China's largest oil company betting on green hydrogen with a solar-powered factory in Xinjiang

China Petrochemical Corporation, also known as Sinopec, has begun construction on the world's largest green hydrogen facility, which will be totally powered by solar energy.

Sinopec announced on Tuesday that the 3 billion yuan (USD 470 million) project in Kuqa, Xinjiang's far western area, will begin production in June 2023 and have a 20,000-tonne-per-year capacity.

It will be China's first and largest photovoltaic-powered hydrogen facility, with an annual output capacity of more than 10,000 tonnes, according to the business.

The majority of the hydrogen produced in the United States comes from fossil fuels, with only 4% coming from renewable sources.

Sinopec's demonstration project will include the entire process of producing and using green hydrogen, including solar power generation, transformation, electrolytic hydrogen production, hydrogen storage, transportation, and refining.

To facilitate hydrogen manufacturing, the business will construct a solar power station with a capacity of 300 megawatts. It will also construct a water electrolysis hydrogen generating plant, hydrogen storage tanks, and a hydrogen pipeline.

The project will supply Sinopec's oil refinery in Tahe, Xinjiang, substituting natural gas-based hydrogen production, saving an estimated 485,000 tonnes of CO2 per year.

According to the party mouthpiece People's Daily, Sinopec chairman Ma Yongsheng said the project will fully exploit Xinjiang's resource advantages and was a critical project for the company's ambitions to become the country's top hydrogen producer.

Low land costs and high solar power generating efficiency in Xinjiang, according to Han Xiaoping, a chief analyst at energy industry website china5e.com, will lower the overall cost of the Sinopec project.

While green hydrogen is more expensive than fossil-based hydrogen, supplying a local refinery would cut intermediate transportation expenses, he added.

“Xinjiang has a strong chemical production capacity … The economics should be relatively acceptable.”

With a capacity of 3.9 million tonnes per year, Sinopec is China's largest hydrogen producer, accounting for 11% of the country's total production. During the 14th five-year plan period, it wants to construct 1,000 hydrogen refueling stations by 2025.

Three more green hydrogen production projects are in the works for the corporation, including two in Inner Mongolia's northern region and an offshore wind-based facility in Fujian's southeastern province.

China's transition to carbon neutrality will be aided by the adoption of low-carbon hydrogen.

According to a report released in May by the China Hydrogen Alliance, hydrogen energy's share of the country's energy mix is predicted to rise from roughly 3% in 2018 to 20% in 2060.

23 provinces and municipalities have already released plans and guidelines for the development of local hydrogen industries. Following the discussion, China is anticipated to release a mid-and long-term national plan for the sector.

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