contribute to about 7%of LCOH decrease.The upcoming carbon tax/pricingMost countries have yet to impose carbon tax/pri
157、cing,but carbon taxes can be ex-pected given the net zero emission ambition.Taxing hydrogen from fossil fuels could further narrow the price gap between green and gray hydrogen.For example,the carbon price of RMB 700 per ton of CO2 corresponds to the cost increase of RMB 14 per kilogram of hydrogen
158、for gray hydrogen(coal to hydrogen)production without any measure of carbon capture,utilization and storage(CCUS)35.Assuming that the coal price is RMB 800 per ton with a carbon tax of RMB 2000 per ton of coal(about RMB 700 per ton of CO2),the LCOH of green hydrogen and gray hydrogen(coal to hydroge
159、n)can break even when the renewable electricity price reaches RMB 0.4 per kWh.(See Exhibit 18.)35 International Energy Agency(IEA),Global Hydrogen Review 2021 https:/www.iea.org/reports/global-hydrogen-review-2021.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook320.140.210.280.350.4
160、20.490.560.630.70079LCOH of gray hydrogen(coal to hydrogen)LCOH of green hydrogenRenewable electricity priceLCOHRMB/kg H2RMB 0.16/kWhRMB 0.4/kWhRMB/kWh Coal price:assume RMB 800/ton Carbon tax:assume RMB 02,000/ton of coal Source:Literature research;BCG analysis.Note:Assuming the exchange
161、 rate is 1 USD=7 RMB.Exhibit 18|Cost parity of green hydrogen and gray hydrogen production in ChinaBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook333.Key Technologies Along the hydrogen Industry ChainHydrogen technology innovation is the ultimate driving force of the industry.The h
162、ydro-gen industry is still facing cost issues,energy efficiency bottlenecks,incomplete safety management and a low level of digitalization,calling for continuous technology innova-tion to power the hydrogen industry.For hydrogen production,although alkaline electrolysis cells(AECs)and proton exchang
163、e membrane(PEMEC)are considered mature products,all the electrolyzer products on market are not designed for the green hydrogen scenario.The existing products are designed for the demands from the chlor-alkali industry,the marine industry,and the vehicle industry.Therefore,improvements and technical
164、 innovations are required for the electrolyzer products for all technical routes.For hydrogen storage and transportation,compressed gaseous hydrogen is expected to dominate the Chinese market in the near term,with ongoing R&D efforts on in-creasing the working pressure while ensuring safety;liquefie
165、d hydrogen storage and transportation have been commercialized at scale overseas;other hydrogen carriers are also being explored in commercial applications.Hydrogen-to-power conversion is essential to hydrogen utilization.Among the technology routes,fuel cells are theoretically more suited for distr
166、ibuted power,whereas gas turbines and boilers perform better in larger-scale power plants.All three technologies have respective development routes and demonstration scenarios,and commercial products can be expected before 2030.Hydrogen safety management has become an emerging field in recent years.
167、The large-scale hydrogen adoption poses new challenges to safety management,hence requiring systematic safety management of all processes combined with digital tools in terms of intrinsic safety,active safety,and passive safety.3.1 Hydrogen Production Innovation3.1.1 Hydrogen Production Technologies
168、Ten years ago,hydrogen energy was only applied in transportation as a clean alternative fuel.Nowadays,in the context of carbon neutrality,hydrogen is increasingly considered as the key lever to decarbonize transportation,energy,chemical,and other areas,so its uses are expanding to wider applications
169、.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook34Electrolyzer products shall be defined by the use cases.The green hydrogen industry is a new scenario bred by the carbon neutrality trend and requires new demands for the electrolyzer:Scalable and able to be applied in gigawatt-leve
170、l green hydrogen plants Directly connectable to green electricity and fit for the fluctuated green electricity Highly efficient and stable Easy to maintainThere are four major technology routes for hydrogen production:alkaline electrolysis cells(AECs)and proton exchange membrane(PEMEC)are already in
