Hybrid Energy Stations to Be Built
The authors are analysts of NH Investment & Securities. They can be reached at ys.jung@nhqv.com. -- Ed.
Classification of hydrogen refueling stations (HRSs) by hydrogen supply method
By hydrogen supply method, HRSs are classified as either off-site or on-site. Currently, off-site HRSs using by-product hydrogen are prevailing.
At off-site HRSs, hydrogen produced at chemical complexes is transported to HRSs through pipelines or tube trailers. Hydrogen mass-production at complexes allows for a reduction in production costs, but the installation of pipelines and high transport costs present problems, especially when hydrogen production facilities are located far away from HRSs.
As for on-site HRSs, hydrogen is produced at the site through natural gas reforming or electrolysis. In this manner, transport costs can be saved, but initial investment costs are high due to the need to establish reformers or electrolysis facilities. Given that natural gas reforming involves fossil fuels, the securing of green hydrogen produced via electrolysis is preferable. But, as the approach is not yet economically viable, it will likely take some time before widespread adoption.
The cost to build an off-site HRS comes to around W2.7bn (W1.7bn~W1.8bn for installation and around W900mn for construction), which is higher than the cost to construct an EV charging station. This stems from the fact that Korea has yet to localize key parts for HRSs such as compressors and chargers, and thus, it needs to import them from other countries.
Around W3bn required per HRS
Currently, there are 53 HRSs in Korea (four in Seoul: National Assembly, Sangam, Yangjae, Gangdong). Although the country constructed 27 HRSs in 2020, it failed to meet its target of raising the total to 100 by last year.
Launch of HyNet
The government plans to raise the number of HRSs to 660 by 2030 and 1,200 by 2040. To this end, public-private partnerships are in motion, with special purpose company (SPC) HyNet seeing establishment in Mar 2019. A total of 13 companies (including HMC and KOGAS) have joined HyNet thus far. HyNet is to operate through 2028, working to enhance the efficiency and regulations of HRSs. While HyNet plans to establish and run 100 HRSs by 2022, related efforts are progressing slowly.
Efforts to establish Kohygen in progress
Efforts to establish another SPC based on public-private partnership called Kohygen are also underway, with the SPC’s goal to be expanding HRS infrastructure for commercial vehicles. KDHC is to play a role regarding hydrogen price and market stabilization, and HMC, six refineries/gas companies (eg, SK Energy and GS Caltex), local governments, and financial investors are to join it. The SPC plans to build 10 HRSs (gaseous HRSs) by 2022 and 25 HRSs (liquid HRSs) by 2023, using a W330bn fund, 50% of which is to be financed by government subsidies.
Hybrid energy stations to be built
With refineries and LPG suppliers set to enter the HRS infrastructure market, the penetration of on-site HRSs which are added to existing gas stations is to expand going forward. At the first Innovative Growth BIG3 Conference in Dec 2020, the government targeted 110 HRSs on a cumulative basis by 1H21. We expect that hybrid energy stations that can supply gasoline, diesel, and LPG for ICEVs, electricity for EVs, and hydrogen for FCEVs will begin to pop up over the mid/long term