IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i12p4821-d1175116.html
   My bibliography  Save this article

Linking Cost Decline and Demand Surge in the Hydrogen Market: A Case Study in China

Author

Listed:
  • Danlu Xu

    (Center of Entrepreneurship and Innovation, Zhejiang Branch, State Grid Corporation of China, Hangzhou 310007, China)

  • Zhoubin Liu

    (Center of Entrepreneurship and Innovation, Zhejiang Branch, State Grid Corporation of China, Hangzhou 310007, China)

  • Jiahui Zhu

    (Jianjing Investment Consulting Co., Ltd., Hangzhou 310004, China)

  • Qin Fang

    (Center of Entrepreneurship and Innovation, Zhejiang Branch, State Grid Corporation of China, Hangzhou 310007, China)

  • Rui Shan

    (Department of Environmental Sciences and Engineering, Gillings School of Global Public Health, University of North Carolina at Chapel Hill, Chapel Hill, NC 27599, USA)

Abstract

Hydrogen is crucial in achieving global energy transition and carbon neutrality goals. Existing market estimates typically presume linear or exponential growth but fail to consider how market demand responds to the declining cost of underlying technologies. To address this, this study utilizes a learning curve model to project the cost of electrolyzers and its subsequent impact on hydrogen market, aligning with a premise that the market demand is proportional to the cost of hydrogen. In a case study of China’s hydrogen market, projecting from 2020 to 2060, we observed substantial differences in market evolution compared to exponential growth scenarios. Contrary to exponential growth scenarios, China’s hydrogen market experiences faster growth during the 2020–2040 period rather than later. Such differences underscore the necessity for proactive strategic planning in emerging technology markets, particularly for those experiencing rapid cost decline, such as hydrogen. The framework can also be extended to other markets by using local data, providing valuable insights to investors, policymakers, and developers engaged in the hydrogen market.

