Energy & Resources, ESG

The energy of the future?

Longi and Sinopec team up in long-term pivot to hydrogen-based energy


Sinopec is trying to go green via new hydrogen initiative

The footage of the heads of Sinopec, Longi and two other energy companies sitting down for a debate might well have looked like a World Economic Forum moment. Instead, it was from a CCTV programme aired on April 17, during which the guests talked enthusiastically about one thing: hydrogen.

The lightest element in the periodic table, hydrogen has been gaining weight as a policy topic since President Xi Jinping made the bold pledge last September for China to be carbon neutral by 2060 (see WiC513). Environmentalists and energy experts believe the most abundant chemical substance in the universe could also be a game-changer. Hydrogen releases nothing other than heat and water when reacting with oxygen or combusting in air to generate power, making it among the cleanest possible fuels. The fact that hydrogen has high energy intensity both in gas or liquid form makes it an even better candidate to replace oil, natural gas and coal.

Driven by a common aspiration for emissions-free energy, the oil-and-gas giant Sinopec and photovoltaics major Longi inked a pact on April 13 to focus on distributed solar power generation, as well as helping to develop the nascent market for hydrogen applications.

Hydrogen, rarely found in pure form, is expensive to make. Worse, the current manufacturing process – which uses means like coal gasification – is carbon intensive. In fact, 96% of the hydrogen produced today is labelled as ‘grey’ in eco-terms. Sinopec generated 3.5 million tonnes of hydrogen last year and is the country’s largest producer, accounting for 14% of domestic output. However, it currently manufactures the chemical mainly for refining its own petrochemical products, as opposed to generating ‘clean’ fuel sales.

What is transformative about the tie-up is that Sinopec can start to ‘green’ its hydrogen production by harnessing Longi’s solar power.

“The persistent decline in the costs for generating solar power has in turn helped drive down the costs for electrolysis,” Bai Yunfei, director of industrial research at Longi, said in a statement – referring to the process in which electricity is used to split water into hydrogen and oxygen.

Back in 2019, solar power was already cheaper than grid electricity across 344 prefecture-level cities in China even without government subsidies, according to a study published at Nature Energy, a British peer-reviewed journal. Nearly a quarter of those cities even saw their photovoltaic prices comparative with those of coal-generated power.

Bai believes that the integration of photovoltaics and electrolysis is going to play a major role in expanding the scale of green hydrogen production, adding that current global demand for hydrogen of about 60 million tonnes a year already would require more than 1,500 GW of solar power to produce it cleanly.

As the world’s largest solar company with a market capitalisation of Rmb357 billion ($54.9 billion), Longi produces one in every four solar wafers, the component that generates power in a photovoltaics module. It was among the rare few firms that survived the turbulent ride of China’s solar industry boom-and-bust, which saw nearly 180 players go under in the last four years alone (see WiC532). What helped the Shanghai-listed company stay in the game was its investments in cost-saving technology and an early bet on using mono-crystalline to make solar wafers. Cooling molten silicon into a single homogeneous structure, mono-crystalline allows for greater conductivity. As the competition in solar infrastructure shifted from cost to technological efficiency, products made with it became the favoured option among industry players.

Longi began to diversify its business across the solar supply chain six years ago. Its foray into hydrogen is essentially a downstream expansion into storage. The idea is that the electricity generated by solar photovoltaics systems during daylight hours, if not used immediately, can be directed towards powering electrolysers, splitting water into hydrogen and oxygen gases. Hydrogen is then collected and stored.

“As an energy carrier, hydrogen has a higher energy density than a lithium battery. It is highly suitable for long-term energy storage — for days, weeks or even months – such that daytime and seasonal imbalances that have dogged photovoltaic power generation can be resolved,” explained Bai.

Sinopec, with its mature infrastructure for storing, transporting, and distributing gas, is a handy partner for Longi. The state-owned enterprise announced in March that it will set up 100 hydrogen filling stations this year, as part of its plan to build 1,000 by 2025.

The shift towards hydrogen could help balance Sinopec’s deficits on its carbon footprint as the company prepares to join the national emission trading scheme to be launched later this year (see WiC530).

The output value of China’s hydrogen industry is expected to reach Rmb12 trillion by 2050, supported by 10,000 hydrogen refuelling stations, according to a white paper by the China Hydrogen Alliance, a domestic think tank. It is unclear how the country is going to achieve these numbers, given that Beijing has yet to craft any concrete policies on the industry. (The slew of regional initiatives rolled out after 2019 focused more narrowly on leveraging the clean fuel for heavy-duty trucks; see WiC456).

But making hydrogen a key plank of China’s energy policy may be inevitable. “There are three major problems in China’s energy industry. First, its carbon emissions are fairly high. Second, the supply of oil and natural gas are still relatively reliant on imports. Third, photovoltaic and wind power, due to their intermittent nature, have yet to be meaningfully connected to the electricity grid,” Li Lianrong, chairman of Hydrogen Energy Technology Development Company – a body under the State Power Investment Corp – said during the CCTV show, noting that hydrogen could be the ultimate solution.

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