Shanghai, China – In the evening of August 26, Shanghai Economic and Information Commission officially announced that the Shanghai government plans to build close to 100 hydrogen fuel refueling stations, forming an output scale of nearly 100 billion yuan and promoting close to 10,000 fuel cell vehicles. Meijin Energy (000723.SZ) is expected to benefit from this.
Shanghai is the second fuel cell vehicle demonstration city cluster approved by China after Beijing. In China, various policies further guide the new energy industry chain to spread out, and in addition the market expects that the Guangdong Fuel Cell Vehicle Demonstration City Cluster project will be approved soon.
Obviously, 2021 has become an important year for fuel cell development in China. According to the “White Paper on China’s Hydrogen Energy and Fuel Cell Industry”, it is expected that by 2025, the output value of China’s hydrogen energy industry will reach 1 trillion yuan; by 2050, the demand for hydrogen will be close to 60 million tons, hydrogen energy will account for more than 10% of China’s terminal energy system, and the annual output value of the industry chain will reach 12 trillion yuan.
In the evening of 26th, the leading company of “hydrogen energy” concept, Meijin Energy (000723.SZ), released its interim report for 2021. The report shows that in the first half of 2021, Meijin Energy achieved revenue of 8.893 billion yuan, up 69.54% year-on-year; net profit of 1.533 billion yuan, up 1396.04% year-on-year; net profit attributable to shareholders of listed companies of 1.249 billion yuan, up 1909.35% year-on-year; basic earnings per share of 0.29 yuan. Meijin Energy’s share price soared 124% in two months’ time.
In the evening of August 26, Shanghai Economic and Information Commission officially released the article “The first batch of fuel cell vehicle demonstration applications in Shanghai city cluster was officially approved” which exploded the investment community. The approved Shanghai Fuel Cell Vehicle Demonstration City Group is a group of six cities (regions), including Shanghai, Jiangsu Province, Suzhou City, Nantong City, Zhejiang Province, Jiaxing City, Shandong Province, Zibo City, Ningxia Ningdong Energy and Chemical Base, and Ordos City in Inner Mongolia Autonomous Region, to form a “1+6” city group.
According to the “Notice on the Demonstration and Application of Fuel Cell Vehicles” jointly issued by the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the National Development and Reform Commission, and the National Energy Administration, the demonstration period will be actively encouraged, and the city groups shortlisted for demonstration will be rewarded according to the completion of their targets, with the demonstration period temporarily set at four years.
Subsequently, Shanghai responded positively to the requirements of the document “Notice on the Demonstration and Promotion of Fuel Cell Vehicles” of five national ministries and commissions, and took the lead in actively carrying out the work related to the declaration of fuel cell vehicle demonstration application city clusters. At that time, the market expected that Shanghai was one of the strongest alternative cities, and now the official announcement was approved to a certain extent as expected to land.
Shanghai Economic and Information Commission further said that Shanghai city cluster will make every effort to grasp the national fuel cell vehicle demonstration application development opportunity, focus on the core key parts and components technology breakthrough, the scale of vehicle promotion to lead, hydrogen refueling station appropriate ahead of the layout, the award of funds to increase the intensity, etc., accelerate the release of relevant support policies, actively carry out fuel cell vehicle demonstration application, strong support for the transformation and upgrading of the automotive industry, to build a world-class automotive industry center.
Analysts pointed out that under the stimulation of preferential policies, the demonstration role of hydrogen fuel city cluster has obvious influence on the industry industry. After Beijing’s official announcement, Shanghai city cluster was also officially announced to be approved, which will further guide the rapid spread of the industry chain, and in addition, the market expects that Guangdong city cluster is also likely to be within the first list.
It is reported that Guangdong hydrogen fuel cell vehicle demonstration city group is composed of Guangzhou, Yunfu, Foshan, Shenzhen, Zhuhai, Dongguan, Jiangmen, Yangjiang and Yulin in Shaanxi Province to declare as one city group.
