The world’s largest green hydrogen project — Sinopec’s 260MW Kuqa facility in Xinjiang, northwest China — has been operating at less than a third of its installed capacity due to various factors, including some missing safety features in the system design and lower-than-promised efficiencies, research house BloombergNEF (BNEF) tells Hydrogen Insight.
The alkaline electrolysers — supplied by three different Chinese manufacturers: Cockerill Jingli (120MW), Longi (80MW) and Peric (60MW) — each have their own technical issues, but all have one common problem related to their flexibility, according to BNEF analyst Xiaoting Wang.
She tells Hydrogen Insight that all three manufacturers promised an operating range of 30-100% of their electrolysis systems’ nameplate yield. In other words, if the amount of renewable energy entering the systems results in the production of less than 30% of its maximum output, the machines will stop releasing hydrogen.
“However, all those electrolysers failed tests at the 30% working point,” said Wang. “The actual working range could be narrower than 50-100%.”
She tells Hydrogen Insight that the problem of is rooted in product design and materials used in the product.
BNEF expects the Kuqa project to alarm many potential investors in green hydrogen, especially international developers considering importing cheaper electrolyzers made in China
In an electrolyser cell, oxygen is produced at the anode and hydrogen is made at the cathode, while the membrane sitting in between is responsible for preventing gas mixing and explosion.
In reality, the membrane is not perfect and gas mixing still occurs, especially on the anode side, because hydrogen molecules are very small, and they can cross the membrane more easily. But this is not a problem only if the concentration of hydrogen in oxygen can be controlled below 1.8%, which can be achieved when the electrolyzers are fed with the nameplate electricity.
The problem comes up when the input electricity is less than the nameplate value: oxygen generation volume is reduced in a way that is almost linear, while the amount of hydrogen that can cross the membrane is affected more mildly and remains relatively high. The net effect is the concentration of hydrogen in oxygen rises, resulting in an explosion.
All three manufacturers use “almost the same raw materials and have the same internal structure, so that is a fundamental issue”, Wang explains.
“So the result is a safety problem that will limit the operating range. The already poor economics [of the Kuqa project] will likely become worse.”
The San Francisco-based analyst wrote in a recent note to BNEF subscribers: “BNEF expects the Kuqa project to alarm many potential investors in green hydrogen, especially international developers considering importing cheaper electrolyzers made in China.”
Wang adds that state-owned Sinopec is now “in the process of adjusting the whole operating algorithm”. This means that instead of having all the electrolysers operate at the same status, as planned, the control unit would dictate some electrolysers to run while setting others to idle, in order to avoid running electrolysers below 50% of their nameplate yield.
While the switch from “intra-electrolyser management” to “inter-electrolyser management” sounds feasible, turning the stacks on and off more frequently will increase their degradation, thus shortening their lifespans, she explains.
Cockerill Jingli's parent company, Belgium-based John Cockerill, says it cannot comment on the matter due to a non-disclosure agreement with Sinopec.
However, John Cockerill’s vice-president of strategy, Fabien Tordeur, told Hydrogen Insight: “It’s worth noting that this is the first project of this scale ever implemented so far, the return of experience gives us a major advantage compared to our competitors.”
Wang says that the problems at Kuqa are causing friction within the Sinopec group.
“There are two Sinopec subsidiaries — one responsible for constructing and operating the green hydrogen facility, and the other one operating the existing oil refinery [where the expected 20,000 tonnes of renewable H2 a year will be consumed],” Wang explains.
“So the second one has shut down its traditional [grey hydrogen production] facility based on natural-gas reforming and expected to get a stable supply of hydrogen from the first one.
“Right now, the second subsidiary is really annoyed because they cannot get the hydrogen at the expected volume.”
According to BNEF, the project is supplied by 361MW of purpose-built solar panels, with further wind power coming from the local grid.
But Wang clarifies the point, saying: “They’re trying to reduce the dependence on the grid when their captive solar power plant is generating less power than the electrolyser’s nameplate demand, because grid electricity costs will be higher [therefore pushing up the cost of the green H2].”
A problem for the Chinese electrolyser market
According to statistics reported by BNEF in August , the largest three electrolyser makers, by annual stack assembly capacity to be commissioned by the end of 2023, would all be Chinese.
The oldest Chinese electrolyser brand, Peric, is adding another 2GW on top its existing 1.5GW facility, totalling 3.5GW.
The world’s second largest solar inverter supplier (after Huawei), Sungrow, is also adding 2GW on top its 1GW facility. Longi — better known as a leading solar panel maker — in third place with 2.5GW, including the already operating 1.5GW factory and another 1GW that was due to be added this year.
However, based on recent conversations Wang had with those companies, they are all postponing official commissioning of the new lines to 2024, due to the lack of enough orders to justify immediate expansions.
It has been widely predicted — including by BNEF — that cheap Chinese electrolysers would increasingly be used in Western green hydrogen projects due to their lower upfront cost compared to non-Chinese brands, even if they are less efficient. BNEF learned that Chinese manufacturers would revise product designs and use different components to cater to international clients’ demands.
This fear has even prompted multiple calls for the EU to prevent Chinese electrolysers from entering the European market —including from John Cockerill Hydrogen CEO Raphael Tilot.
But the fact that three biggest Chinese electrolyser manufacturers have the same flexibility problems with their equipment may make international developers more cautious about buying Chinese models.
Kuqa is not due to be the world’s largest operational project for much longer. Another Sinopec project that is about a third larger is already under construction in Ordos, Inner Mongolia, China, but it is not known when that will be completed, and the company has also announced a ¥20bn ($2.8bn) green hydrogen project in Inner Mongolia that will pump 100,000 tonnes of H2 a year through a new 400km pipeline to Beijing.