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Renewablehydrogen

forchemical

sectordecarbonisationin

ChinaTECHNICAL

DOCUMENTTechnical

documentTechnicaldocument:

renewable

hydrogenforchemical

sectordecarbonisation

in

ChinaAuthoraffiliationAgora

Energy

China502E,

German

Centre,

No.19

Dongfang

East

Road

Chaoyang

District,

Beijing,

Chinawww.agora-Project

leadWenbo

Zhaowenbo.zhao@agora-energy.comAuthorsWenboZhao(Agora

Energy

China)Philip

Horster(formerlyAgora

Energy

China)Emir

Çolak(Agora

Industry)Wei

Meng

(Agora

Energy

China)AcknowledgmentsWewouldliketothank

Leandro

Janke,

MatthiasDeutsch,

Maia

Haru

Hall,

Darlene

D'Mello,Julia

Metz,Frank

Peter,Alexandra

Steinhardt,Anja

Werner,IsadoraWangandYiranJinfortheir

helpful

comments

andsupport.→

Pleasecite

asfollows:Agora

Energy

China

and

Agora

Industry(2026):Technical

document:

renewable

hydrogen

for

chemicalsectordecarbonisation

in

ChinaAgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

ChinaPublicationdetails2AEmissionsreductionmethodology6BCostmethodologiesandinputvaluesB.1

ElectricityB.1.1LCOE

calculation

methodologyB.1.2

InputvaluesB.2

HydrogenB.2.1Levelisedcostof

hydrogen(LCOH)