171、 commercialization,while anion exchange membrane(AEMEC)and solid oxide electrolysis cells(SOECs)are still in the laboratory/trial stage.The four technology routes essentially correspond to three kinds of water electrolysis tech-nology systemsacidic,alkaline,and solid.All three systems originally cam
172、e from other applications and were not specifically designed for large-scale green electricity hydrogen production,hence they all have the potential for technological innovations.Acidic electrolyzer system:PEMEC is the major technology under this category.Due to the manufacturing technique limitatio
173、n of bipolar plate and membrane,it is very difficult to expand the scale of a single stack of acidic electrolyzers.Meanwhile,the use of rare metals(e.g.,platinum)restricts PEMECs scale effect,making the acidic electrolyzer system more suitable for small-scale and distributed scenarios so far.Alkalin
174、e electrolyzer system:Alkaline system includes AEC and AEMEC technolo-gies.For AEC technology,the manufacturing process of key components is relatively mature,and its cost reduction is ongoing driven by the scale effect contributed by mature manufacturing techniques and well-built supply chains.Ther
175、efore,alkaline technologies show higher potential for large-scale and centralized green hydrogen production.There is indeed room for improvement in terms of adaptability to renew-able electricity fluctuations and easy maintenance of alkaline electrolyzer products.Solid oxide electrolysis cells:SOEC
176、technology,currently at early stage of R&D.In China,alkaline electrolyzers currently dominate the market.In the past two years,most large-scale green hydrogen production projects chose AEC,while small-scale distributed projects preferred PEMEC technology.(See Exhibit 19.)In the medium term,for green
177、 Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook35hydrogen scenarios at different scales worldwide,it is expected that AEC will remain the most viable mainstream technology route.AEC dominates the confirmed projects in terms of both the number of projects and capacity Projects in p
178、lan are more likely to choose AEC because these projects are of larger capacity AEC dominates projects 10MW PEMEC is preferred in small and trial projects 4MW86(44%)13(8%)59(37%)#of projects21,031(80%)77(0%)5,301(39%)Installed/planned capacity(MW)15826,409China green hydrogen production projects and
179、capacity by technology,20212022China green hydrogen production technology byproject capacity,202107490%11Gas 30MPa485%23Gas 70MPa680%38Liquified hydrogen965%75%71ChemicalAmmonia(NH3)/Methanol(MeOH)Liquid organic hydrogen carriers(LOHC)110Metal hydrides488%80100Higher efficiency potential
180、than most alternativesSource:Goldman Sachs Research;IEA;BCG analysis.1 Lower heating value.Exhibit 22|Key hydrogen conditioning pathwaysAppropriate storage and transportation methods can be applied based on the different conditions of hydrogen.Hydrogen storage and transportation in compressed gaseou
181、s form is the most widely applied and mature technology for now.Various storage options are available for gaseous hydrogen ranging from small volume to bulk storage,including cylinders,vessels,and caverns.Its transportation via compressed gaseous hydrogen(CGH2)tube Boston Consulting GroupAugust 2023
182、China Hydrogen Industry Outlook40trailers is flexible and convenient,but it is more suitable for short-distance transpor-tation due to the limited hydrogen carrying capacity.For long distance,pipelines are the most cost-effective solution for hydrogen bulk transportation,despite the higher capital e
183、xpenditure(CapEx)involved in building new dedicated hydrogen pipelines;blending hydrogen into the existing compressed natural gas(CNG)pipelines can be a cost-attractive alternative.Liquid hydrogen is believed to be a promising route for larger-scale deployment in the future owing to its higher volum
184、e energy density,despite the technology and equipment being less mature than that of gaseous hydrogen.Liquid hydrogen(LH2)can be stored in LH2 vessels/tanks on a medium scale and transported with LH2 tanker trucks on roads and vessels that enable international long-haul for global trade of hydrogen.
