Shanghai Securities News visits Pengfei Hydrogen Energy: Only by integrating the entire industrial chain can one secure leadership in the commercialization of hydrogen energy.

Driven by the “dual carbon” goals, the hydrogen energy industry is transitioning from demonstration projects to large-scale commercial operations. As the leading enterprise in Shanxi Province’s hydrogen energy industrial chain, Pengfei Group has adopted a dual‑technology approach—producing hydrogen from coke oven gas and from waste heat generated by dry quenching of coke—to establish a closed-loop, end-to-end value chain encompassing production, storage, transportation, refueling, application, research, and manufacturing.

Recently, Ma Xiaolong, Assistant to the President and General Manager of the Hydrogen Energy Business Unit at Pengfei Group, said in an exclusive interview with a reporter from the Shanghai Securities News that, with the industry still far from achieving overall profitability, competition has moved beyond isolated technological breakthroughs. Only by integrating the entire industrial chain can companies secure leadership in the commercialization of hydrogen energy.

A dual‑technology approach lays the foundation, creating a closed-loop, end-to-end industrial chain.

Inside the Pengfei coking‑gas hydrogen production plant, purification equipment is converting a byproduct of the coking process into high‑purity hydrogen. According to Ma Xiaolong, the coking gas generated during coke production contains roughly 60% hydrogen, 20% methane, and small amounts of carbon monoxide, carbon dioxide, and other components. After undergoing multiple processing steps—including oil removal, fine desulfurization, and decarbonization—the resulting hydrogen achieves a purity of 99.999%.

“By leveraging our own coking industry to produce hydrogen from coke oven gas and turning coking by‑product off‑gas into a valuable resource, we not only turn waste into wealth but also significantly reduce hydrogen production costs,” Ma Xiaolong told reporters. He added that at present, Pengfei’s cost of producing standard‑grade hydrogen is just 8 yuan per kilogram, while high‑purity hydrogen costs 11 yuan per kilogram—both well below the national industry average.

What makes Ma Xiaolong even prouder is the green hydrogen pathway. “We are the first enterprise in the country to produce hydrogen by using waste heat from dry quenching of coke,” he said. By harnessing this waste heat for power generation, the electricity cost can be as low as 0.2 yuan per kilowatt-hour. Coupled with reclaimed water from a wastewater treatment plant as feedstock, “the overall hydrogen production cost is kept below 16 yuan per kilogram, representing a reduction of more than 60% compared to the national average of 40 yuan per kilogram for electrolysis‑based hydrogen production.”

Unlike most companies that focus on a single link in the industrial chain, Pengfei Group has spent years integrating the entire value chain—from hydrogen production and hydrogen refueling stations to the manufacturing of hydrogen-powered commercial vehicles.

At the Pengfei Beiyao Hydrogen‑Recharging Integrated Energy Island, reporters observed hydrogen‑powered heavy trucks lined up to refuel. “It takes just 20 minutes to fully refuel a hydrogen truck, providing a range of 600 kilometers,” said Ma Xiaolong. The energy island integrates fuel, gas, hydrogen, and electric charging, with a daily hydrogen‑refueling capacity of up to 8 tons. In addition, Pengfei is currently accelerating the planning and construction of 20 similar energy islands.

Leveraging its proprietary hydrogen‑production facilities and integrated energy islands, Pengfei Group has put 902 hydrogen‑powered heavy‑duty trucks into operation, with a combined mileage exceeding 61 million kilometers. “After several years of deployment, the conditions for large‑scale commercial adoption are steadily maturing,” said Ma Xiaolong. Pengfei has already mapped out long‑haul logistics routes for hydrogen‑fuel‑cell trucks stretching from Xinjiang to Hebei and Shandong, bringing it one step closer to the goal of establishing a 10,000‑kilometer hydrogen corridor and rolling out one million such heavy‑duty vehicles.

Storage and transportation have become the biggest bottleneck, and the industry has yet to achieve overall profitability.

Addressing the industry’s pain points, Ma Xiaolong stated frankly: “Costs in the storage and transportation stages account for 30% to 40% of the total end‑use cost of hydrogen.” He noted that the prevailing transport method today is long‑tube trailer trucks, which can carry seven tanks per vehicle but hold only 200 kilograms of hydrogen. “The vehicle’s width and volume limit the amount that can be transported in a single trip, and the farther the distance, the higher the cost.”

Meanwhile, the storage and transportation of liquid hydrogen also face numerous challenges. “Liquefying hydrogen requires temperatures as low as minus 253 degrees Celsius, and once liquefied, the hydrogen must be kept at ultra‑low temperatures throughout the entire transport process, with capital investments running into several billion yuan,” said Ma Xiaolong.