calculation

methodologyB.2.2

Input

valuesB.3Ammonia

and

methanolB.3.1

DatacollectionB.3.2Real

case

and

concept

case

dataB.4

MethanolB.4.1

DatacollectionB.4.2

Realcase

dataB.5Methodological

differences

between

PyPSA

Optimisation

and

PTX-BOAB.6Price

overviews

of

grey

ammonia

and

methanol77881010101112131515161718CRegionalprojectdata–further

details19DAsummaryof

policies21Bibliography

26AgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

ChinaTable

of

Contents3Table

B-1Comparisonofthe

methodologies

for

the

LCOE,

LCOH,

LCOA

and

LCOM7Table

B-2Techno-economic

parameters

for

the

renewable

energy

sources

9Table

B-3Techno-economic

parameters

for

the

electrolysis

11Table

B-4Techno-economic

data

for

Haber-Bosch

plants12TableB-5Technicalandfinancial

datafor

selected

off-grid

green

ammoniaprojectsin

China13TableB-6Production

inputs

and

costsforthe

concept

ammonia

synthesisplantin

Sichuan14Table

B-7Techno-economic

data

for

methanol

synthesis

plants15Table

B-8Technical

and

financial

data

for

the

off-grid

green

methanol

project

in

China

16Table

B-9Production

inputs

and

costs

for

methanol

synthesis

plant17Table

B-10Overview

of

methodologies

18Table

B-11Ammonia

spot

market

prices

between

2022

and

202418Table

B-12Methanol

spot

and

contract

prices

in

China,

November

2023toSeptember202419Table

C-1Comparison

of

green

ammonia

and

methanol

capacityannouncement

with

grey

ammonia

and

methanol

production

in

202120Table

D-1A

summary

of

policies

about

Chinese

national

and

province-level(Inner

Mongolia,Jilin,

Ningxia),EU

and

German

renewablehydrogen

policies22Table

D-2IPCEI-funded

projectsinGermany26AgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

ChinaList

ofTables4This

technicaldocumentprovidesfurtherdetailson

both

themethodologyfor

theemissionsreductioncalculationsand

themethodologyandinput

valuesfor

estimating

the

levelised

cost

of

electricity(LCOE),hydrogen(LCOH),ammonia(LCOA)andmethanol(LCOM).It

also

includes

further

regional

data

onhydrogenprojectsandcoalproductionas

wellasa

summaryofpolicies.Thecostestimates,projectdataandpolicyreviewin

thisdocumentare

basedprimarilyon

thesituationas

of2024.Policy

status

and

revisions

reflect

officialdocumentsavailableat

the

timeof

writingandmay

besubject

tosubsequent

updates.AgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

China5Inorder

toquantify

theCO₂emissionreductionsachieved

by

usingrenewable

hydrogeninsteadoffossil-based

hydrogenin

theproductionofchemical

products,

thisstudy

breaksdown

theprocesssteps

in

which

hydrogenis

usedasarawmaterialandcalculates

the

hydrogenconsumptionateachstage

indetail.Different

traditional

hydrogenproduction

methodsand

theircorrespondingCO₂emissionsare

alsoconsidered.Thecalculationofemissionreductionsis

basedona

scenarioanalysisapproach

thatintegratespublicly

availableindustrystatistics,reportedprocessdata

andassumptionsfrom

literatureandotherindustry

sources.Thisprovidesaconsistentanalyticalframeworkforevaluatingrenewablehydrogen

substitutionacross

variouschemicalproducts.CalculationSteps1.

Chemical

product

data

collection:obtaining

data

ontheproduction

volumesofmajorchemicalproducts

and

their

hydrogenconsumption.2.Processflowanalysis:identifyinghydrogenconsumptionforeachstep

within

theactualproductionprocess

where

hydrogenis

usedasa

feedstock.3.Sourceidentification:determining

thesourcesof

feedstock

hydrogenin

traditionalprocesses,

based

onreal-worldconditions.4.Emissionfactorapplication:utilisingstandardemissionfactorsfordifferent

hydrogenproduction

processes(derivedfromindustrydata)

tocalculate

CO₂emissionreductionswhenusingrenewablehydrogen.AssumptionsWeassumenosignificantchangesin

theeffectivenessofrenewable

hydrogensubstitution

andnosignificantchangein

theeffectofemission

reduction

withrenewable

hydrogensubstitutionin

recent

years.Theemissionreductioncalculationsare

basedon

the

latestavailable

unified-yeardata

(2022)for

chemical

product

output

and

hydrogenconsumption.50–50splitforsyngasadjustmentandpurchased

hydrogenInmethanololefinandcoalchemicalproduction,itis

typical

toadjust

thecarbon-to-hydrogenratio

using

syngas

whilealsopurchasingexternal

hydrogen.This

studyassumeseachsourcecontributes50%of

total

hydrogenconsumption.Feedstock

hydrogensourcesassumptionFor

methanol(Zhu&Feng,2024)and

ammonia(Xiong,Liu,&Gao,2022)production,referencesfrom

the

literature

were

used

toidentify

the

hydrogenfeedstocksources.Forotherchemicalproducts,all

feedstockhydrogenisassumed

tocomefromcoal

-

based

hydrogenproduction.GreenmethanolscenarioThisstudyincludesagreenmethanolproductionscenario.Itisassumed

thatsufficientexternalCO₂is

available

toproduce

thesamequantityofmethanolas

inotherscenarios.DataSourcesHistoricalproductiondataforrefining,ammonia,methanolandmoderncoal-basedchemicals(coal

-to-olefins,coal-to-oilandcoal-to-gas),as

wellasCO₂emissionsdatafor

varioushydrogenproduction

processes,primarilycomefromindustryreportsand

handbooks(seereferencesin

this

technicaldocument).Thedifferentprocessroutesand

hydrogen

consumption

levelsforeachchemicalproductarereferencedfrompubliclyavailableindustrialprocess

dataand

literaturestudies.A

EmissionsreductionmethodologyAgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

China6B

Costmethodologiesandinput

valuesToensurerobustresults,

thisreportrelieson

variousinformationon

theinput

valuesand

thecalculationmethodologies(seeTable2.1).