185、The major challenge of liquid hydrogen is that the cryo-compression process for the liquefaction of hydrogen is energy intensive and leads to additional costs in energy loss.Furthermore,efforts are needed to address the hydrogen boil-off and safety issues.Other non-hydrogen liquids,such as ammonia,m
186、ethanol and LOHCs,can also be hydrogen carriers through chemical conversion.Conversion to ammonia or methanol allows hydrogen to be stored and transported leveraging the existing mature infra-structure.Ammonia and methanol can be directly utilized as fuel or feedstock as well,thereby it is believed
187、to be one of the most promising directions of hydrogen storage and transportation.However,compared to physical processes,chemical conversion and re-conversion lead to extra costs and energy loss,and the technology(especially re-conversion technology)is yet to be proven.Exhibit 23 compares the differ
188、ent options for hydrogen storage.Exhibit 24 presents the common hydrogen transportation methods.Each of the options has advantages and dis-advantages;so far there is no one-size-fits-all solution.The optimal solution will depend on various factors,e.g.,geographical features,transportation distances,
189、volumes,and end uses.In China,compressed gaseous hydrogen is the major hydrogen storage and transpor-tation method with low cost,flexible storage conditions,and mature technology and infrastructure.Currently,the hydrogen transportation demand is regionally concentrated(mostly stay within pilot city
190、clusters),so compressed gaseous hydrogen is still expected to be the mainstream in the near term.R&D efforts have been put into increasing the working pressure of the gas cylinder leveraging composite materials such as carbon fiber:from 35 MPa cylinders(most common in China)to 50 MPa cylinders(more
191、common over-seas).Transportation efficiency is significantly increased.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook41Salt cavernsDepletedgas fieldsRockcavernsPressurizedcontainersLiquidhydrogenAmmoniaLOHCsMetalhydridesMainusageVolumeCyclingLCOS(levelized cost of storage)(USD/kg)
192、Geographical availabilityN/ALimitedLimitedLimitedNot limitedNot limitedNot limitedNot limitedNot limitedLarge volumeLarge volume Medium volume Small volumeSmallmediumvolumeLarge volumeLarge volumeSmall volumeWeeks to monthsSeasonalWeeks to monthsDailyDays to weeksWeeks to monthsWeeks to monthsDays t
193、o weeks0.231.900.710.194.572.834.500.111.070.230.170.950.871.86Benchmark LCOSPossible future LCOSGaseous stateLiquid stateSolid stateStorage optionSource:BloombergNEF,Hydrogen Economy Outlook(2020).Exhibit 23|Options of hydrogen storageDescriptionConditioning of hydrogenEconomically feasible distanc
194、eTransportation capacityGaseous H2Liquefied H2Ammonia/MeOHLOHCGaseous H2Liquefied H2Ammonia/MeOHLOHCGaseous H2Liquefied H2Ammonia/MeOHLOHCGaseous H2Liquefied H2Ammonia/MeOHLOHCTanker trucksPipelinesShipsRegional transportation and distribution within 200 km(cost-sensitive to distance)On-road deliver
195、y of compressed H2 typicallyranging from 2050 MPaOn-road delivery of cryogenic LH2,ammonia,methanol or LOHCBulk delivery in existingnatural gas pipelines,dedicated H2 pipelines or ammonia pipelinesDelivery as LH2,ammonia,methanol or LOHC by LH2 ships or modified LPG shipsInter-regional transportatio
196、n 200 km(LH2 is less cost-sensitive to distance than CGH2)Both long-distance and regional transportation,within 1,500 km(high CapEx1,low OpEx)International long-haulCGH2 tube trailersMediumBulk transportationBulk transportationSmallSource:IEA,The Future of Hydrogen(2019);literature research;BCG anal
197、ysis.1 Only true for new pipelines;re-purposed pipelines or hydrogen blending could cost lower.Exhibit 24|Common hydrogen transportation methodsBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook42While the storage and transportation of liquefied hydrogen have been commercialized at sc
198、ale in leading markets such as the US,Europe and Japan,its civil use in China is still in the demonstration phase.For domestic players,obstacles exist especially in hydrogen lique-faction technology,equipment,and materials.Core technologies such as turbo-expanders and cryogenic valves still rely on
199、imports.Liquid hydrogen cylinder manufacturing techniques lag as well.Therefore,developing domestic technology and localizing the core equipment are needed before the large-scale deployment of liquid hydrogen in China.We expect that in the medium to long term,as the demand for high-efficiency hydrog
200、en transportation increases across regions,liquefied hydrogen will be deployed at scale.3.3 Hydrogen-to-Power ConversionThe efficient utilization of hydrogen energy involves hydrogen-to-power conversion,which is essential to the green hydrogen industry development and clean energy transformation.The
201、 economics of this process highly relies on the breakthrough in upstream production and midstream transportation,and hence its large-scale deployment is expected to happen in the next five to ten years.Albeit challenging,pioneers are actively validating and demonstrating hydrogen-to-power applicatio
202、ns to explore the route to the promising hydrogen future.Hydrogen-to-power conversion relies on energy conversion devicesmainly gas turbines,boilers,and fuel cells.Comparing the three routes,fuel cells are theoretically more suited for distributed power,whereas gas turbines and boilers perform bette
203、r in larger-scale power plants.(See Exhibit 25.)According to International Energy Agency(IEA),the capacity of all planned or ongoing hydrogen and ammonia power generation projects will reach 3.5 gigawatts by 2030.About 85%of the installed capacity is focused on hydrogen-or ammonia-fueled gas turbine
204、s and boilers,while the use of hydrogen in fuel cells and the co-firing of ammonia in coal-fired power plants account for around 10%and 6%respectively37.3.3.1 Hydrogen-Fueled Gas TurbinesCombustion of hydrogen(or ammonia)fuel in gas turbines is a high-potential pathway to decarbonize the gas turbine
205、s fueled by natural gas in the current power generation system:by blending in 30%hydrogen by volume,it is possible to reduce a gas turbines carbon emission by around 10%38.As gas turbines are already widely deployed in power 37 International Energy Agency(IEA),Global Hydrogen Review 2022 https:/www.