Although, fuel cells have not yet reached the stage of generating profits, the trend of industrial data is continuing to be positive. Data show that in the first half of this year, China’s hydrogen production increased by 25% year-on-year, with a 30% increase in the proportion of hydrogen produced using new energy sources. The increase in the scale of hydrogen production from electrolytic water has led to an increase in demand for equipment such as electrolytic cells. In addition, the latest data from the China Association of Automobile Manufacturers (CAAM) shows that from January to July this year, the production and sales of fuel cell vehicles completed 664 and 675 units respectively, with a year-on-year increase of 48.5% and 47.7% respectively.
The Beijing Municipal Bureau of Finance said that Beijing has initially established a financial support policy system to promote the development of hydrogen energy industry, covering key technology research and development, hydrogen refueling station construction and operation, vehicle purchase subsidies and other aspects.
In April this year, Shandong, a major energy province, has become the first demonstration province in the country for the large-scale promotion and application of hydrogen energy. The person in charge of Shandong Energy Bureau said that during the “14th Five-Year Plan” period, Shandong Province will build 100 hydrogen refueling stations, promote 10,000 fuel cell vehicles, and strive to exceed 100 billion yuan in total output value of hydrogen energy industry.
According to the prediction of Gan Yong, the former vice president and academician of Chinese Academy of Engineering, the proportion of hydrogen energy in China’s terminal energy system will reach 10% to 15% in the future, and hydrogen energy will be synergistic and complementary with electricity as the main consumer of the terminal energy system, and drive the formation of a 10 trillion new industry.
All kinds of policy trends show that the wind of fuel cell has been scraped up under the background of the era of carbon neutrality. In the “14th Five-Year Plan”, hydrogen energy and energy storage are listed as one of the six future industries to be planned. According to incomplete statistics, up to now, more than 20 provinces and 40 prefectures have issued hydrogen energy plans, and 2021 has apparently become the year for the rapid development of China’s fuel cell industry.
According to the “White Paper on China’s Hydrogen Energy and Fuel Cell Industry” released by China Hydrogen Energy Alliance, it is expected that the output value of China’s hydrogen energy industry will reach 1 trillion yuan by 2025; the number of hydrogen refueling stations will exceed 1,500 in 2030; by 2050, the demand for hydrogen will be close to 60 million tons, hydrogen energy will account for more than 10% of China’s terminal energy system, and the annual output value of the industry chain will reach 12 trillion yuan.
Under the wind mouth, the capital is excited to move
With the capital feast of lithium new energy as a vivid case, the capital has long been eager for the rising fuel cell windfall. According to industry statistics, from January to July 2021, there were more than 80 public investment events in China’s hydrogen energy industry, with a total nominal investment amount of more than 250 billion yuan, an increase of more than 90% year-on-year, among which there were more than 10 projects with tens of billions of investment scale.
Facing the windfall of fuel cell, besides China, developed countries such as the United States, Japan and Germany have also raised the planning of hydrogen energy to the height of national energy strategy. According to the previously disclosed “EU Hydrogen Energy Strategy”, the EU plans to invest 575 billion euros (about RMB 4.56 trillion yuan) into the hydrogen energy industry in the next ten years.
Meanwhile, India’s decision on the fuel cell industry chain seems to be very big. Earlier, Prime Minister Narendra Modi said India would launch a 100 trillion rupee ($1.35 trillion, or about $8.8 trillion) national infrastructure plan that would help create jobs and expand the use of clean fuels, while setting a goal of achieving energy independence by 2047, saying the goal could be achieved by popularizing electric vehicles, transforming a gas-based economy and making India a hub for hydrogen production.
Some analysts suggest that although the policy windfall has arrived and the long-term picture for fuel cells is rosy, there is not much of a profit base to support a sustained upside in the stock price, and many of the fuel cell technologies have not been validated for commercial application in the market, so there is some uncertainty about future technology development, product competitiveness and profitability.
Industry Insights Dept
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