Plan and Status
China’s hydrogen fuel cell electric vehicle (FCEV) is still at an infant level comparing to the commonly-mentioned new energy vehicle (NEV), which includes a plug-in electric vehicle, hybrid-electric vehicle, and others. Other than hydrogen, methanol is also used for fuel cells. In this article, FCEV refers to hydrogen FCEV.
The Energy Technology Innovation Plan of Action (2016-2030) issued by National Development and Reform Commission of the PRC addressed that hydrogen power and FCEV technological innovation would be a primary task, and by 2030, it is expected to have 100,000 FCEVs on road in China.
The 13th Five-Year Plan explicitly pictured the direction for hydrogen power development. The upper-to-middle industry chain should be able to prepare for the FCEV development. The infrastructure such as hydrogen power plants, storage, and channel network should be able to support hydrogen energy applications.
From 2013 to 2017, FCEV sales volume is 6,475, in which the number was 3,260 in 2017 solely at a YOY growth of 41%. Approximately 53% of FCEVs were sold to North America, and 38% of FCEVs were sold to Asia (mainly Japan). According to Bohai Securities (渤海证券), the estimates of accumulated FCEV sales volume worldwide will reach 10.3 million with a market size over CNY 3,600 billion (USD 537 billion) and CNY 350 billion (USD 52 billion) attributes to China by 2030.
Japan is the frontier in FCEV area and Toyota’s Mirai FCEV model is a milestone in the FCEV industry. In 2018, the non-commercial FCEV sales volume in the U.S. was 2,332. More than 70% of FCEV vehicles sold were distributed in the U.S. by Toyota in 2018, approximately 1,700, and Honda sold 624 models. In China, with less than 1,000 FCEVs running on the road and most of them are commercial vehicles, lags behind Japan and the United States in fuel cell technologies and applications.
Cleaner and More Efficient
For the environment protection purpose, hydrogen is considered one of the cleanest resources because its redox product is water, 2H2+O2 = 2H2O. FCEV motor generates electricity from the hydrogen’s redox process. Comparing to FCEV, NEV also has advantages at environment protection. NEV’s pollution is centered at the power plant, which helps to have better pollution control and management. For hydrogen power, the conflict appears in the production stage.
The massive hydrogen production is the first step that needs to be solved in the industry chain. Hydrogen can be generated from fossil fuel’s side production, electrolysis, and others. But the energy costs in producing hydrogen, like the electricity used in the electrolysis process, are considerably high. To achieve the 2030’s goal, hydrogen production technology must be improved at a lower cost.
The industry chain for hydrogen power includes production, storage, transmission, and application. FCEV is the last ring in the chain. Except for production, storage and transmission are the prerequisites for hydrogen’s application in FCEV.
In 2018, the hydrogen stations in China were approximately 10, and most of them are located at the east coast. The limited number of hydrogen station prevents the landing of FCEV. Due to the production, storage, and transmission, it cannot support additional hydrogen stations’ operation and extend hydrogen energy’s applications.
Restraints from upper and middle rings of the industry chain prevent the commercial use of FCEV, but considering the benefits of FCEV, hydrogen power development is a must for China.
China is heavily depending on the crude oil imports, even with the NEV’s preferred policy, the imports of crude oil keep trending up. Along with the prevalence of NEV in China, the coal imports have risen since 2015 from 205 million tons to 2017’s 271 million tons. China committed in the 2015 Paris Agreement to reach peak carbon emissions around 2030 and increase the non-fossil share of the primary energy to 20%. In the 13th Five-Year Plan, China will also strive to reach the goal that by 2030, the share of non-fossil power generation should exceed 50%.
To reach the goal of decreasing fossil fuel use and lower the dependence on oil and coal imports, China must develop renewable energy and improve energy use efficiency. The structural change in energy will tremendously reshape energy-dependent applications like vehicles. To adapt to the change, NEV and FCEV are included in the state’s development plan.
However, China is ceasing the subsidy program for NEV. Buyers will expect fewer and even no subsidies for buying NEVs. Recently released NEV subsidy list has stricter requirements on NEV’s power efficiency and mileage range. Subsidies for non-commercial NEVs with less than 350 km became history. By the end of 2020, the government will cease the subsidy program for NEVs fully. But for FCEV, the attitude remains positive. When NEV’s subsidy program has stricter requirements than ever, the FCEV industry still can enjoy the favorable policy.
NEV’s battery technology has reached a bottleneck since the power density cannot extend the range as expected. Hydrogen FCEV has a better opportunity in power density. The extreme range of NEV is less than 800 km, but FCEV’s range can support more than 1,000 km.
Other than the mileage range, most of NEV’s batteries cannot maintain performance under extreme weather. The power failure happens frequently when the temperature drops and customers’ complaints and question voices for the issue aggregate. However, FCEV does not concern about the battery problem since it relies on redox and sufficient oxygen supply will be enough for the fuel cell to generate power for the vehicle.
