Green Hydrogen Capacity Exceeds One Million Tons as Companies Look Overseas for Real Orders

One million tons — that is the new milestone China's renewable hydrogen production has reached. Driven by dual-carbon targets and a barrage of supportive policies, China's green hydrogen industry is expanding at an astonishing pace, but concerns over supply-demand imbalance are surfacing in parallel. As capacity races ahead while market absorption hits bottlenecks, going overseas to find "real orders" has become the defining challenge for the industry.

Capacity Surge: The Leap From Zero to One Million Tons

In recent years, China's green hydrogen industry has experienced explosive growth. According to industry statistics, the nation's total planned renewable hydrogen production capacity has surpassed the one-million-ton mark, spanning regions rich in wind and solar resources including Inner Mongolia, Xinjiang, Gansu, and Ningxia. A large number of water electrolysis hydrogen production projects have been launched in rapid succession, with core equipment capacity for alkaline electrolyzers and PEM electrolyzers expanding in tandem. China has become the world's largest electrolyzer manufacturing country.

Looking at the upstream supply chain, the number of electrolyzer equipment manufacturers has multiplied several times over in the past three years. Companies such as LONGi Hydrogen, Sungrow Hydrogen, Cockerill Jingli, and Peric Hydrogen have all expanded production, with GW-scale manufacturing bases coming online one after another. Equipment prices have also dropped rapidly amid fierce competition, with alkaline electrolyzer unit costs falling more than 60% compared to three years ago, further fueling investment enthusiasm on the project side.

Meanwhile, central state-owned enterprises represented by Sinopec, China Energy Investment Corporation, and China Huadian, along with a cohort of private new energy companies, have been actively deploying large-scale green hydrogen demonstration projects. Wind-solar-hydrogen integrated projects around the Kubuqi Desert and the Taklamakan Desert routinely plan for tens of thousands of tons of annual capacity, while extended pathways such as "green hydrogen + green ammonia" and "green hydrogen + green methanol" are also accelerating.

Supply-Demand Mismatch: Early Signs of Overcapacity

However, a clear gap is forming between the rapid expansion of capacity and actual market demand. Currently, the primary domestic absorption scenarios for green hydrogen are concentrated in grey hydrogen substitution in the chemical sector, refinery hydrogenation, and some fuel cell applications in transportation — but the actual absorption volumes in these scenarios fall far short of the pace at which planned capacity is growing.

On one hand, although green hydrogen production costs are declining, a significant price gap remains compared to grey hydrogen. Current domestic grey hydrogen costs approximately 8 to 12 yuan per kilogram, while green hydrogen generally falls in the 15 to 25 yuan per kilogram range. Even in regions with the best wind and solar resources, green hydrogen struggles to achieve price parity with grey hydrogen. Without mandatory green hydrogen consumption policies, downstream users lack sufficient willingness and motivation to "go green."

On the other hand, hydrogen storage and transportation infrastructure remains a prominent weak link in the value chain. Long-distance hydrogen pipeline networks are still in the early stages of construction, high-pressure gaseous transport is costly, and liquid hydrogen transportation technology remains immature. This leaves a large number of green hydrogen projects in northwestern China facing the awkward predicament of being able to "produce it but unable to ship it or sell it."

Industry insiders acknowledge that the actual commissioning rates and capacity utilization of some green hydrogen projects are far from ideal. Some projects slip into low-load operation after securing subsidies and completing demonstration objectives. Behind the impressive capacity figures, the formation of effective output and commercially viable closed loops remains a long road ahead.

Breaking Through by Going Global: Finding "Real Orders" in International Markets

Facing the reality of limited domestic market absorption, an increasing number of Chinese green hydrogen supply chain companies are setting their sights on overseas markets. Green hydrogen demand in Europe, the Middle East, Southeast Asia, Latin America, and other regions is being rapidly unlocked by policy drivers, opening new growth opportunities for Chinese companies.

The EU's Carbon Border Adjustment Mechanism (CBAM) and the "Fit for 55" climate plan have established explicit demand for green hydrogen and its green derivatives. By 2030, the EU plans to import 10 million tons of renewable hydrogen — a massive demand gap that creates opportunities for Chinese green hydrogen equipment and technology exports. Middle Eastern nations such as Saudi Arabia, the UAE, and Oman have also released national hydrogen strategies, planning tens of billions of dollars in green hydrogen project investments and urgently seeking cost-effective electrolyzer equipment and EPC services.

Chinese electrolyzer manufacturers have already achieved substantive breakthroughs in overseas markets. Companies including LONGi Hydrogen, Peric Hydrogen, and Tianjin Mainland Hydrogen Equipment have secured orders from the Middle East and Europe, with some establishing localized service teams and warehousing centers abroad. Additionally, models for exporting green hydrogen products in the form of green ammonia and green methanol are accelerating, with multiple green methanol projects targeting the international maritime fuel market entering substantive construction phases.

But the road overseas is not without obstacles. Industry experts note that overseas markets impose stringent requirements on product certification, standards compliance, and carbon footprint traceability, requiring Chinese companies to adapt to varying technical standards and commercial rules across different regions. At the same time, decision-making cycles for overseas green hydrogen projects tend to be lengthy — from initial contact to signing a formal contract often takes one to two years or even longer — demanding sufficient patience and resource commitment from companies.

More critically, the ability to distinguish "real orders" from "false prosperity" is becoming a core competitive advantage for companies going overseas. Of all green hydrogen projects announced globally, fewer than 15% have actually reached the Final Investment Decision (FID) stage, with the vast majority still in the feasibility study or early development phase. Companies need to precisely identify high-quality projects that have secured funding, offtake agreements, and policy support, and avoid falling into the trap of "plenty of signings but scarce implementation."

AI Empowerment: Smart Technologies Accelerating Green Hydrogen Industry Upgrades

Notably, artificial intelligence technologies are playing an increasingly important role across multiple segments of the green hydrogen industry. On the production side, AI algorithms are being used to optimize electrolyzer operating parameters, adjusting hydrogen production loads in real time based on wind and solar output fluctuations to improve system efficiency and equipment lifespan. On the storage and transportation side, machine learning-based pipeline scheduling systems enable intelligent optimization of hydrogen distribution. On the market side, big data analytics and AI forecasting models help companies more accurately assess green hydrogen demand trends and pricing dynamics across global regions.

Some leading companies have already built digital twin platforms for green hydrogen projects, using AI to simulate and assess risks across the entire project lifecycle, significantly shortening development cycles and reducing investment decision risks. These intelligent capabilities are becoming a differentiated competitive advantage for Chinese green hydrogen companies competing overseas.

Looking Ahead: From the Capacity Race to the Value Race

Million-ton-level capacity is an important milestone in the development of China's green hydrogen industry, but competition in the next phase will no longer be purely about scale. Instead, it will shift toward a comprehensive contest of cost control, commercial viability, and global operational capabilities.

In the short term, the domestic green hydrogen market still requires further policy support, including establishing green hydrogen consumption quota systems, improving green hydrogen certification and trading frameworks, and accelerating the construction of hydrogen pipeline infrastructure. In the medium to long term, as electrolyzer technology continues to iterate and the levelized cost of renewable energy falls further, green hydrogen is expected to achieve cost parity with grey hydrogen in some regions around 2028, at which point market demand will see a genuine explosion.

For Chinese companies actively pursuing international expansion, the window of opportunity in the global green hydrogen market has opened — but it belongs only to those participants capable of delivering real value and building long-term trust. Moving from "capacity is king" to "orders are king," China's green hydrogen industry is undergoing a profound growth transformation.