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China’s Hydrogen Industry May Not Mirror Solar PV Success: OIES Report

A new report by the Oxford Institute for Energy Studies (OIES) analyzes China’s emerging hydrogen industry, questioning whether its success in solar PV can be replicated in electrolysis technology. The study emphasizes that while China has rapidly scaled up alkaline electrolyzer manufacturing through strong state support and innovation systems, replicating similar cost reductions for Proton Exchange Membrane (PEM) electrolyzers remains a major challenge due to greater technological complexity and limited technology transfer opportunities.

Unlike solar PV—which was initially export-led—China views hydrogen primarily as a domestic decarbonization tool. This has brought state-owned enterprises (SOEs) to the forefront of the hydrogen sector, in contrast to the private sector leadership seen during the early solar boom. Moreover, hydrogen’s competitiveness hinges not just on equipment costs but heavily on the cost of renewable electricity—another layer of complexity absent in solar PV economics.

The report highlights key challenges for China: scaling up PEM electrolyzer production, reducing renewable electricity prices, and navigating rising global trade protectionism which could hinder export prospects. However, China’s vast domestic market offers significant opportunities, particularly in hard-to-abate sectors and large-scale industrial hydrogen hubs.

In conclusion, while China’s strengths in manufacturing and policy alignment bode well for the hydrogen sector, structural and geopolitical factors mean its path will likely diverge from the solar PV model. The report underscores the need for global collaboration, trade openness, and innovation-driven strategies to truly accelerate the hydrogen economy.