Assources,weusemethodsforeachcostestimationcan

befoundin

theChina-specificdataandconditions.MoredetailedtechnicaldocumentComparisonofthe

methodologiesforthe

LCOE,

LCOH,

LCOAand→Table

B-1LCOMLCOELCOHLCOA/LCOMNumberof

calculation

methods113MethodologyCombined

LCOEmethodologyof

GE

ChinaandChina’s

nationalstandard

NB/T10394-200LCOH

methodologyofUmlaut

andAgoraIndustry(2024)LCOX-calculator,

LCOX-PyPSA-China,LCOX-site-specific(Table

2.2)Key

parameters:PV,onshorewind

capex,opex,annuityfactor,lifetimeand

FLH,

residualvalue,tax,ElectrolysiscapexforChina,annuityfactor,lifetime,

FLH,stackreplacementtime,

LCOEDependingon

method(Table

2.2)Typeof

resultsLCOE

PV,LCOEonshore

wind

LCOE

hybrid3

LCOH:for4

000,

6

000and8

000

FLHMultiple

LCOXforeach

methodB.1

ElectricityFor

therenewableelectricityusedinelectrolysis,

weassume

a

power

generation

mix

of50%power

fromphotovoltaicandonshore

wind,respectively.Thisis

because

both

theregions

with

the

highestpotential

for

low-costgreen

hydrogenproduction,as

wellasmostcurrentannouncedprojects(seeprojectdataanalysis

below),areprimarily

locatedinruralareasof

inlandprovinces,farfromcoastalregions.Toestimatethelevelisedcostofelectricity(LCOE),we

useacombinationof

twoauthoritativesources

widely

usedinChina,ensuring

thereliabilityandapplicability

of

the

LCOE

model

in

the

context

ofChina.These

are

the

methodology

from

GE

China’s

WindPowerLCOE

WhitePaperandtheparameter

selectionrequirementsoutlinedinChina’snationalstandard

NB/T10394-2020Specifications

forPerformance

Assessmentof

Photovoltaic

PowerGenerationSystemsfor

thecalculation.Boththedetailedcalculationmethodand

theinput

valuesare

availableinthe

technicaldocument.AgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

China7→N

is

the

lifetime

of

the

equipment→nis

thenumberof

years

theequipmenthas

beenin

operation→

is

the

corporate

incometax→

is

the

annual

depreciation

value.It

iscalculated

byusing

theaverageannual

lifemethod→

is

the

discount

rate,

which

is

the

rate

atwhich

theexpectedfutureearningsofafinite

periodarediscounted

to

theirpresent

value→

Baisthe

annual

opex→

is

the

residual

value

of

fixed

assets→

Ra

istheresidualrate→

is

the

equivalent

number

of

hours

offull

generation.(In

actual

operation,the

actualgenerationof

windpowerandsolarpowerissubject

toactiveforecastingandstategridregulation,and

this

variableis

the

totalgeneration

ofanormal

yearconvertedinto

theequivalentnumber

of

hours

of

full-load

operation

of

all

units).B.1.2

InputvaluesTheinputvaluesfortheLCOEareasfollows:B.1.2.1

CapexCapitalcostsfor

theutility-scalePVinstallationsareUSD557/kW(CIPA,2024)andforonshorewind

USD636/kW(China

Renewable

Energy

EngineeringInstitute,2024).B.1.2.2

Opexand

lifetimeTodeterminetheopexand

lifetimeofPVandonshore

wind,

werelyon

thecommonChineseestimatesforthesetechnologies.ForPV,theopexissetat1%ofcapexperyearand

the

lifetimeis25

years.Onshorewind

projects

have

an

opex

of2%of

capex

and

alifetime

of20

years

in

the

model.B.1.1LCOEcalculation

methodologyThe

full

investment

model

LCOE

is

calculated

in

the

following

formula(GE,2016;NB/T10394-2020,2020).AgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

China8B.1.2.3

Full

load

hours

(FLH)average

yearisconvertedinto

theequivalentnumberof

FLH.The

average

technical

potential

of

PV

andWeassume1510FLHforPVand2272FLHor

onshore

wind.Toensure

these

valuesincludewindis

not

used.curtailmentconsiderations,

the

totalgenerationofanTechno-economicparametersfortherenewableenergysources→Table

B-2ParameterPVOnshorewind

powerFullload

hours

(h)(h)1510122722Capex

USD/kW RMB/(Year·W)55736364OPEX(in

%

of

capex)1%2%Discount

rate5.63%65.63%5Lifetime(inyears)N(Year)2520Residualvalue5%65%6Corporatetax25%25%Result(USD/kWh)0.02710.0241considered.The