206、iea.org/events/global-hydrogen-review-2022.38 MHIofficialwebsitehttps:/ Consulting GroupAugust 2023China Hydrogen Industry Outlook43generation globally,there is potential to convert the existing fleets to hydrogen or ammonia co-firing only with minimal upgrades and modifications.In the longer term,t
207、echnology development is also expected to prepare new gas turbine power sets for 100%hydrogen firing.Originally designed to operate on natural gas instead of hydrogen,gas turbines are already mature power generation devices.Although conventional gas turbines do have a certain level of flexibility in
208、 fuel,as hydrogen and natural gas have very different combustion properties,the blend-in of hydrogen would hence affect the combustion chemistry and flame stability,leading to operability,cost,and pollution issues.Therefore,burning hydrogen-enriched fuels in gas turbines is still challenging in tech
209、nology and requires modifications in fuel handling systems,valves and piping,and combustor hardware.Ongoing R&D mainly focuses on addressing the key issues listed below39,40,41.39 Power Engineering,Hydrogen substitution for natural gas in turbines:Opportunities,issues,and challenges https:/www.power
210、- Beita,J.,Talibi,M.,Sadasivuni,S.,&Balachandran,R.(2021).“Thermoacousticinstabilityconsiderationsforhighhydrogencombustioninleanpremixedgasturbinecombustors:Areview”.Hydrogen,2(1),33-57.41 European Turbine Network(ETN Global),The Path Towards a Zero-Carbon Gas Turbine https:/etn.global/wp-content/u
211、ploads/2020/02/ETN-Hydrogen-Gas-Turbines-report.pdf.Electrical efficiency(%)Power output10kWPEMFC1MW10MW100MW1GW0700SOFCCombined cycle power plant(CCPP)Steam turbineGas turbine100kWFuel cells:Suitable for distributed powerCombustion engines/boilers:Suitable for large-scale power generatio
212、nCoal-fired boilerFuel cellsCombustion enginesSource:Literature research;BCG analysis.Exhibit 25|Power output and efficiency of fuel cells and combustion enginesBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook44 Flashback:The combustion speed of hydrogen is significantly higher than
213、 that of natural gas,which means the rapid flame of hydrogen can shoot back up the incoming fuel nozzle and the high temperature will damage the hardware of gas turbines.OEMs are developing methods of detecting and avoiding flashbacks.Autoignition:High reactivity of hydrogen would increase the autoi
214、gnition risk in the premixing section,which requires a more delicate design of the combustors(e.g.,multi-nozzle arrangements)to protect the burners and nozzles from being overheated or damaged.Thermoacoustic instabilities:Oscillations due to thermoacoustic instabilities of hydrogen flames can trigge
215、r component vibrations,flame blow-off,and flashback.These will hamper the gas turbine operation and must be avoided by improved system design and more reliable monitoring and control systems.NOX emission:Although hydrogen is a carbon-free fuel,its combustion through gas turbines still produces NOX e
216、missions due to its higher adiabatic flame temperature relative to natural gas.To reduce NOX emission,lean premixed(LPM)combustors are developed as the current state-of-the-art for low NOX operation.Power generation projects of hydrogen-fueled gas turbines are in commercial demonstra-tion now.Most d
217、emonstrations start from a blending rate of 15%to 30%(volumetric basis)of hydrogen and target higher blending rates going forward.This is because a 30%hydro-gen blend is typically viewed as the threshold requiring critical modifications of the com-bustor and fuel handling system,etc.As of today,Siem
218、ens Energy has been ready to burn up to 75%of hydrogen in the fuel mix,and the 100%hydrogen-fired gas turbine is also under development,targeted to release in 203042.In China,the State Power Investment Corporation(SPIC)demonstrated 30%hydrogen blending on a gas turbine in commercial operation in Sep
219、tember 202243.SPICs 100%hydrogen-fired gas turbine demonstration in China was also approved in October 2022,a set of 1.7-megawatt gas turbines aiming to start operation by the end of 202344.Meanwhile,ammonia-fired gas turbines,despite being niche,have also attracted attention in countries such as Ja
220、pan.For example,in responding to the countrys Road Map for Fuel Ammonia,the IHI Group demonstrated the worlds first gas turbine(2 megawatts)using 42 SiemensEnergyofficialwebsitehttps:/www.siemens- PR Newswire https:/ GGFC https:/www.gg- Consulting GroupAugust 2023China Hydrogen Industry Outlook45100
