The Zhitong Finance App learned that Guolian Securities released a research report stating that on January 3, the Ningdong Energy and Chemical Base Management Committee released the “2024 Edition of Certain Measures to Promote the High-Quality Development of the Hydrogen Energy Industry at the Ningdong Base” (Draft for Comments). The bank believes that the current regional hydrogen energy policy subsidizes all aspects of hydrogen energy, such as hydrogen production equipment, hydrogen-using chemical plants, hydrogen fueling stations, and hydrogen energy vehicles. On the one hand, the subsidy is strong and wide-ranging; on the other hand, the policy has an exemplary effect. It is expected that key hydrogen energy bases will announce subsidy policies one after another to promote industrial development. Recommended attention: Huadian Heavy Industries (601226.SH), Shuangliang Energy Saving (600481.SH), Cowell (688551.SH), Kaishan (300257.SZ), etc.

Incident: On January 3, the Ningdong Energy and Chemical Base Management Committee issued “Certain Measures to Promote High-Quality Development of the Hydrogen Energy Industry at the Ningdong Base” (Draft for Comments). The core of the measures is to strengthen top-level design for hydrogen energy development in the Ningdong region and enhance industry support.

The views of Guolian Securities are as follows:

The rental price of photovoltaic power plants is discounted, and hydrogen production equipment is given a one-time subsidy

The document proposed “For photovoltaic power plants supporting green hydrogen production, the land lease fee (20 years) is based on the actual rental price of the grid-connected power generation project in that year, and a 20% discount will be given. It can be paid in installments, with an interval of no more than 5 years”. As photovoltaic land lease costs rise year by year, lower rental prices can reduce construction costs, improve the overall economy of light-hydrogen supporting projects, and increase investment enthusiasm. The document proposed “If an enterprise invests 10-20 million yuan in additional green hydrogen production equipment, it will be given a one-time subsidy of 6% of the equipment investment amount; if it invests 20 million yuan (inclusive) or more, it will be given a one-time subsidy of 7% of the equipment investment amount, up to a maximum of 3 million yuan.” According to China Energy Construction Framework tender statistics, the price of alkaline electrolyzers (excluding power supply) is 628 to 7.26 million yuan. Assuming 7 million yuan/unit, purchasing 6 units would be subsidized 2.94 million yuan, reducing costs by 7%. Granting equipment subsidies not only attract new hydrogen production projects, but also open up demand for additional hydrogen production equipment in stock projects, such as hydrogen generation+ammonia/methanol, hydrogen production+chemical integration projects.

Use the hydrogen terminal to give a 5.6 yuan/kg subsidy to open up space for green hydrogen demand

The document proposes that “for chemical projects to replace green hydrogen at the Ningdong base, it has been determined that this level of finance will subsidize hydrogen use according to the 5.6 yuan/kg standard. A single enterprise will not exceed 5 million yuan per year, with a maximum subsidy of 3 years.” Chemical companies on the green hydrogen end are encouraged to use green hydrogen to gradually replace coal hydrogen production and methanol hydrogen production.

1) Unlike electricity price subsidies and hydrogen sales subsidies, this time the hydrogen subsidy is being given to chemical companies, which is expected to increase the enthusiasm of chemical companies to use green hydrogen and open up room for growth in green hydrogen consumption.

2) The bank uses an alkaline electrolyzer with an electricity consumption of 4.0 kWh/Nm3. When the electricity cost is about 0.3 yuan/kWh, the cost of green hydrogen is about 15 yuan/kg, which can replace blue hydrogen. When considering the 5.6 yuan/kg subsidy, the cost of hydrogen used by chemical companies is about 10 yuan/kg, which can replace coal to produce hydrogen. Green hydrogen is already economical.

The hydrogen production and application side of the green hydrogen project is expected to start construction first, and demand for electrolyzers will be released at an accelerated pace

The document suggests that “in terms of construction schedule, it is necessary to ensure that hydrogen production and application side construction starts first, and that the new energy part is put into operation no earlier than hydrogen production loads and application facilities; where hydrogen production and application are put into operation in stages, supporting new energy sources should be built in stages according to the corresponding scale”, the reliability of green hydrogen projects is improved, and that hydrogen production and application side construction starts first is expected to accelerate the release of demand for electrolyzers.

Hydrogen fueling stations are subsidized for equipment, and hydrogen energy vehicles are subsidized for hydrogen use

The document grants a construction subsidy for hydrogen refueling stations “according to the standard of no more than 20% of the total investment in the purchase and installation of approved equipment, up to a maximum of 3 million yuan. “Subsidy funds are disbursed over 3 years”, which stipulates that operators of hydrogen fueling stations with a hydrogenation capacity of 500 kg or more will be given construction subsidies. At the same time, they are required to complete completion and acceptance by the end of 2025 to promote the construction of hydrogen fueling stations.

Hydrogen vehicles are “given hydrogen subsidies to operators according to the 15 yuan/kg standard” to support the priority promotion and use of hydrogen energy vehicles for new and updated municipal sanitation, buses, commuting, forklifts, etc., to enhance the application scenarios of hydrogen energy vehicles and promote demand for hydrogen energy vehicles.

Risk warning: Subsidies fall short of expectations, equipment tenders fall short of expectations, raw material prices rise