However, this also makes the storage and transportation segment the link in the industrial chain with the greatest potential for cost reduction. “Promoting liquid‑hydrogen storage and transport as a replacement for high‑pressure gaseous storage and transport could cut storage and transportation costs by more than 30%; and developing hydrogen pipelines would enable point‑to‑point direct supply, further reducing transshipment expenses,” says Ma Xiaolong. He believes that, as liquid‑hydrogen storage and transport equipment is scaled up and intra‑provincial and inter‑provincial hydrogen pipelines are completed, the storage and transportation segment could achieve substantial cost parity.

Speaking about the current state of the industry, Ma Xiaolong acknowledged that overall profitability has yet to be achieved, with the sector still in a phase where “certain segments generate modest profits while the entire value chain remains unprofitable.” “Hydrogen‑energy companies can eke out small margins in hydrogen production and refueling‑station operations, but vehicle manufacturing, fleet management, and R&D on core components are all still operating at a loss, dragging down overall profitability,” he explained. Citing a 49‑ton hydrogen‑powered heavy truck as an example, he noted that the vehicle’s base price ranges from RMB 980,000 to RMB 1.14 million; even after factoring in Level‑4 subsidies, buyers still face additional costs of RMB 220,000 to RMB 380,000, reflecting substantial fixed‑asset investments.

However, Ma Xiaolong remains optimistic about the industry’s prospects. He believes that industrial hydrogen applications will be among the first to achieve self-sustainability in the near future. “The industrial sector is far less price‑sensitive than the transportation sector; coking, chemical, and metallurgical industries have rigid hydrogen demand that is insulated from fluctuations in the logistics market,” he notes. Moreover, with policy support increasingly tilting toward industry, this can effectively spur large‑scale development across upstream segments such as hydrogen production, storage, and transportation, thereby reducing costs across the entire value chain.

With policies becoming more supportive, the inflection point for the commercialization of hydrogen energy is drawing near.

Beyond costs, policy bottlenecks persist. Ma Xiaolong highlighted two key issues: first, policy restrictions on green‑electricity‑based hydrogen production; and second, unclear jurisdiction over the management of hydrogen refueling stations.

“At present, national regulations governing wind‑ and solar‑based hydrogen production remain inconsistent, and mechanisms for green‑power quotas, grid connection, and green‑certificate accounting are still underdeveloped, all of which constrain the large‑scale deployment of green hydrogen.” In response, Ma Xiaolong hopes that policies will permit wind‑ and solar‑generated green power to be used on‑site with any surplus fed into the grid. “By locating small‑scale hydrogen‑production facilities adjacent to large‑scale power plants, ample green electricity can significantly boost the utilization rate of hydrogen‑production equipment and substantially reduce companies’ capital‑depreciation expenses.”

Regarding the management of hydrogen refueling stations, Ma Xiaolong noted that there is currently no nationwide unified standard for construction specifications, approval procedures, or safety regulations, and overlapping responsibilities among multiple government agencies have inadvertently extended the time required to bring such facilities online.

However, he has also noted a positive shift in policy direction. This year, China launched a new round of pilot programs for the comprehensive application of hydrogen energy, with a key difference from previous initiatives: the policy focus has shifted from subsidizing fuel-cell vehicles to subsidizing hydrogen production. “In the past, these were called ‘fuel-cell vehicle demonstration city clusters’; this year, they’re designated as ‘hydrogen‑energy comprehensive application pilot demonstration city clusters,’ with 75% of subsidies now earmarked for the hydrogen industry.” In his view, the goal of supporting the hydrogen sector is to bring down hydrogen prices: “Once prices come down, the market will take off.”

As one of the few domestic hydrogen‑energy companies that have achieved commercial operations without incurring losses, Ma Xiaolong believes Pengfei’s key lies in its closed-loop, end-to-end industrial chain. “Only when a company can seamlessly integrate hydrogen production, refueling, heavy‑truck applications, and vehicle manufacturing does it dare to make substantial investments,” he said. He added that only by fully integrating the entire value chain can an enterprise take the lead in commercializing hydrogen energy.

Ma Xiaolong revealed that Pengfei is planning to further reduce the end‑user hydrogen price from its current level of 25 yuan per kilogram to 15 yuan per kilogram through process improvements and internal profit reallocation. “Once the cost of hydrogen can be brought down to a point where the market actively chooses it…” “Once its positioning is firmly established, commercial deployment will enter a whole new phase.” At the end of the interview, Ma Xiaolong drew an analogy: “Hydrogen energy is like the new‑energy vehicle market 10 years ago—it, too, requires a transition from a nascent stage to widespread adoption.” (Reporter Wu Bin)
 

Source: Reprinted from the original text. Shanghai Securities News