221、%liquid ammonia in June 202245,and Mitsubishi Power targets the worlds first ammonia-fired 40-megawatt gas turbine system by 202546.3.3.2 Hydrogen-and Ammonia-Fueled BoilersBlending ammonia or hydrogen in a coal-fired power plant can effectively reduce carbon emissions.In China,as coal accounts for
222、a large proportion of the countrys energy structure and coal-fired boilers are already widely deployed,it is imperative to explore hydrogen-and ammonia-fueled boilers as an option for energy transformation and decar-bonization.When hydrogen or ammonia is blended into coal-fired boilers,the combustio
223、n speed of hydrogen and ammonia gas is much higher than that of pulverized coal,hence the main challenges are the modification of burners and the control of NOX emissions.To address the issues,recent studies across the globe have been focusing on multi-combustor design,gas injection control strategy
224、,etc.These technologies are also applied in demonstration projects in China.For example,China Energy Investment Corporation realized 35%ammonia co-firing in a 40-megawatt boiler in 202247;Anhui Province Energy Group announced the successful implementation of 10%to 35%ammonia co-firing in existing 10
225、0300 megawatt coal-fired power plants under various working conditions in 202348.3.3.3 Stationary Fuel CellsCompared with gas turbines and boilers,fuel cell technologies are capable of converting hydrogen to power with higher flexibility(with quicker start-up and smaller power output),less pollution
226、(no NOx emissions with hydrogen fuel),and less noise.Stationary fuel cells are generally used for distributed power typically ranging from 0.5 kilowatts to 2 megawatts,such as residential and commercial micro-CHP systems,uninter-ruptible power supplies(UPS),and power generation units of power compan
227、ies.By the end of 2021,South Korea,North America,and Japan are the leading markets in stationary fuel cell adoption.(See Exhibit 26.)Due to the differences in the strategic plan-ning and policies across countries,the technology routes and use cases can also differ49.45 IHIofficialwebsitehttps:/www.i
228、hi.co.jp/en/all_news/2022/resources_energy_environment/1197938_3488.html.46 MHIofficialwebsitehttps:/ P http:/ TheP https:/ E4tech,Fuel Cell Industry Review 2021 https:/ Consulting GroupAugust 2023China Hydrogen Industry Outlook46 South Korea and the US have been the leaders in the deployment of sta
229、tionary fuel cell systems at industrial and grid levels,with solid oxide fuel cells(SOFCs)and phosphoric acid fuel cells(PAFCs)as the main technology routes.In October 2021,a 79-megawatt PAFC power plant was built in South Korea by POSCO Energy and Doosan Fuel Cell,recording the worlds largest fuel
230、cell power plant50.In the US,fuel cells are primarily leveraged by institutions and corporations for self-generation in order to reduce grid dependency or to fulfill green targets.These projects are typically done by commercial units of hundreds of kilowatts and low megawatts,represented by Bloom En
231、ergy(SOFC technology route).Japan is the initiator and leader in residential micro-CHP applications,represented by its Ene-Farm program since 2009,with a fleet now of more than 400,000 domestic CHP units(typically less than 1 kilowatt each),utilizing both proton exchange mem-brane fuel cells(PEMFCs)
232、and SOFC technology.Government incentives played a vital role in this program,supported by R&D efforts of local gas companies(Osaka Gas and Tokyo Gas)and fuel cell suppliers(Panasonic,Aisin Seiki,etc.).50 HydrogenCentral,“WorldlargesthydrogenfuelcellpowerplantwasbuiltinKoreabyKospo78MW”https:/hydrog
233、en- new stationary fuel cell capacity0274325348200021+11.3%60%28%10%3%2021100%Capacity by region44%44%7%4%1%2021100%South KoreaNorth AmericaJapanEuropeRoWSOFCPAFCPEMFCMCFCCapacity by technology route(unit:MW)Source:E4tech;IEA;BCG analysis.Note:Not all fuel cells are
234、fueled by hydrogen,for example,most of the SOFCs are fired on natural gas by far.Because of rounding,not all bar segment totals add up to 100%.Exhibit 26|Stationary fuel cell capacityBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook47Each stationary fuel cell technology has its advan
235、tages and limitations51,52.(See Exhibit 27.)Globally,solid oxide fuel cells(SOFCs)and phosphoric acid fuel cells(PAFCs)have larger installment base so far.Proton exchange membrane fuel cells(PEMFCs)are expected to grow rapidly,while molten carbonate fuel cells(MCFCs)are relatively niche.PAFCs and SO
