Chinese enterprises start equity investment in international clean hydrogen projects

Historically, the primary modes of participation for Chinese enterprises in international clean hydrogen projects have centered on equipment supply and Engineering, Procurement, and Construction (EPC) services.

In equipment supply, Chinese companies have leveraged their cost and manufacturing advantages – particularly in core equipment such as electrolysers – to establish themselves as key equipment providers for clean hydrogen projects worldwide. Sungrow Hydrogen and Shuangliang Hydrogen, for instance, are set to supply 320 MW of electrolyser equipment for a green ammonia project being developed by ACME in Oman.

In engineering and construction, Chinese firms have primarily participated as EPC contractors. One example is PowerChina, which delivered the engineering and construction work for the Tashkent Green Hydrogen Project in Uzbekistan – the first green hydrogen project independently developed globally by ACWA Power. Comprising a 52 MW wind power facility and a 20 MW green hydrogen plant, this project has now officially commenced operations.

Recent developments, however, indicate that Chinese enterprises are beginning to explore a broader role in international clean hydrogen project development through equity investment. This marks a gradual expansion of their involvement beyond that of equipment suppliers or engineering contractors, into the project development and investment stages.

Envision Energy, for example, is currently developing a zero-carbon energy project in Brazil. By building a comprehensive zero-carbon energy ecosystem that integrates “wind power + energy storage + AIDC (Artificial Intelligence Data Center) + green hydrogen + Sustainable Aviation Fuel (SAF)”, Envision Energy is participating actively in both the development and investment aspects of the project.

Separately, Guofu Hydrogen has successfully secured key equipment orders for a hydrogen project in Tasmania, Australia, by investing in Line Hydrogen (Australia) Pty Ltd – a move that also serves to further expand the company’s strategic footprint within the Australian market.

According to HySights analysis, several key factors are driving Chinese enterprises to participate in international clean hydrogen projects through equity investment.

First, project equity investment enables Chinese enterprises to become more deeply involved in the formulation of industry standards and technical specifications. This can help mitigate market entry barriers arising from differences between national standard systems, as well as economic nationalism in some countries that may impede the outright purchase of foreign technology.

Second, clean hydrogen projects are typically characterised by large investment scales, lengthy construction cycles, and complex industrial value chains. By participating in project development through equity stakes, Chinese enterprises can secure long-term equipment and product supply contracts in advance, thereby strengthening their market stability.

Moreover, project equity participation can significantly enhance an enterprise’s bargaining power within a project and its influence across the industrial chain. It enables the enterprise to engage in project construction through an integrated “equipment + systems + services” model, driving the delivery of comprehensive solutions and alleviating the issue of low profit margins associated with the mere export of equipment.

On the sell side, project developers have encountered mounting challenges in securing offtake. This has left many with a choice between reducing project scale, adjusting their end-product strategy, or sourcing external funding to continue development.

China’s outbound investors are seeking to capitalise on this situation by participating in projects they can add significant value to both in technical and operational expertise as well as hardware provision.

Looking ahead, as China’s outbound investors also begin to participate in overseas project investments, forming synergies with Chinese equipment manufacturing enterprises, the investment costs of overseas projects are likely to decline. This, in turn, should enable more projects to reach final investment decision (FID).