latterrefers

to

the

valueofsomeresidualmaterialsrecoveredduringthescrappingof

fixedassets,

whichshould

bedeductedfrom

thecost.Second,the

LCOE

methodology

reported

on

the

AgoraIndustry(2024a)for

the

capex

and

opex

of

batterystorage

is

not

considered.In

reality,most

of

thePVand

windpowerinChinaisnotequipped

withbatterystorage.Third,

theChinesemethodologydoes

notincludecurtailmentcostconsiderations

because

Chinadoesnotprovidesubsidiesfor

windandsolar

powercurtailmentdevices.B.1.2.4Comparison

with

the

methodology

of

theEU

mapof

hydrogen

productioncostsWe

compared

this

methodology

with

those

of

LCOE

models

for

wind

and

PV

used

in

Europe,specifically,the

LCOE

methodology

from

the

EU

map

of

hydrogen

production

costs(Agora

Industry,2024a),

to

betterunderstandandadapttheLCOEmethodologytothespecificconditionsinChina.Thereare

threedifferences.First,in

the

Chinese

LCOE

methodology,

thecorporateincome

taxas

wellas

theresidualare

1https://zfxxgk.nea.gov.cn/2023-09/07/c_1310741874.htm2

https://zfxxgk.nea.gov.cn/2023-09/07/c_1310741874.htm3"ChinaPVIndustryDevelopmentRoadmap2023-2024"4http://www.creei.cn/userfiles/site/3c50e7395318409d8812d79d025fad46.pdf5/s/EjHD46pDjoE25491GNPllA6https://mp.weixin.qq.com/s/EjHD46pDjoE25491GNPllA(Range

from5%~10%)AgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

China9→a

refers

to

the

annuity

factor/cost

of

capital.→

τ

refers

to

thefull

loadhours→

Opex

refers

to

the

operational

expenditures→

Capex

refers

to

the

capital

expenditure→refers

to

the

electricity

costs→LHV

represents

lower

heating

value

of

hydrogen.TheLHVis33.3kWh/kg→Efficiency

represents

the

ratio

of

the

output

ofhydrogen

to

theelectricalpowerrequiredforproducing

it.The

efficiency

is67%

based

on

themean

valueof

theavailabledata.→The

term

in

whole

represents

thesystem→

refers

to

the

discount

rate

in

percent,→refers

to

the

lifetime

in

years.The

annuity

factorrepresents

the

levelisedcostofdiscountrateineachyear.Thecostanalysisincludesfourmaincomponents

that

coverexpendituresfor

theconstructionandoperation

of

theelectrolysissystem.Themaincomponentsare

capexdepreciation,Op,electricitycostsandcostofcapital.Capexdepreciationincludescapexfor

the

electrolysissystem,EPC,stackreplacementcostsand

compressor

costs.Opex

is

set

to

be2%of

capexper

year.Electricitycostsinclude

thoseforhydrogen

productionandforcompression.B.2.2

InputvaluesTheinputvaluesfortheLCOEareasfollows:B.2.2.1

Capexand

lifetimesDataoncapexis

basedonresearch

by

AgoraEnergiewende

and

the

BNEF

report

in2024.Thecapex

of

the

electrolysis

system

is

set

at

USD462/kW7,including

an

initial

stack.The

compressor

cost

is

USD56.The

lifetime

stack

is80000hours.The

stackreplacement

cost

is19%and

the

EPC

is34%oftheelectrolyser

system’s

capex.The

total

capex

is

USD600/kW(BloombergNEF,2024),B.2.2.2OpexWe

assume2%Opex

as

a

fraction

of

capex

per

year.B.2

HydrogenB.2.1Levelisedcost

of

hydrogen

(LCOH)

calculationmethodologyFor

the

LCOH,the

calculation

method

developed

byUmlaut

and

Agora

Industry(2023)is

adapted

to

Chinabyusingnationalinput

values,forexamplefor

thecapex,opex,electricitycostsandannuityfactor.Tocreate

low-,mid-and

high-costscenariosfor

theLCOH,we

use

three

different

FLH

assumptions

forelectrolysers:4000FLH,6000FLH

and8000FLH.