Limitation of FCEV
User Experience
The fuel cell for FCEV is dominated by polymer electrolyte membrane (PEM) fuel cell. The cutting-edge of the PEM technology aims to reach extreme thinness so that the oxygen and hydrogen can have a close-to-complete reaction and improve energy efficiency during the use. Toyota’s Mirai model made innovative structure change on the cathode side and solved the problem caused by the mix of airflow and redox reactant.
The redox reactant of FCEV is water and a vehicle spraying water on the road may somehow be challenging people’s traditional image of the vehicle. Considering the road condition and weather, water emitted from FCEV might also be a hidden risk for driving safety.
Back to the FCEV itself, the initiation process will be longer than current ICE (internal combustion) vehicle and NEV. The electricity generated from the redox reaction takes time to fuel motor to start driving. The delayed launch can be solved by an extra battery to support the launch need. The extra battery may cause less space for fuel tank, but the compromisation is worth to minimize the launch waiting time.
The FCEV’s power generation relies heavily on the air flow and the oxygen density in the air. The different environment might lead to varied FCEV’s performance. Maintaining a steady performance under various circumstances will be a concern to a lot of consumers. Besides the range problem, NEVs’ poor performance in winter or cold weather has kept numerous potential customers from purchasing. For FCEV, consumers would like to see a better performance than NEV when facing the same conditions.
Industry Chain
Except for the user experience side, previously mentioned industry chain and hydrogen energy infrastructure is the primary task for the industry to realize the massive scale of FCEV delivery. The energy chain and vehicle industry jointly contribute to the final use of FCEV. The infrastructure network will take more than a decade to complete for a basic need.
Currently, in China, the hydrogen energy development deviates from regions to regions. Some have complete hydrogen power chain from production to application and some only have hydrogen power application.
The development of hydrogen power mainly located at the east coast and Middle China. The west and northwest are not listed above due to the blank in hydrogen power development. Yangtze delta is in the leading position comparing to other provinces in China. Because of SAIC (Shanghai Automotive Industry Corporation) Motors, the radiation of SAIC’s hydrogen FCEV inversely pushes the hydrogen power development in the delta area. Jiangsu and Shanghai are two regions that are capable of producing, storing, transporting, and applying hydrogen power.
Shānxi is only left who has a full hydrogen power chain. Shānxi has the most coal mines in China and the process of process coarse coal will produce side product, hydrogen. As Shānxi provides coal use for the entire nation, the mass production of coal urges the development of its side product, hydrogen, to transform into a complete industry chain, especially the storage and transportation ring.
China’s technology in fuel cell falls behind Japan and the U.S. for 5-10 years. The core technology of fuel cell significantly relies on foreign companies’ support. The state has included the fuel cell into the development plan, and some companies actively cooperated with overseas fuel cell tech corporates to strengthen its own fuel cell R&D force.
Weichai Power (潍柴动力), a traditional engine manufacturer, founded a fuel cell company with Ballard Power Systems Inc. to develop its own fuel cell dynamic system. Ballard Power Systems Inc. is a Canada-based fuel cell company with nearly 30 years of R&D experience in fuel cell technology. It started to cooperate with multiple Chinese enterprises by offering fuel cell technological support. The jointly founded corporate will have the patent of the next generation of fuel cell technology, but the timeline of the next generation is ambiguous.
How likely the cooperation will bring real fuel cell technology into China is still a question mark. Fuel cell system, the core technology for FCEV, will take some time for China to catch up with Japan and North America.
FCEV is still at an infant level in China, but favored policies and subsidies are encouraging the industry to grow. Contrasting to subsidizing the buyer side, the policy tends to weigh on the operation side like hydrogen refill station. As indicated by Tianfeng Securities (天风证券), the hydrogen refill station and refill subsidies are set by the local government, while the state hasn’t published explicit subsidy standards. In Foshan city, fixed hydrogen refill station built before 2019, newly-built station with storage under 500 kg capacity could be subsidized with CNY 5 million (USD 746 thousand); above 500 kg, it can receive CNY 8 million (USD 1.2 million). Foshan’s subsidy program for refill looks attractive as well. When hydrogen sale price in Y2018-2019 is CNY 40 and below per kg, the subsidy will be 20; in Y2020-2021, the subsidy will be CNY 14 when the price is CNY 35 and below; in 2022, the subsidy will be CNY 9 when the price is CNY 30 per kg.
As 2020 is approaching, China committed in Copenhagen Accord to increase non-fossil energy share to 15%, which has been realized in 2018. The 2030’s emission goal has a strict requirement on carbon emission, and to keep the promise, hydrogen power development is a primary task for the next decade and industries relied on energy must reform themselves to adapt to the energy structural change.