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Xinhua News Agency, Beijing, April 8 - Title: Breaking the Cost Barrier of Green Hydrogen: A Key Window for Transitioning from Demonstration to Scale
Xinhua News Agency reporter Yang Jing
The 14th Five-Year Plan outlines the goal of leading future development in key areas, establishing a comprehensive cultivation system for future industries, and promoting hydrogen energy and nuclear fusion energy as new economic growth points.
This strategic deployment anchors the long-term development direction of the hydrogen energy industry. Recently, the Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued the &#34;Notice on Carrying Out Comprehensive Hydrogen Energy Application Pilot Work&#34; (hereinafter referred to as the &#34;Notice&#34;), further transforming top-level design into actionable and quantifiable plans.
The &#34;Notice&#34; specifies a quantitative target of reducing the average terminal hydrogen price to below 25 yuan/kg by 2030, with advantageous regions striving for 15 yuan/kg, providing a clear roadmap for industrial development.
How to bridge the cost gap between green hydrogen and gray hydrogen and address the economic bottlenecks across the entire chain has become the core issue for the green hydrogen industry to shift from policy-driven to market-driven.
Cost Gap: The Real Difference Between Green Hydrogen and Traditional Hydrogen Production
The core bottleneck in the development of green hydrogen is insufficient cost competitiveness. Data from the China Hydrogen Energy Alliance Research Institute indicates that by the end of June 2025, the national production-side hydrogen price index will be approximately 27.5 yuan/kg, while the consumption side will reach as high as 45 yuan/kg, highlighting a nearly 18 yuan price difference that underscores the cost transmission bottleneck from production to terminal, posing challenges to the 25 yuan/kg target.
Electricity costs are the core component of green hydrogen costs, accounting for 60%-70%. Fang Wei, Vice President of Sunshine Hydrogen Energy Co., Ltd., estimates that with an electricity price of 0.3 yuan/kWh, the electricity cost alone would be about 16.5 yuan/kg, and when combined with equipment and construction costs, the total cost exceeds 20 yuan/kg; if the electricity price drops to 0.15 yuan/kWh, the electricity cost could be compressed to below 10 yuan/kg, with the total cost expected to be controlled around 15 yuan/kg.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/Op1SrG2ixWYJTMxbUhkK8CKFCSlHRBZhaNPuZGKg9lme8AA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/Op1SrG2ixWYJTMxbUhkK8CKFCSlHRBZhaNPuZGKg9lme8AA/641"/> Electricity Price and Green Hydrogen Price Calculation
Additionally, the intermittent volatility of wind and solar power directly lowers the utilization rate of electrolyzer equipment, and high depreciation further drives up hydrogen prices. The past reliance on large power grids for &#34;grid-connected hydrogen production&#34; can ensure stability, but high electricity prices and complex recognition of green attributes make it difficult to support long-term cost optimization.
Wu Liang, Chief Engineer of Shanghai Electric Group Shanghai Hydrogen Equipment Technology Co., Ltd., bluntly stated that the current cost of green hydrogen is more than twice that of gray hydrogen, and even considering imported carbon taxes, downstream still needs to bear higher costs; reducing costs relies &#34;70% on hydrogen production and 30% on other links,&#34; requiring both lower green electricity prices and efficiency improvements and cost reductions across the entire hydrogen production, storage, and transportation chain
Journalistic research has found that relying solely on equipment price reductions has reached a bottleneck. In the past three years, the price of electrolyzers has significantly declined, with some models' bidding prices nearly halved, leaving limited room for further compression. An industry consensus has formed: single-point price reductions are unsustainable, and system efficiency improvements are the key to breaking the deadlock.
Path to Breakthrough: From Equipment Competition to System Reconstruction
Multiple business leaders and experts have stated that breaking through green hydrogen costs must move beyond a single equipment mindset and shift towards an integrated system thinking of source, grid, load, and hydrogen storage. The core pathways focus on off-grid hydrogen production, system optimization, and the application of flexible technologies, as well as technological iteration and digital intelligence empowerment.
Off-grid hydrogen production locks in the cost advantages of green electricity.
Transitioning from &#34;grid-connected&#34; to &#34;off-grid&#34; has become an important choice for the industry to reduce electricity costs. By constructing independent micro-energy systems through direct connections of wind and solar power + energy storage for hydrogen production, wasted wind and solar electricity can be &#34;turned into treasure,&#34; lowering the electricity price base from the source and breaking free from dependence on the large power grid.
This technological route is accelerating from concept to large-scale practice. The hydrogen energy pilot list announced by the National Energy Administration in 2025 includes advanced flexible off-grid hydrogen production demonstration projects such as the Liaoning Huadian Tieling Xintai Off-grid Wind Power Energy Storage Hydrogen Production Integrated Project and the Jilin Da'an Large-scale Wind and Solar Off-grid Direct Current Hydrogen Production Project.
