【Haichuan Hydrogen Energy】Competition intensifies in water electrolysis equipment sector
Thread Content
1. The large number of companies in this industry. A friend of mine did a rough estimate at the beginning of last year; it is said that there are already over 200 companies involved in the manufacturing of equipment for producing hydrogen through electrolysis. However, based on what I know and have encountered, including companies and research institutions as well as different technical approaches, the actual number is far higher than that. Don’t ask me for the exact figures; I don’t have the energy to keep track of them, but it’s definitely true – if I listed my WeChat friends, the number would be higher than that. 2. The industries of enterprises entering this phase are highly diverse. Currently, the companies entering the water electrolysis industry come from virtually all sectors: those that originally manufactured electrolyzers and companies involved in the supply chain; enterprises with energy and power-related backgrounds (such as those belonging to the two grids, three oil companies, four major utilities, five large enterprises, as well as local energy companies); chemical industry firms (especially those with experience in chlor-alkali production, coal chemistry, or refining); companies involved in the renewable energy sector (photovoltaic, wind, hydro, nuclear energy, etc.); steel manufacturers; companies related to fuel cells; gas companies; construction-related enterprises; and other categories including real estate and engineering design firms, among others Although the industry classification is not that precise, it roughly conveys the idea of covering almost all industries. 3. Competing to launch various “new products”. When we, as professionals in this industry, talk about it, we often mention a common saying: the electrolyzer rollout ceremony takes place at a speed akin to that of making dumplings. This description is somewhat exaggerated, but it’s quite vivid. The introduction of various new products means that it’s almost impossible to hold a launch event without having some highlights; hence there are products with high hydrogen production capacity, those with low power consumption, and those that represent something truly new – that is, something unprecedented. Of course, from the perspective of promoting industry development, we are not averse to \"new products\", but this \"newness\" should not refer to artworks that can only be viewed from afar and not touched, or to models that exist only in form. Based on this, various oddities have emerged at product launches – such as products not being made publicly available despite the launch events lasting for a long time, products that live up to their name only in name alone, or even exaggerated claims of achieving yields of 20,000 pounds per mu!
4. The low price. First of all, everyone can see just how low the prices are. To illustrate with an example of a product in the range of 1,000 units, the price dropped by almost half in less than a year, going from around 12 million per unit based on last year’s market fair price to around 7 million at present. Based on the data I have at my disposal (including the BOM and the entire supply chain), along with accurate analysis of operating costs, this is an analysis grounded in MLO (materials, labor, and manufacturing expenses, including variable and fixed manufacturing costs). At the current selling price, it’s impossible to achieve a gross profit; based on a thorough analysis of operating costs, each unit incurs losses of around 1 million or more. Of course, the currently popular 1-to-4 configuration corresponds to an electrical power output of around 20 MW, with a price range of approximately 26 to 28 million. The BOP cost for a 1-to-4 setup isn’t four times that of a 1-to-1 setup, but the amount of cost savings can be determined by looking at the proportion of costs covered by the BOP. In the most ideal scenario, it can cover up to 90% of the costs. In the current business landscape, property owners who can recover 60–70% of their funds are generally considered to be in a fairly good position. By this calculation, how many companies’ cash flows can withstand such conditions? Secondly, this trend of involution has gradually spread abroad. A few years ago, a foreign company referred to our domestic supply chain as a “Hongse supply chain.” Rationally speaking, this term carries both positive and negative connotations: the positive aspect is the high level of competitiveness, while the negative aspects are the disorderly nature of competition and a lack of respect for technology. There is another case: a domestic company wanted to bring in a well-known foreign electrolyzer manufacturer, but the latter refused due to concerns that the domestic company would have no advantage at all in facing such competition and would not be able to adapt to it. Once again, there are two fundamental reasons for this phenomenon. First, hydrogen energy is still in a relatively early stage, and the profit models available are not very satisfactory; as a result, owners try to secure low prices (so as to obtain better financial projections) ； Companies with some financial resources, or those that started out in a brutal and rough manner, use an \"Internet mindset\" to expand their influence and drive out competitors (think of those services like Xiao Huang, Xiao Lan, Xiao Gui, etc., which we were able to use almost for free back then). Finally, leverage industry status and influence to shape public opinion and affect the decision-makers’ judgments, thereby creating an atmosphere that indicates the industry has entered a phase of cost reduction. But essentially, it does this by exploiting the supply chain and harming itself in order to establish a monopoly position in the market. View its advantages and disadvantages rationally or neutrally. Above, we have presented this form of \"involution\" from various perspectives. Of course, we also need to objectively and rationally analyze its advantages and disadvantages. Where lie the advantages, and where the disadvantages? Let me explain further
What are the advantages and what are the disadvantages? 1. What are the benefits? Based on what we call the \"wolf culture\" and our successful experiences in the photovoltaic and wind power industries, companies that manage to survive in such a competitive environment are generally able to develop strong capabilities that enable them to stand out among numerous competitors. It can also probably facilitate rapid development in the industry, or at least help it achieve leadership on a global scale. Of course, for a few to stand out, factors such as timing, luck, and fate are also necessary. But while focusing on those who stand out, we must also be aware of the numerous victims behind their success. 2. What are the drawbacks? Many of the companies involved are overwhelmed by the need to compete fiercely, and they follow trends blindly; as a result, many products lack any proper research and development process or thorough testing, which means that the products brought to the market carry high risks and safety hazards ； Secondly, the focus on cost reduction leaves no resources for research and development, resulting in products competing in a homogeneous market with low quality; aside from scale, this does not contribute to advancements in industry technology ； Thirdly, the extreme compression of supply chain profit margins will also lead to a lack of momentum in the development of basic materials and components ； Fourth, this process easily leads to the outcome of bad money driving out good money ； Fifth, market concentration leads to significant changes in the direction of financial capital. It conforms to the profit-seeking nature of capital, but goes against the original intention of capital to promote industry. After discussing these points, what should the relevant companies do?
III. Where to go from here? 1. Act according to your capabilities and stick to your responsibilities. 2. Pursue differentiated development to avoid engaging in homogeneous competition. 3. Push aside the mist, and clarity will finally appear. 4. Strategic focus, accurate judgment. No further explanation is given above, but it still needs to be emphasized that it is an industrial product with a long cycle and intended for large-scale use. Together with scenarios featuring high risk factors, creating safe and efficient products is undoubtedly the cornerstone for a company’s survival. At the same time, we might as well learn from foreigners: we must respect technology and ensure that it receives its proper technical compensation – this is the key to the survival and sustainable development of any industry!
[HaiChuan Hydrogen Energy] is starting to become extremely affordable! ! ! Quotation for the complete set of equipment for hydrogen production via alkaline water electrolysis at 1000 Nm3/h is below 7 million yuan: https://bbs.hcbbs.com/thread-3875247-1-1.html (Source: HaiChuan Network)