Suggested Citation

  • Danlu Xu & Zhoubin Liu & Jiahui Zhu & Qin Fang & Rui Shan, 2023. "Linking Cost Decline and Demand Surge in the Hydrogen Market: A Case Study in China," Energies, MDPI, vol. 16(12), pages 1-13, June.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:12:p:4821-:d:1175116
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/12/4821/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/12/4821/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gan, Peck Yean & Li, ZhiDong, 2015. "Quantitative study on long term global solar photovoltaic market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 46(C), pages 88-99.
    2. John Paul Helveston & Gang He & Michael R. Davidson, 2022. "Quantifying the cost savings of global solar photovoltaic supply chains," Nature, Nature, vol. 612(7938), pages 83-87, December.
    3. Kothari, Richa & Buddhi, D. & Sawhney, R.L., 2008. "Comparison of environmental and economic aspects of various hydrogen production methods," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(2), pages 553-563, February.
    4. Navas-Anguita, Zaira & García-Gusano, Diego & Dufour, Javier & Iribarren, Diego, 2020. "Prospective techno-economic and environmental assessment of a national hydrogen production mix for road transport," Applied Energy, Elsevier, vol. 259(C).
    5. Xi Yang & Chris P. Nielsen & Shaojie Song & Michael B. McElroy, 2022. "Breaking the hard-to-abate bottleneck in China’s path to carbon neutrality with clean hydrogen," Nature Energy, Nature, vol. 7(10), pages 955-965, October.
    6. Neij, Lena, 1997. "Use of experience curves to analyse the prospects for diffusion and adoption of renewable energy technology," Energy Policy, Elsevier, vol. 25(13), pages 1099-1107, November.
    7. Paltsev, Sergey & Morris, Jennifer & Kheshgi, Haroon & Herzog, Howard, 2021. "Hard-to-Abate Sectors: The role of industrial carbon capture and storage (CCS) in emission mitigation," Applied Energy, Elsevier, vol. 300(C).
    8. Adrian Odenweller & Falko Ueckerdt & Gregory F. Nemet & Miha Jensterle & Gunnar Luderer, 2022. "Probabilistic feasibility space of scaling up green hydrogen supply," Nature Energy, Nature, vol. 7(9), pages 854-865, September.
    9. Castrejon-Campos, Omar & Aye, Lu & Hui, Felix Kin Peng, 2022. "Effects of learning curve models on onshore wind and solar PV cost developments in the USA," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    10. Park, Sang Yong & Kim, Jong Wook & Lee, Duk Hee, 2011. "Development of a market penetration forecasting model for Hydrogen Fuel Cell Vehicles considering infrastructure and cost reduction effects," Energy Policy, Elsevier, vol. 39(6), pages 3307-3315, June.
    11. Tibebu, Tiruwork B. & Hittinger, Eric & Miao, Qing & Williams, Eric, 2022. "Roles of diffusion patterns, technological progress, and environmental benefits in determining optimal renewable subsidies in the US," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    12. Dong, Changgui & Sigrin, Benjamin & Brinkman, Gregory, 2017. "Forecasting residential solar photovoltaic deployment in California," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 251-265.
    13. Forrest, Kate & Mac Kinnon, Michael & Tarroja, Brian & Samuelsen, Scott, 2020. "Estimating the technical feasibility of fuel cell and battery electric vehicles for the medium and heavy duty sectors in California," Applied Energy, Elsevier, vol. 276(C).
    14. Park, Changeun & Lim, Sesil & Shin, Jungwoo & Lee, Chul-Yong, 2022. "How much hydrogen should be supplied in the transportation market? Focusing on hydrogen fuel cell vehicle demand in South Korea," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    15. Jing Meng & Rupert Way & Elena Verdolini & Laura Diaz Anadon, 2021. "Comparing expert elicitation and model-based probabilistic technology cost forecasts for the energy transition," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(27), pages 1917165118-, July.
    16. Umair Yaqub Qazi, 2022. "Future of Hydrogen as an Alternative Fuel for Next-Generation Industrial Applications; Challenges and Expected Opportunities," Energies, MDPI, vol. 15(13), pages 1-40, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tiruwork B. Tibebu & Eric Hittinger & Qing Miao & Eric Williams, 2024. "Adoption Model Choice Affects the Optimal Subsidy for Residential Solar," Energies, MDPI, vol. 17(3), pages 1-19, February.
    2. Lafond, François & Bailey, Aimee Gotway & Bakker, Jan David & Rebois, Dylan & Zadourian, Rubina & McSharry, Patrick & Farmer, J. Doyne, 2018. "How well do experience curves predict technological progress? A method for making distributional forecasts," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 104-117.
    3. Tibebu, Tiruwork B. & Hittinger, Eric & Miao, Qing & Williams, Eric, 2022. "Roles of diffusion patterns, technological progress, and environmental benefits in determining optimal renewable subsidies in the US," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    4. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Inagaki, Yugo & Morgan, Peter J., 2021. "Analyzing the factors influencing the demand and supply of solar modules in Japan – Does financing matter," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 1-12.
    5. Samadi, Sascha, 2018. "The experience curve theory and its application in the field of electricity generation technologies – A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 2346-2364.
    6. Kurdgelashvili, Lado & Shih, Cheng-Hao & Yang, Fan & Garg, Mehul, 2019. "An empirical analysis of county-level residential PV adoption in California," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 321-333.
    7. Rúa, Diego & Castaneda, Monica & Zapata, Sebastian & Dyner, Isaac, 2020. "Simulating the efficient diffusion of photovoltaics in Bogotá: An urban metabolism approach," Energy, Elsevier, vol. 195(C).
    8. Zhu, Min & Dong, Peiwu & Ju, Yanbing & Li, Jiajun & Ran, Lun, 2023. "Effects of government subsidies on heavy-duty hydrogen fuel cell truck penetration: A scenario-based system dynamics model," Energy Policy, Elsevier, vol. 183(C).
    9. Lan, Yuncheng & Lu, Junhui & Wang, Suilin, 2023. "Study of the geometry and structure of a thermoelectric leg with variable material properties and side heat dissipation based on thermodynamic, economic, and environmental analysis," Energy, Elsevier, vol. 282(C).
    10. Kothari, Richa & Singh, D.P. & Tyagi, V.V. & Tyagi, S.K., 2012. "Fermentative hydrogen production – An alternative clean energy source," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(4), pages 2337-2346.
    11. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.
    12. Balcombe, Paul & Speirs, Jamie & Johnson, Erin & Martin, Jeanne & Brandon, Nigel & Hawkes, Adam, 2018. "The carbon credentials of hydrogen gas networks and supply chains," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 1077-1088.
    13. Abadie, Luis Mª & Chamorro, José M., 2023. "Investment in wind-based hydrogen production under economic and physical uncertainties," Applied Energy, Elsevier, vol. 337(C).
    14. Hong, Sanghyun & Kim, Eunsung & Jeong, Saerok, 2023. "Evaluating the sustainability of the hydrogen economy using multi-criteria decision-making analysis in Korea," Renewable Energy, Elsevier, vol. 204(C), pages 485-492.
    15. Bolinger, Mark & Wiser, Ryan, 2009. "Wind power price trends in the United States: Struggling to remain competitive in the face of strong growth," Energy Policy, Elsevier, vol. 37(3), pages 1061-1071, March.
    16. Greaker, Mads & Lund Sagen, Eirik, 2008. "Explaining experience curves for new energy technologies: A case study of liquefied natural gas," Energy Economics, Elsevier, vol. 30(6), pages 2899-2911, November.
    17. Hellsmark, Hans & Jacobsson, Staffan, 2012. "Realising the potential of gasified biomass in the European Union—Policy challenges in moving from demonstration plants to a larger scale diffusion," Energy Policy, Elsevier, vol. 41(C), pages 507-518.
    18. Freida Ozavize Ayodele & Siti Indati Mustapa & Bamidele Victor Ayodele & Norsyahida Mohammad, 2020. "An Overview of Economic Analysis and Environmental Impacts of Natural Gas Conversion Technologies," Sustainability, MDPI, vol. 12(23), pages 1-18, December.
    19. Adrian Neacsa & Cristian Nicolae Eparu & Cașen Panaitescu & Doru Bogdan Stoica & Bogdan Ionete & Alina Prundurel & Sorin Gal, 2023. "Hydrogen–Natural Gas Mix—A Viable Perspective for Environment and Society," Energies, MDPI, vol. 16(15), pages 1-38, August.
    20. Bracco, Stefano & Delfino, Federico & Pampararo, Fabio & Robba, Michela & Rossi, Mansueto, 2016. "A pilot facility for analysis and simulation of smart microgrids feeding smart buildings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1247-1255.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:16:y:2023:i:12:p:4821-:d:1175116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.