From the construction of demonstration projects to large-scale promotion, the economics and stability of off-grid hydrogen production still require breakthroughs in key technologies for support. Associate Professor Hu Song from Beijing University of Science and Technology stated that the core key to off-grid hydrogen production is the adaptability of green electricity. If the adaptability of green electricity can be improved without changing costs, it could significantly reduce energy storage and hydrogen production costs, which is crucial for controlling hydrogen production costs.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OUACbB0BhG4zzNaGoyYNg5srKiBg6th_AzqWgMchhV-qwAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OUACbB0BhG4zzNaGoyYNg5srKiBg6th_AzqWgMchhV-qwAA/641"/> In July 2025, the National Power Investment Jilin Da'an Wind and Solar Green Hydrogen Synthesis Ammonia Integrated Demonstration Project will be fully operational. Sunshine Hydrogen Energy provided the image.
System Optimization and Flexible Technology: Improving Green Electricity Adaptability
The core pain point of off-grid hydrogen production is the contradiction between the fluctuation of green electricity supply and the continuous hydrogen demand in chemical production, which directly drags down system efficiency and raises costs.
Cui Chuan Sheng, Technical Director of Donghua Engineering Technology Co., Ltd., stated that while the direct costs of green electricity in regions rich in wind and solar resources are low, the instability of wind and solar power leads to low utilization rates of electrolyzer equipment and high depreciation costs. At the same time, the demand for continuous operation of chemical production 24 hours a day places extremely high requirements on hydrogen source stability. If the matching between green electricity and hydrogen demand is not smooth, it will result in efficiency losses and increased costs.
The introduction of flexible hydrogen production technology provides a key pathway to solve this contradiction, effectively enhancing the adaptability of green electricity. This technology can actively follow the fluctuations of wind and solar output, flexibly adjust the scale and efficiency of hydrogen production, and accurately connect the intermittency of green electricity with the continuity of downstream hydrogen demand.
Sunshine Hydrogen Energy has adapted flexible hydrogen production systems to strong fluctuating wind and solar power sources in several national-level demonstration projects in Jilin, Inner Mongolia, and other regions. The electrolyzer load responds quickly, and the system has a high fault-free operation rate, resulting in a significant improvement in actual hydrogen production efficiency. Fang Wei stated that true cost competitiveness comes from a high proportion of absorption of fluctuating green electricity and optimal overall system efficiency, rather than simply low equipment prices
The improvement of system efficiency will further enhance the adaptability of green electricity. Cui Chuan Sheng proposed that the key to breaking the deadlock lies in shifting from &#34;equipment procurement&#34; to &#34;system integration&#34; thinking. By precisely balancing capacity, implementing intelligent operating strategies, and optimizing technology combinations, the goal is to maximize the absorption of green electricity and the value of equipment. Essentially, this involves optimizing at the system level to enhance the adaptability efficiency of green electricity throughout the entire hydrogen production and utilization chain.
In summary, the introduction of flexible technology addresses adaptation pain points, while the enhancement of system efficiency solidifies adaptation effects. The synergy of both will effectively improve the adaptability of green electricity for off-grid hydrogen production.
Technological iteration and digital intelligence empowerment lay a solid foundation for energy efficiency.
For gigawatt-scale projects, the operation of multiple equipment clusters and the coupling of multiple energy sources present management challenges. Artificial intelligence, digital twins, and other digital intelligence technologies, along with diverse technological routes, are iteratively collaborating to continuously optimize the comprehensive energy efficiency of green hydrogen.
At the level of technological iteration, the industry is building a layered and progressive technological layout based on mature routes and breakthroughs in cutting-edge technologies. Wu Liang stated that the hydrogen era has fully laid out four technological routes: Alkaline (ALK), Proton Exchange Membrane (PEM), Solid Oxide (SOEC), and Anion Exchange Membrane (AEM). Among these, ALK and PEM are in the mature commercial stage; AEM, which combines low cost and high flexibility, is the next-generation technology being prioritized for advancement. SOEC can efficiently utilize waste heat from data centers, significantly enhancing overall system energy efficiency, and companies are accelerating its productization. Liu Wangen, Deputy General Manager of Shanghai Taiqiang Morning Energy Technology Co., Ltd., stated that Chint Hydrogen Energy mainly adopts a dual-route approach of ALK + AEM, where ALK meets the hydrogen demand for large-scale industrial applications, and AEM adapts to flexible scenarios such as distributed wind-solar coupling, achieving optimal economic efficiency in system hydrogen production from the perspective of total lifecycle costs through a &#34;mainstream + forward-looking&#34; combination.