Theresulting

threeLCOH

valuesareusedasinputvaluesfortheLCOAandLCOM.Seethetechnical

documentforfurtherdetails.The

calculation

of

the

LCOH

is

based

on

the

followingformula.AgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

Chinaspecificenergy

consumptionof

theelectrolysis7

2023USDaverageprice10B.2.2.3

SystemspecificationB.2.2.4FLHLifetime

stack

is

set

as80000

hours,

the

specificWe

use

three

different

FLH

levels

for

the

LCOHenergy

consumption

is55.5kWh/kgH₂andthecalculation:4000,6000and8000.By

using

these,compressor

efficiency

is80%.we

are

able

to

calculate

a

range

of

LCOH

values

andsubsequent

LCOA

and

LCOM

values.In

the

analysis,weselect6000

hoursas

themid-costscenario.Techno-economicparametersfortheelectrolysis→Table

B-3Discount

rate10%Lifetimeelectrolysersystem10ammoniaLifetimestack80

000hAnnuityfactor0.163Energyconsumption50.0

kWh/kgH2Full

load

hours6

000Compressorefficiency80%ElectricitycostsUSD26.57/MWhOpex2%Capexelectrolysersystem*USD462/MWhEPC**34%Stackreplacement

costs19%StorageandcompressionUSD56/kW

compressorToal

capexUSD

600/kWlibrary"Python

for

Power

System

Analysis”(PyPSA)

(Brown

et

al.,2018).

The

inputs

come

from

the

same

data

collection

except

that

the

LCOE

and

LCOH

aredetermined

by

theoptimisation.

Yearly

based

weather

data

weresourcedfromPfenningerandStaffell(2016).Important

to

note

is

that

it

differs

from

the

PtXBusiness

Opportunity

Analyser(PTX-BOA;Oeko

-Institut

et

al.,2024)in

multiple

ways(i.e.,regardingseasonality,

weather

years,RESmix),meaning

that

thecostestimatesforChinain

thisreportarenotcomparable

to

PtX-BOA

results.B.3Ammonia

and

methanolFor

theestimationof

both

the

levelisedcostofgreenammonia(LCOA)and

the

levelised

cost

of

greenmethanol(LCOM),three

different

methodologiesare

used(see

Table2.2).First,we

continue

themodular

approachby

taking

the

LCOE

and

LCOHasinputsfortheLCOAandLCOMcalculation.The

otherinput

valuesarederivedfromOeko-Institut

(2024)and

other

national

data

sources.The

resultswere

validated

with

theopen-sourcePython-basedNote:*All

components

for

an

electrolyser

system

including

an

initial

stack;

**EPC

=

engineering,procurement

and

construction

covering

both

di-

rectandindirectcosts

basedon

BNEF’s

categorisationAgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

China11Thisreportfurther

validates

theresults

withprojectreports

tocompareourestimatesforgreenmethanoldatafromactualgreenammoniaandmethanolproducedfromRES,electrolysisandcapturedcarbonprojectsinChinatoestimateanLCOAandLCOMforwith

thecostestimatesof

biogenicmethanol.specificproductionsites.Themaininputsarecapex,REScapacityandammonia/methanolproductioncapacity.Thismakesitpossible

tocompare

theB.3.1

DatacollectionLCOX

estimates

of

our

methodology

with

thoseofrealprojectsand,ultimately,to

assess

theircost-competitiveness.B.3.1.1

CapexAdditionally,

weassessaconceptcaseforagrid-Capitalcostsfortheammoniasynthesisare

basedconnectedammoniasynthesisprojectinSichuan,onamixofsources,including

thecostsreportedwhichreliesona

hydropowerPowerPurchaseby

Oeko-Institut(2024)and

the

global

capex

priceAgreemet(PPA)as

the

renewable

electricity

source.estimated

by

Cesaro

et

al.,(2021).

The

average

valueThisconceptstudyprovidesinsightson

how

usingacross

sources

is

USD6338/kW.

