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China’s largest green hydrogen refuelling station is selling H2 at a seventh of the cost of the fuel in California

China's largest green hydrogen refuelling station is selling H2 at a seventh of the cost of the fuel in California

The largest integrated green hydrogen production and refuelling complex in China is able to supply hydrogen at 35 yuan per kilo ($4.86/kg), near cost parity with diesel, according to reporting by the Chinese newspaper Hunan Daily.

Unlike the vast majority of China’s hydrogen refuelling stations, engineering firm Sany’s filling spot in the city of Changsha, Hunan province, which entered into a testing phase this week, produces its own H2 onsite via alkaline electrolysers, thus avoiding transportation costs.

The electrolysers are capable of producing up to 180kg an hour, but the pumps can only dispense two tonnes per day — enough to fill up more than 100 vehicles.

By way of comparison, hydrogen fuel is being sold at the pump elsewhere in China for 75 yuan per kilo — which is still cheaper than in other countries. The largest H2 fuel market in the US, California, is currently seeing pump prices of $36/kg — more than seven times higher than the Changsha facility — while in Germany, Europe’s largest market, current per-kg prices are between €12.85 and €15.75 ($14-16.60).

If the price of H2 fuel in China drops below 30 yuan per kilogram, such as via future technology upgrades, “hydrogen fuel vehicles are more competitive than diesel vehicles” even without subsidies, said Wang Zhimin, director of Sany Hydrogen Energy Hydrogenation Equipment Institute.

While hydrogen is often highlighted as a way to decarbonise heavy, long-haul transport, the switch from existing trucks will depend on logistics firms committing to high upfront costs or renting from emerging pay-to-use schemes such as a programme run by Shell in Germany.

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However, because diesel is already a relatively expensive fossil fuel, particularly in markets with higher taxes, some green hydrogen investors have suggested that the cost gap is easier to bridge than with cheap natural gas or even grey H2, potentially making it an easier sell for use in road transport than by industrial offtakers.

But others have pointed out that most of the pump price at hydrogen refuelling sites is not based on the price of the H2 molecule, but the capex of the filling station as well as extra costs from compression and maintenance.

While Sany appears to be leveraging economies of scale, the 37-million-yuan station will not be open to the public but rather supply fuel-cell trucks used in company operations — which could limit its utilisation rate.

Similarly, although the engineering firm uses solar panels to power the electrolysers, it is unclear whether the complex has another source of renewable electricity or uses grid power for production during night.