【Industry Insights】 China assesses demand for platinum group metals for hydrogen energy

Alkaline systems are looking to increase platinum group metal (PGM) loading to improve production efficiency, while proton exchange membrane (PEM) manufacturers are working to reduce PGM loading to lower costs.

Influenced by industry demand, competing Chinese manufacturers of hydrogen production equipment are taking different approaches to the use of platinum group metals, from more energy-efficient production to lower material costs.

China produces less than 2% of its annual hydrogen through electrolysis, which requires the use of platinum, iridium and ruthenium as catalysts, but is expected to increase the share of electrolytic hydrogen production in its hydrogen supply mix, thereby expanding the platinum group metals market.

"Electrolysis is a niche market, and proton exchange membrane electrolyzers are a niche within a niche."

Electrolyzer manufacturers delivered 458 MW (megawatts) of capacity last year, and research firm BloombergNEF expects shipments to at least quadruple this year to 1.8-2.5 GW (gigawatts). China is expected to account for 62-66% of total global demand, driven largely by state-owned energy companies eager to demonstrate their compliance with national decarbonization targets.

In China, traditional alkaline hydrogen production systems dominate the electrolytic hydrogen production market, accounting for nearly 90% of the market share. Alkaline electrolyzers are the most technically mature and typically use inexpensive nickel-based catalysts, so they have the lowest capital costs.

Sinopec, China's largest oil refiner, is using 260 MW of alkaline electrolyzer equipment for its 3 billion yuan ($433 million) China Green Hydrogen mega-project, which will be the world's largest hydrogen project when it comes online next summer. The project, located in the Xinjiang region of western China, will convert solar energy into 20,000 tons of green hydrogen per year.

But there are signs in the industry that alkaline electrolyzers will further expand the use of platinum group metals, according to Zhang Bihang, founder and chairman of Suzhou Jingli Hydrogen Production Equipment Co. Suzhou Jingli is a leading supplier of alkaline electrolysis equipment in China and one of three domestic manufacturers of electrolysis equipment for Sinopec projects.

At a seminar on precious metals organized by China's gold industry in late November, Zhang Bihang said the capacity of alkaline electrolyzers has increased from 1,000 m3/h of hydrogen production in 2017 to 1,300-1,400 m3/h of standard and up to 2,000-3,000 m3/h.

Meanwhile, energy consumption requirements are becoming more stringent as China pursues energy efficiency goals. Electricity accounts for 50-70% of the cost of hydrogen production, while electrolysis technology is increasingly needed to respond more quickly to the typical fluctuations of intermittent wind and solar energy.

Zhang Bihang said, "Without these requirements, alkaline electrolysis would not require the use of precious metals, but as production now increasingly requires higher efficiency and lower energy consumption, we will have to turn to precious metals."

Zhang Bihang also said that platinum group metals are being incorporated into the catalytic coating of alkaline electrolyzer electrodes, which has led to a significant increase in hydrogen density while drawing on standard electrical loads.

Proton exchange membrane technology is a relatively new and competitive option, and some industry experts expect the technology to eventually become the primary production pathway for green hydrogen.

Industry demand for each technology effectively means that alkaline systems are looking to increase platinum group metal loading to improve production efficiency, while proton exchange membrane manufacturers are working in the opposite direction to reduce costs.

About 45 percent of the cost of a 1 MW (megawatt) PEM electrolyzer is spent on the "power stack," a device that breaks down water into hydrogen and oxygen when it is energized. Huang Fang, project director of Proton Exchange Membrane Electrolyzer manufacturer Shandong Saxx Hydrogen Energy Co., told the seminar that a quarter of the 45 percent cost is spent on the catalyst coating, a large portion of which is iridium and platinum.

According to the International Energy Agency (IEA), the higher material costs for membranes as well as electrodes and bipolar plates imply a total cost of $1,750/kW for proton exchange membrane systems in 2020, compared to $1,000-$1,400/kW for alkaline electrolyzers.

Huang Fang said he hopes the cost of proton exchange membranes can be reduced to $1,000/kW by 2030.

The catalyst determines the largest share of the total cost of the proton exchange membrane; therefore, the next step is to consider how to bring the cost down," he said. For example, we can reduce the loading on the cathode by 5-10%, and with an iridium catalyst in the anode, we can reduce the loading to 70-80% of the original."

Proton exchange membrane technology has relatively small geographical requirements - which may make it more suitable for dense urban or industrial areas than alkaline systems - and can be better integrated with renewable energy sources, but requires more extensive use of platinum group metals as catalysts.

Huang Fang notes that while the hydrogen industry in Europe and the US is adopting proton exchange membrane technology to increase electrolyzer capacity, China remains firmly committed to alkaline systems - as illustrated by the introduction of 1,300-1,400 m3/h units.

Huang Fang says, "Electrolysis is a niche market, and proton exchange membrane electrolysis is a niche within a niche, but China's double carbon target gives us more breathing room."

A recent report by the World Platinum Investment Association suggests that 1.5 million ounces of platinum demand is expected to be generated in 2030 - partly for electrolysis and partly for fuel cell electric vehicles, up from a forecast of 117,000 ounces in 2023. In the meantime, however, the platinum market may not tighten significantly as demand from the internal combustion engine automobile and jewelry industries is expected to decline as the decade progresses. (Source: pemedianetwork)