The collaborative iteration of diverse technological routes allows green hydrogen production to adapt to different resource conditions and application scenarios, thereby solidifying the foundation for energy efficiency enhancement from the equipment side.
In terms of digital intelligence empowerment, artificial intelligence has become the core means to elevate system management from &#34;passive response&#34; to &#34;proactive prediction.&#34; Fang Wei, Vice President of Sunshine Hydrogen Energy, pointed out that artificial intelligence is a key technological means supporting digital advancement. By collecting massive operational data to build analytical models, it accurately maps digital signals to equipment conditions, health status, performance degradation, and other characteristics. Relying on empirical data to train intelligent models can gradually achieve fault prediction and performance trend identification, completing the capability upgrade from &#34;visible&#34; to &#34;understandable&#34; to &#34;predictable.&#34;
Scenario Differentiation: Which Fields Will First Calculate the Economic Account
Currently, the economic viability of green hydrogen shows significant scenario differences, with green chemicals becoming the main battleground for its initial breakthrough. In regions with superior wind and solar resources, green hydrogen can be produced and converted on-site into green ammonia and green methanol, effectively avoiding long-distance storage and transportation issues, aligning with international low-carbon development needs.
The integrated project of green hydrogen, ammonia, and methanol in the hydrogen energy industrial park in Songyuan, Jilin, invested and constructed by China Energy Construction, officially commenced production at the end of last year. This is also the world's largest integrated project for green hydrogen, ammonia, and methanol. After the project commenced production, the Belgian shipping company CMB.TECH signed the world's first sales contract for green ammonia as a marine fuel with China Energy Construction. This project provides an important demonstration for the large-scale application of green hydrogen in the green chemical field
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/ORXX4jmDhpD553GOT7qx1W1bXo-Lv_EZNuNTVgX7smW2QAA/1000?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/ORXX4jmDhpD553GOT7qx1W1bXo-Lv_EZNuNTVgX7smW2QAA/1000"/> On December 16, 2025, the China Energy Construction Songyuan Hydrogen Energy Industrial Park project—the world's largest integrated demonstration project for green hydrogen and ammonia—officially commenced production. Sunshine Hydrogen provided the image.
In the transportation sector, hydrogen-powered heavy trucks in closed scenarios such as mining areas, ports, and industrial parks rely on integrated hydrogen production and refueling stations to reduce storage and transportation costs. When the terminal hydrogen price drops to 25 yuan/kg, the energy cost approaches that of diesel vehicles, demonstrating local economic viability. Fang Wei stated that heavy-duty long-distance scenarios have already shown local advantages, and as prices decrease and infrastructure improves, economic viability will further expand.
Liu Wangen introduced that Shanghai Tai Hydrogen Morning has verified in natural gas hydrogen blending and industrial green hydrogen substitution projects that when the cost of green electricity drops to a reasonable range, the comprehensive cost of hydrogen-blended gas supply can compete with traditional natural gas, providing a new path for decarbonization of industrial kilns. However, scenarios such as metallurgy and large-scale energy storage are still in the early demonstration phase, and their economic viability relies on carbon pricing mechanisms and support from low-cost green electricity.
Overall, the breakthrough in green hydrogen costs has transitioned from concept to reality, presenting a clear pattern of scenario differentiation and gradual implementation. Green chemicals, leveraging local consumption, green premiums, and long-term contracts, have become the core area to first establish a profitable model; applications such as hydrogen-powered heavy trucks in closed scenarios and natural gas hydrogen blending achieve local competitive advantages through cost optimization, opening a window for large-scale promotion. Meanwhile, scenarios like metallurgy and large-scale energy storage are still in the demonstration and cultivation stage, and their economic breakthroughs will depend on the improvement of carbon pricing mechanisms and the continued decline in green electricity costs, with potential gradually released as the industry matures.
Industry insiders predict that when the cost of green electricity continues to decline, the energy consumption and lifespan of electrolyzers are optimized, and the storage and refueling systems are improved, the cost of green hydrogen will effectively compete with the comprehensive cost of &#34;gray hydrogen + carbon tax&#34; around 2030, completing the transition from policy-driven to market-driven

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According to Xinhua News Agency, the green hydrogen industry is facing challenges related to insufficient cost competitiveness. According to the "Notice," by 2030, the price of hydrogen for end use needs to be reduced to below 25 yuan/kg. Currently, the cost of green hydrogen is about twice that of gray hydrogen, mainly influenced by electricity costs. Reducing the electricity price to 0.15 yuan/kWh is expected to control the cost of green hydrogen to around 15 yuan/kg. To achieve this goal, it is necessary to bridge the cost gap between green hydrogen and gray hydrogen and promote market-driven industrial development

Xinhua Net Technology Observation | Green Hydrogen Cost Breakthrough: The Key Window Period from Demonstration to Scale