Additionally,

weelectrolysis-to-ammonia

technologyinregions

withincludea

hydrogenstorage

tank

thatis

basedonabundant

hydropowerresources,suchasSichuan,Agora

Energiewende’s

capex

data(USD59.7/kWh).canfurtherdecrease

thecosts.Lastly,formethanol,Theoverallcapexof

theammoniasynthesissystemwealsoincludeanoverviewofestimatesof

thecoststands

at

USD692.7/kW.of

biomethanoland

bio-e-methanolfoundinother8

USDisreportedin2023values.Techno-economicdataforHaber-Boschplants→Table

B-4ParameterUnitAgoraUnit

cost(USD)Cost

USD/MWhCostUSD/tCapex

Haber-Bosch+Storage(ofwhichStorage)USD2023/kW692.7(59.7)Opex%capex

p.a.2LifetimeYears20EfficiencykWh

NH3/kWh

H20.82H2demandKg

H2

/

kWh

NH30.0372.29*112.4N2demandKg

N2/kWh

NH30.1600.06810.9ElectricitydemandkWhel/

kWh

NH30.1420.0263.6Totalproduction

priceUSD2023/MWh126.9AgoraEnergyChina—Technicaldocument:renewablehydrogen

for

chemical

sector

decarbonisation

in

ChinaNotes:This

table

is

derived

from

Agora

and

Öko-Institut

(2024).*Assuming

6

000

FLH

for

the

electrolysis.12B.3.1.2

Production

inputsandexpenditureB.3.1.4

FLHTheproductioninputsareequally

basedon

AgoraWe

assume8000FLH,as

the

capex

includesIndustry’smethodologyand,along

withexpenditures,can

be

found

in

Table

B-3.Fuel

costs

are

based

on

thehydrogenstoragecosts.LCOH

and

LCOE

values

and

market

prices

for

nitrogenin

China

inthe

first

halfof2024.B.3.2

Realcaseand

concept

casedataB.3.1.3

Opexand

lifetimeB.3.2.1

CapexThe

opex

is

set

at2%of

capex

peryear

and

theAsrealcaseprojectsinclude

theinvestmentcostlifetime

is

set

at20

years.These

are

a

commonof

theentireoff-gridsystem(includingRESandstandardforChineseinfrastructureprojects.nitrogencapture),

thecapex

valuesperkWammonia

synthesiscapacityare

thussignificantly

higher

than

for

hydropower,

whichincludes

theelectrolysis,nitrogencaptureandsynthesissystem

butnot

the

electricitysource.

At

thesame

time,italso

leads

tolower

fuel

costs

for

real

case

projects.Technicalandfinancialdataforselectedoff-gridgreenammoniaprojectsin

China→Table

B-5Real

casedataReal

Case1Real

Case

2Concept

CaseLocationUlatMid

Banner,

Inner

MongoliaDa'an,JilinSichuanAmmonia(ktpa)57180140Ammonia(MW)3711791Electrolysis(ktpa)N/A32N/AElectrolysis(MW)N/A148N/AOnshorewind(MW)210800-Solar

PV

(MW)50--FLH

wind2

2983

220*8

000FLH

PV1

760-*8

000Batterystorage20MW/40MWh40MW/80MWhCapex(million

USD)320890186Capex(USD/kW)8

6377

607956AgoraEnergyChina—Technicaldocument:renewablehydrogenfor

chemical

sector

decarbonisation

in

ChinaNotes:*assumed

FLH

of

hydropower-based

ammonia

plant.13B.3.2.2

FLHaninput

because

thesystem’selectricityisassumedto

come

entirely

from

the

off-grid

RES.Given

thatWecalculate

variousLCOAs

basedondifferenttheseareintegratedprojects,

wealsoassume

thatFLH

levels(5000,6000,7000and8000).If

thethecapexincludesanitrogencapture

unitinsteadofRES

system(wind

or

wind/PV

hybrid)is

unable

toassumingnitrogeninputsatmarketprice.Therefore,generatesufficientelectricity

tomeet

thepowertherealcasesdonot

haveinputcosts

beyond

waterdemandof

thesynthesisprocess,

theresultingratio(see

Table

X-3).Catalysers

for

the

respective

chemicalis

usedas

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