Futubull learned that Sinolink Securities released research reports stating that 2024 is a preparatory year for the hydrogen energy industry. Under the triple drive of policy promotion, demonstration effect, and industrial cost reduction, next year will see a significant increase in volume, driving the industry towards commercialization, focusing on integrated green hydrogen projects and fuel cell technologies. According to the 2025 national targets, the gap in green hydrogen projects is between 0.09-0.1 million tons (with a reserve of 0.11 million tons), while the gap in fuel cell vehicles is 0.025 million vehicles (with a reserve of 0.025 million vehicles), both aiming to double their explosive levels.

Sinolink Securities' main points are as follows:

Policy side: Top-level policy setting + local policy demonstration and promotion have laid the foundation for the next year's explosive growth. The industry has received unprecedented support from the policy side, with central government work reports accelerating the development of emerging hydrogen energy at the frontier, being included in the Energy Law for energy management orientation. Over twenty provinces and cities at the local level have issued industrial development action plans. The central and local authorities have provided policy support for next year's explosion.

Application side: Projects are moving towards integrated development, with application scenarios continuously expanding, and demonstration landing catalyzing the progress of existing projects. Green hydrogen is shifting towards integrated production and usage, with policy support exploring the construction of integrated wind-solar-hydrogen-ammonia-alcohol bases. Starting from 2024, multiple operators are constructing wind/solar-hydrogen storage + ammonia-alcohol/heavy-duty truck integrated projects. Integrated project development connects the upstream and downstream, solves application difficulties, and facilitates overall economic control, reducing project validation time. At the same time, running green hydrogen's business model is the current focus, with several benchmark demonstration projects progressing normally in 2024, accelerating the bidding progress of existing projects to provide practical support for the large number of projects set to land next year.

Economic side: The industry chain costs are decreasing, and green hydrogen is gradually moving towards cost parity in applications. In 2024, the price of photovoltaic energy storage hydrogen equipment continues to decline. Based on current estimates, green hydrogen can achieve economic viability in specific scenarios, such as on-site utilization of ammonia-alcohol production, fuel cell heavy-duty trucks, laying the economic foundation for next year's explosion.

Integrated green hydrogen projects are set to explode, capturing the hydrogen production equipment and green energy operator opportunities.

From 2023 to 2024, the domestic approved green hydrogen production capacity has exceeded 6 million tons, with approximately 0.11 million tons of projects currently underway. With the joint promotion of policies, demonstration effects, and industrial cost reduction, the progress of project implementation will accelerate. Taking into account the national plan of 0.1-0.2 million tons by 2025, a total of 1.2 million tons of green hydrogen production capacity planned in various regions, the current stock of 0.68 million tons, and 5.8GW of projects already started but not yet tendered, it is estimated that a wave of tenders for green hydrogen projects will take place in 2025, driving a high demand for hydrogen production equipment. The bank optimistically estimates that the bidding volume for domestic electrolytic cell projects in 2025 will be 5GW.

Taking orders from the industry and on-site verification of projects are the current priorities, with the channel advantages and integrated advantages of hydrogen production equipment being key, preferably under state-owned or cooperative companies of the primary energy sector. Green operators are also embracing opportunities, with the rise of green methanol and green ammonia bringing more development opportunities to green hydrogen and electrolytic cells. If the replacement ratio of green methanol/green ammonia for traditional methods reaches 30%, it can drive the absorption of 5.562/3.681 million tons of green hydrogen, focusing on high-value and key core equipment: wind and photovoltaic industry chains, green hydrogen synthesis ammonia/alcohol technology and equipment, and biomass processing companies will be the first to benefit.

Hydrogen commercial vehicles are entering a period of rapid growth, presenting opportunities for the core components of fuel cell technology.

As the deadline for confirming the 2025 plan approaches, the national plan guarantees a minimum volume for the promotion of fuel cell vehicles, set to be no less than 0.05 million vehicles by 2025. As of October 2024, the inventory of fuel cell vehicles is approximately 0.025 million vehicles, leaving nearly half of the target gap to be filled. Simultaneously, the industry has commercial potential, and the combination of demonstrations, subsidies, and cost reduction factors will drive the mass deployment of fuel cell vehicles, in turn benefiting high-value fuel cell components such as systems, stacks, and hydrogen storage tanks.

Investment advice

1) Hydrogen production and fuel cell development run concurrently: ① Opportunities arising from the surge in project scale and integration for upstream hydrogen production equipment and green operators; ② Opportunities for fuel cell vehicle components under the target + subsidy + demonstration framework. The key lies in economic viability, breakthroughs in applications, and a focus on policy-driven and new closed-loop business models;

2) Further policy adjustments + realization of demand + implementation of new business models may lead to overall valuation recovery. The trading logic behind the hydrogen sector lies in the expectation of further policy-driven advancements and sustained growth in overall deployment:

① The hydrogen sector is expected to receive further policy adjustments;

The overall sector driving force is gradually shifting from the previous cost end to the demand end.

The closed-loop commercial model of "green electricity, green hydrogen + fuel cell vehicle operation" is expected to initially take shape. The key is to focus on two major directions: integrated green hydrogen projects and fuel cell automobiles. Hydrogen production equipment, green operators, and fuel cell related targets will benefit first: Huadian Technology (601226.SH), Jilin Electric Power (000875.SZ), Morimatsu International (02155), Kewell Technology (688551.SH), and CIMC Enric (03899).

Risk factors: Policy promotion intensity lower than expected, demonstration projects progressing slowly, cost reduction speed lower than expected, and technology research and development progress slower than expected.