The world’s largest green hydrogen plant is at risk of sourcing a significant portion of its power requirements from coal-fired power on the grid, according to research house BloombergNEF (BNEF), after project developer Sinopec dramatically scaled back the $444m project’s dedicated solar plant.

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The 260MW electrolysis system under construction in Kuqa, Xinjiang province, northwest China, is now set to be serviced by a dedicated 361MW solar array — almost two thirds smaller than the 1GW laid out in the original proposals in 2021 — accounting for just 58% of the electrolyser’s 1,060GWh annual power requirements.

In a private report for subscribers, BNEF says that state-owned oil company Sinopec is planning to negotiate with the local grid operator for the remaining 42%, but that its commitments thus far have been “vaguely described by Sinopec to be from nearby wind farms or other clean power sources”.

BNEF says the worst-case scenario, in which all the electricity is sourced from coal-powered generation rather than wind, would cause carbon intensity from Kuqa’s planned annual H2 production of 20,000 tonnes to outstrip that of grey hydrogen produced from steam reforming of natural gas.

“There is big uncertainty about how ‘green’ the hydrogen is,” says the BNEF report, authored by hydrogen specialist Xiaoting Wang and head of hydrogen Meredith Annex. “In the worst case, all of the 442GWh electricity is from coal power plants, and the corresponding hydrogen yield would have the highest carbon emissions among all production technologies at 40kgCO2/kgH2.

“The weighted average emission intensity from the Kuqa project [if the remaining 42% of power was from coal] would be 16.8kgCO2/kgH2, which is 189% of the intensity for direct production from reforming natural gas, or 83% of that for coal gasification,” it added.

“In this case, the system can hardly qualify as a ‘green’ hydrogen project.”


While Sinopec has committed to use “clean” generation — questions remain around how easy it will be to buy real-time wind power from the grid.

Xinjiang is a windy province, recording average wind speeds of 8.92 metres per second, however the local grid is still dominated by coal-fired power, which accounted for a massive 77% of electricity generation in 2019, according to the IEA — well above China’s average of 57%.

If Sinopec chose to buy the relevant number of credits in China’s Green Electricity Certificate (GEC) system, it could buy coal-fired power in Xinjiang and offset that against renewable energy produced elsewhere in China.

In this instance, Sinopec could still call the H2 green, but it risks falling foul of the growing body of international definitions for green hydrogen.

Draft EU regulations unveiled last week require European green H2 producers and suppliers to use renewable electricity in real time, and be able to prove an electrolyser’s hour-by-hour power source.

Even India, which is taking a more moderate approach, would require green hydrogen to be directly powered by renewable energy, although it allows “banking” of green power — meaning that a certain amount of excess clean energy sent to the grid on one day could be drawn from the network at a later date.

World beater

The Chinese company started construction on the Kuqa project in December 2021, and plans to bring it on line in June 2023. The 20,000 tonnes per year of hydrogen Sinopec plans to produce from the plant will be used at its local oil refinery (to remove sulphur from crude oil) — and will go towards meeting the company’s ambitious target of producing 500,000 tonnes of green H2 per year by 2025.

Once commissioned, the Kuqa H2 plant will overtake the current largest green hydrogen project in the world, a 150MW project in northern China owned by Ningxia Baofeng Energy, which purports to be able to produce 23,000 tonnes annually when operating at a 100% capacity factor — ie, at maximum output for every minute of the year.

The Kuqa project volumes indicate an annual electrolyser utilisation rate of 48.8%, BNEF points out.

Sinopec is using 650-watt solar panels for the Kuqa project, which are 55% larger in surface area than mainstream 395W panels, delivering efficiency savings of about 6%, BNEF says.

And the oil company has taken an equally rigorous approach to electrolysers, using a four-to-one formula for its electrolysis system, in which large 40MW “modules” comprised of eight 5MW electrolyser stacks sharing gas and liquid separation units and a purification unit, potentially slashing electrolysis system costs by up to 10%, the research house points out.

Sinopec is also working on a green H2 plant in Ordos City, Inner Mongolia, that it says will produce 10,000 tonnes per year for a chemicals plant, before ramping up to 20,000 tonnes per year at a later date.