236、FCs are commonly adopted in distributed commercial projects,in which PAFCs are the most mature and earliest commercialized,while SOFCs recorded faster growth in recent years for higher efficiency,longer lifetime,and free of precious metal catalysts.PEMFCs are the mostly applied in kilowatt-level dec
237、entralized residential applications as of now due to shorter start times,with the potential to further expand to megawatt-level projects in the future,especially for the Chinese market.In China,PEMFC technology is in the dominant position with multiple demonstrations planned,such as the aforemention
238、ed Luan project in section 2.2,while SOFC technology is not a mainstream technology route for power generation.It is believed that,in China,51 US Department of Energy,Comparison of Fuel Cell Technologies https:/www.energy.gov/eere/fuelcells/comparison-fuel-cell-technologies.52 IEA Technology Collabo
239、ration Programme Advanced Fuel Fells,Stationary Fuel Cell Applications:Current and Future Technologies 2021 https:/ Performance.pdf.FuelOperatingtemperatureElectricalefficiencyElectrolyteElectrodesHeatextractionStart-up timePEMFC(proton exchangemembrane fuel cell)SOFC(solid oxide fuel cell)H2 onlyNa
240、tural gas,biogas,coal gas,H2,etc.80C100C800C1,000C40%50%50%65%Proton exchangemembraneYttria-stabilizedzirconia(YSZ)PlatinumCeramicMinor+20%25%in CHP60 minutesPAFC(phosphoric acid fuel cell)Natural gas,H2,etc.150C200C40%45%Phosphoric acidPlatinum+30%35%in CHP60 minutesMCFC(molten carbonate fuel cell)
241、Natural gas,biogas,coal gas,H2,etc.650C700C60%65%Alkaline metal carbonateNickel oxide+10%20%in CHP60 minutesSource:Literature research;BCG analysis.Exhibit 27|Comparison of stationary fuel cell technologiesBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook48stationary PEMFC is relativ
242、ely mature compared with other technologies,and its cost reduction path is clear.The technology will also benefit from the rapid development of FCEVs and will expand its applications in power generation.3.4 Hydrogen SafetyHydrogen safety spans the entire process of hydrogen production,storage,transp
243、ortation,and utilization.Hydrogen safety management cannot be ignored for the development of hydrogen as a clean energy carrier.3.4.1 The Importance of Hydrogen Safety ManagementHydrogen safety had attracted little attention in the past because the hydrogen consump-tion volume was small,the distribu
244、tion of hydrogen-related facilities was scattered,and the overall risk was thus controllable.Recently,with the rapid development of green hydrogen globally,large-scale hydrogen consumption uses began to emerge,calling for the industrys attention to hydrogen safety management.Also,several hydrogen sa
245、fety acci-dents in South Korea53,Norway54,and the US55 have emphasized the criticality of hydrogen safety.Establishing a systematic hydrogen safety management system to minimize the risk of hydrogen safety accidents is critical to protecting the publics confidence in hydrogen energy and safeguarding
246、 the development of hydrogen energy.3.4.2 Hydrogen Safety Management SystemThe unique properties of hydrogen bring challenges to hydrogen safety management.(See Exhibit 28.)Hydrogen is the least dense gas known in the world(only about 1/14 as dense as air).It is highly buoyant and easy to escape and
247、 disperse.In the case of leakage in a con-fined space,hydrogen will easily accumulate in the upper space.53 American Institute of Chemical Engineers,Review:Hydrogen Tank Explosion in Gangneung,South Korea https:/www.aiche.org/chs/conferences/international-center-hydrogen-safety-conference/2019/proce
248、eding/paper/review-hydro-gen-tank-explosion-gangneung-south-korea.54 Reuters,“NorwayfinesNelunits$3millionover2019blastathydrogenfuelstation”https:/ H2tools,Report on the June 2019 Hydrogen Explosion and Fire Incident in Santa Clara,California https:/h2tools.org/sites/default/files/2021-06/AP_Santa_
249、Clara_Incident_Review_Report_Rev1.pdf.Boston Consulting GroupAugust 2023China Hydrogen Industry Outlook49 Hydrogen is colorless and odorless,making it hard to be sensed quickly when leakage occurs.Hydrogen is highly flammable and explosive,with a wide explosive limit between 4%and 75%(volume concent
250、ration).The fire caused by explosions is usually ferocious.Given the properties of hydrogen,it is necessary to adopt a systematic approach to manage the safe use of hydrogen.The industry believes that the hydrogen safety system includes three aspects:intrinsic safety(ex-ante),active safety(in-proces
