China Petroleum & Chemical Corporation, known as Sinopec, has announced a delay of nearly two years in achieving full capacity for its Kuqa green hydrogen project in Xinjiang province. Originally anticipated to reach an annual capacity of 20,000 tonnes upon completion, the project is now expected to attain this rate in the fourth quarter of 2025. Sinopec's August announcement highlighted the full commissioning of the project, which employs 260 megawatts of electrolyzers powered by renewable energy to produce carbon-free hydrogen for the Tahe oil refinery located nearby. The facility's annual hydrogen output at full capacity is projected to offset fossil fuel burning equivalent to 485,000 tonnes of carbon dioxide emissions per year.

The extended timeline for the Kuqa project poses a challenge to the global green hydrogen production sector, which is anticipated to experience substantial growth from 0.1 million tonnes in 2023 to 51.2 million tonnes by 2030. Green hydrogen, produced using renewable sources like solar and wind, generates only water and oxygen when burned, making it crucial for reducing emissions in energy-intensive industries such as oil refining and steel manufacturing.

According to a statement released on December 25, Sinopec reported the commencement of production on June 30, with approximately 22 million cubic meters of green hydrogen produced by December 21. This corresponds to roughly 2,000 tons, indicating an annual utilization rate of around 20% for the past year. Despite facing challenges with the electrolysers' ability to handle power fluctuations from intermittent renewable sources, the company stated that solutions have been implemented, and operational efficiency has significantly improved. Sinopec plans to incrementally increase green hydrogen production as the Tahe refinery completes its expansion project.

Addressing the operational challenges faced by the Kuqa project, Longi Green Energy Technology, a solar industry leader that supplied some of the electrolysers, defended the low operation rates during a forum in Beijing on December 22. Longi's President, Li Zhenguo, explained that in situations where power generation is lower than expected, such as on cloudy days, it is safer and more stable to shut down certain electrolysers to ensure others can operate at full capacity.

In September, Sinopec unveiled its ambition to emerge as China's largest hydrogen producer, aligning with the nation's energy transition and climate objectives. The company outlined its target to establish a production capacity of 120,000 tonnes of hydrogen annually by the close of 2025. Beijing had earlier introduced China's inaugural hydrogen strategy in March, outlining industry development plans spanning from 2021 to 2035. The national strategy includes objectives such as putting a minimum of 50,000 hydrogen fuel-cell electric vehicles on the roads and producing 100,000 to 200,000 tonnes of green hydrogen each year by 2025.