Fuel cell is pivotal for Taiwan's hydrogen industry, according to DIGITIMES Research

Vyra Wu, DIGITIMES Asia, Taipei 0


In the realm of "decarbonization"-spawned green business opportunities, the spotlight shines brightly on low-carbon hydrogen, an arena deemed indispensable in the medium to long term. Taiwan has earmarked hydrogen energy as one of the twelve pivotal strategies for its transformative journey towards net-zero emissions.

The island nation's hydrogen energy policy focal point revolves around expanding hydrogen power generation and incrementally boosting blending ratios. Projections indicate that hydrogen power generation could command a significant share of 9-12% of the overall energy mix by 2050. Initial strategies in Taiwan lean towards import reliance on hydrogen energy, directing current governance priorities towards hydrogen storage and refueling infrastructure.

In the wake of COP28's spotlight on hydrogen energy, CES 2024 served as a podium for major players to deliver speeches and showcase solutions centered around hydrogen energy. Powerhouses such as Bosch and Hyundai Motor are staunch advocates of hydrogen's pivotal role in future energy landscapes, with keen interest piqued by the recently announced $70 billion US Regional Clean Hydrogen Hubs Program (H2Hubs). The burgeoning hydrogen energy sector has spurred the entry of innovative startups, including pioneers in solid-state hydrogen storage such as Hydrolux and hydrogen gas detection firms such as MEMS.

The production of green hydrogen, a capital-intensive endeavor, necessitates abundant local renewable energy sources for electrolysis, the cornerstone of green hydrogen production. This entails substantial upfront investments in electrolyzer infrastructure, coupled with ongoing operational and financing costs. Forecasts suggest that by 2050, the supply potential of green hydrogen could vastly outstrip demand, making production costs a key determinant of competitiveness.

The hydrogen energy ecosystem encompasses upstream hydrogen production, midstream storage and transportation, and downstream fuel cell applications. Analysts from DIGITIMES Research identify three primary global trends among hydrogen energy frontrunners: a shift towards upstream electrolysis for hydrogen production, expansion by fuel cell originators into electrolyzer technology, and a holistic approach covering both upstream and downstream segments by industry giants such as Plug Power, Doosan, and Hyundai Motor.

Source: Company statements, DIGITIMES Research, April 2024

Source: Company statements, DIGITIMES Research, April 2024

In contrast, Taiwan's hydrogen energy landscape appears to favor a trajectory from fuel cell technologies toward key components of reverse reaction electrolyzers, tapping into niche markets, or assuming roles as System Integrators (SI).

Taiwanese manufacturers have long played a vital role in fuel cell component supply chains, with companies such as Bloom Energy relying on them for 30% of their components. Leveraging this foundation, Taiwanese firms are eyeing entry into the supply chain for key electrolyzer components. Companies such as Hephas Energy, Delta Electronics, and Taiwan Fertilizer are venturing into upstream hydrogen production for green hydrogen.

Electrolysis stands as the inevitable path for green hydrogen production. Despite limited involvement thus far, Taiwan has seen participation from companies such as Air Liquide Far Eastern, Hephas Energy, and Delta Electronics. Additionally, other players are exploring avenues such as industrial by-product hydrogen production, methane pyrolysis, and low-carbon ammonia decomposition.

Anticipated as the inaugural year for hydrogen refueling stations in Taiwan, 2024 will witness the establishment of demonstration stations by CPC Corporation, Taiwan, and Linde LienHwa. On the downstream front, Chung Hsin Electric & Machinery boasts over sixteen years of experience in hydrogen energy, with notable achievements in hydrogen-powered vehicles and methanol-reforming fuel cells. Collaboration between Unimicron Technology and Bloom Energy in constructing a 10MW hydrogen fuel cell promises stable and efficient power sources for industries, offering insights into potential replication across other sectors.

With Taiwan's Ministry of Transportation rolling out a trial operation plan for hydrogen fuel cell buses in January 2024, analysts at DIGITIMES Research foresee a surge in demand for hydrogen fuel cells. However, further development across the hydrogen energy value chain hinges on clearer regulatory frameworks, particularly regarding local hydrogen production plans for refueling stations and upstream electrolytic hydrogen (green hydrogen) demonstration projects.

About the Analyst

Sabrina Yu received her Technology Management MBA from the National Tsing Hua University and a bachelor's degree in Business Administration. She has more than 10 years of research and project management experience at Taiwan-based Chung-Hua Institution for Economic Research (CIER) and AECOM. Currently, her research areas mainly focus on Net Zero/ESG issues, renewable energy and energy storage, and carbon reduction technologies.