251、s),and passive safety(ex-post).(See Exhibit 29.)Indeed,as a whole system,every aspect matters.However,compared with remedial actions on uncertain and uncontrollable results,preventive engagement beforehand and actively intervening in the process deserves more attention.Intrinsic safetyIntrinsic safe
252、ty is a preventive protection concept,which fully considers the properties of hydrogen and fundamentally improves the safety level from the perspective of design and manufacturing.Multiple measures can be applied,including product/HydrogenNatural gasAmmoniaColorlessColorlessColorlessColorToxicityRel
253、ative density(Air=1)Explosive limits1(vol%)4%75%5%15%16%25%0.0690.550.59Non-toxicNon-toxicToxicOdorlessCH4 is odorless;the additive(mercaptan)stinksPungent odorOdorSource:Literature research;BCG analysis.1 The explosive limits refer to the concentration of a gas or vapor in the air which will result
254、 in an explosion,if an ignition source is present.Exhibit 28|Properties of hydrogen,natural gas and ammonia gasBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook50equipment certification,hazard and operability analysis(HAZOP),and product/equip-ment tests/reviews.These measures aim to
255、make sure that,materials are hydrogen compatible to prevent hydrogen embrittlement(HE),structures are well designed to avoid stress concentration,and techniques minimize manufacturing defects.One of the biggest challenges of hydrogen safety is hydrogen embrittlement(HE).Since hydrogen molecules are
256、so small,they can easily permeate solid metals,causing stress concentrations that lead to embrittlement or even metal cracking.From the aspect of intrinsic safety,hydrogen storage equipment should use materials with better hydrogen embrittlement resistance(such as 316L stainless steel),and its struc
257、-ture shall be optimized to prevent stress concentration.Active safetyHydrogen energy players shall proactively establish active safety mechanisms,such as rapid detection of hydrogen leaks,risk prediction and early warning,and safety procedures and training.Active safety aims to prevent hydrogen lea
258、k,accumulation,and ignition in confined spaces,and strictly control the quality of hydrogen source and rigorously manage the due processes.Intrinsic safety(ex-ante)Active safety(in-process)Passive safety(ex-post)Certification of product/equipment Hazard and operability(HAZOP)analysis Test and review
259、 of product/equipment Materialprevent hydrogen embrittlement Structureavoid stress concentration Techniqueavoid manufacturing defects Prevent hydrogen leakage,hydrogen accumulation in confined spaces,and ignition Control the quality of the source of hydrogen,and apply rigorous process management Ens
260、ure that the damages will not expand,and responsibilities are held accountable Quick detection of hydrogen leaks Risk prediction and warning Safety procedures and training Comply with the fire code Be away of leak point Avoid oxidizing environment with dust and fumeMeasuresPurposesSource:Research of
261、 Professor Fuyuan Yang,Tsinghua University;BCG analysis.Exhibit 29|Hydrogen safety systemBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook51 Passive safetyIn the unfortunate event of an accident,passive safety aims to take emergency mea-sures immediately to ensure that the damages do
262、 not expand,and the responsibilities can be held accountable.Factories and facilities shall comply with the fire codes,keep away from the leak point,and avoid oxidizing environment with dust and fume,etc.Furthermore,on the basis of systematic hydrogen safety management,digital tools can be used to f
263、urther improve the management,making the status more visualized,the response faster,and the collaboration closer.The digitalization of hydrogen safety management shall be integrated with products and systems,so as to realize real-time performance monitoring and predictive maintenance functions in da
264、ily operation.The2022BeijingWinterOlympicsmarkedthefirst hydrogen-fueled handheld torch and the first zero-carbon torch in the history of the Winter Olympics,highlighting the two themes of this Olympic Games:technology and green.To ensure safe and stable burning of the torch and proper usage of hydr
265、ogen energy,an expert team has conducted a thorough safety evaluation and risk analysis for the high-pressure hydrogen supply system,hydrogen supply pipeline,and torch combustion system.The“HydrogenMobility”researchteamatTsinghua University has established a safety monitoring system for hydrogen lea
