China Moves to Rein In Its Booming Hydrogen Industry
China is eager to avoid overcapacity in yet another clean energy sector as it looks to curb excess hydrogen production amid overheated investments in projects.
Over the past years, China, the world’s top solar equipment manufacturer, has grappled with overcapacity and price wars in the solar sector amid booming installations and solar equipment exports. Battery manufacturing has also come under increased government scrutiny amid signs of overcapacity.
Now the country leading the global clean energy rollout is looking to avoid a repeat of the same mistakes in the hydrogen sector, too.
“Due to the overheated investment in certain aspects of the hydrogen sector, we are formulating a plan for the rational allocation of major projects,” a senior official at the top economic planner, the National Development and Reform Commission (NDRC), said at a Tuesday briefing, as carried by Bloomberg.
“Both the national and local governments should conduct in-depth analysis when organizing projects to avoid blind investment and waste of funds,” NDRC’s Ren Zhongbao added.
China boasts rapid deployment, ability to scale, and cost leadership in the clean hydrogen sector, according to a report by DNV from earlier this year.
At present, China accounts for around 60% of global electrolyzer deployment and investment decisions. Costs continue to decline due to sustained technology investment, local supply chains, and access to low-cost capital, DNV reckons.
“Production costs are roughly half those seen in many other markets, with projects scaling from tens to hundreds of megawatts within a few years,” according to the analysts.
Competition among hydrogen manufacturers in China is fierce, the International Energy Agency (IEA) said last week.
In 2025, China’s electrolyzer manufacturing capacity was 35 GW per year while demand was less than 2 GW.
“This substantial overcapacity has contributed to bidding below full cost, with awarded bids in auctions falling as low as USD 170/kW,” IEA’s analysts noted.
With clean hydrogen investments and projects in China booming, Beijing wants to avoid the mistakes in the solar and battery industries.