266、ks based on the active safety concept.The research team independently developed a hydrogen leakage near-field detector,proposed a high-sensitivity,low-cost hydrogen leakage near-field detection method,and realized real-time(100 milliseconds)monitoring of ppm-level tiny hydrogen leakage faults.A seri
267、es of hydrogen safety measures have ensured zero accidents ofhydrogenusageduringthe2002BeijingWinter Olympics and Winter Paralympics.Case Study:Safety Design in the Hydrogen-Fueled Torch of the 2022 Beijing Winter OlympicsBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook52ConclusionT
268、he world is experiencing the third energy revolution.In this revolution,hydrogen will become an important new energy carrier,and play a vital role in the era of decarbonization.From an energy transition perspective,hydrogen can be seen as“zero-carbon petroleum”,replacing petroleum as both a power so
269、urce and an industrial feedstock,and playing a vital role in the global energy trading networks.As a secondary energy,hydrogen together with electricity make the two sides of a coin,meaning that hydrogen is another storable and transportable form of electricity:on the power generation side,large-sca
270、le green hydrogen production facilities are comparable to wind and solar power plants;on the transmission and distribution side,long-distance hydrogen pipelines are just like ultra-high voltage transmission lines;on the power consumption side,distributed hydrogen power storage systems and onsite hyd
271、rogen refueling stations can play as micro-grids.Hydrogen transportation,hydrogen energy storage,and industrial applicationsthe commercialization of hydrogen end uses will unveil huge business opportunities in the coming decades.Translating the great strategic importance of hydrogen into substantial
272、 commercial value requires systematic planning and development on the hydrogen value chain,the industry chain,and the technologies.In the hydrogen value chain,strategic key processes need to be identified and addressed.Currently,the economics of green hydrogen from renewable electricity become pivot
273、al to the whole value chain.Countries across the globe are aiming for breakthroughs in the most promising hydrogen uses through combined efforts of policy guidance,technology innovation,and financial investment.By connecting the whole value chain,pilot projects are successfully implemented in variou
274、s hydrogen use cases,which will greatly promote the development of the hydrogen industry.In the hydrogen industry chain,the downstream pull is vital for the upstream develop-ment.Some use cases such as fuel cell transportation with a stronger consumption base have already founded a solid industry ch
275、ain.Such“leading use cases”are capable of driving the development of upstream hydrogen production,storage,and transportation,thus facilitating hydrogens expansion into other uses.Hydrogen technology innovation is the ultimate driving force of the industry,which lays the foundation for the value chai
276、n and industry chain development.The hydrogen industry is still facing cost issues,energy efficiency bottlenecks,unsystematic safety man-agement,and a low level of digitalization,calling for continuous technology innovation to power the hydrogen industry.Boston Consulting GroupAugust 2023China Hydro
277、gen Industry Outlook53Most of the nascent industries(new energy vehicles,lithium-ion batteries,photovoltaic,etc.)had faced the“Valley of Death”in their early life cycle,typically caught in a cycle of“poor product performancelow client satisfactionweak demandlack of investment stagnated technologydif
278、ficulty in commercialization”.To overcome the“Valley of Death”,the green hydrogen industry needs joint efforts on the value chain,industry chain,and technology chain to form a virtuous circle of“good product performancehigh client satisfactionstrong demandhigh willingness to investtechnology breakth
279、roughfull speed of commercialization”.Once the virtuous circle is established,the hydrogen industry is expected to become the flagship of the global energy transition,create trillion-dollar business opportunities,and ultimately underpin carbon neutrality in the coming decades.Boston Consulting Group
280、August 2023China Hydrogen Industry Outlook54About the AuthorsBCG expert team:ChenYu,NicholasGe,HaixuWang,CecilyDai,ShaowenWang,BillZhangAcademician Minggao Ouyangs team:MinggaoOuyang,FuyuanYang,ChangshengYao,JunmingHu,JiaenDuBoston Consulting GroupAugust 2023China Hydrogen Industry Outlook55About Bo
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