In Depth: Chemical Plant With Its Own Power Grid Proves Viability of Disruptive Model

In Chifeng, located in North China's Inner Mongolia autonomous region, a pioneering project demonstrates the feasibility of using a renewables-powered electricity grid to produce ammonia. This project showcases how local renewable resources, primarily wind and solar energy, can be harnessed for industrial purposes. Notably, it represents a potentially transformative approach by integrating renewable energy sources into industrial processes, thereby reducing reliance on traditional electricity grids. [para. 1]

The project's primary advantage for the wind-turbine manufacturer Envision Group is the significantly lower power costs associated with the standalone grid. Envision spends 60% less for electricity sourced from the standalone grid compared to the state-run grid. This financial benefit is in part due to China's rapid increase in wind and solar capacity, leading to decreased electricity costs from these renewable sources. However, industrial users often face higher prices when buying electricity from state-run grid operators because these operators subsidize household electricity costs. [para. 2][para. 3]

Furthermore, the project provides substantial benefits to the local government, which is eager to promote green industries. By ensuring efficient utilization of the region's renewable power, the initiative helps mitigate the issue of wasted renewable energy, prevalent in resource-rich inland regions like Inner Mongolia. Additionally, the green ammonia and hydrogen produced by the project play a crucial role in the decarbonization of sectors such as shipping, aviation, and heavy industry. [para. 4]

Despite its advantages, the project encounters challenges. Wind and solar power's inherent instability hinders the establishment of a self-sufficient power system aimed at minimizing costs. Additionally, domestic demand for ammonia is currently low, affecting the project's profitability. Future success hinges on the potential to export green ammonia once the project achieves full-scale and stable production. [para. 5][para. 6][para. 7]

The project is structured in several phases, including a trial phase, with an initial annual production target of 20,000 tons of green ammonia. It's scheduled to officially commence mass production, aiming for an annual output of 300,000 tons and an eventual capacity of 1.5 million tons per year. The focus on ammonia stems from its relatively easier transport feasibility compared to hydrogen. [para. 8][para. 9]

Inner Mongolia's preferential policies support this renewable hydrogen project, offering exemptions from specific fees and costs. The model's cost advantages make it appealing to energy-intensive firms aiming to control expenses while meeting government-mandated emission reduction targets. Still, reliance on renewable sources presents challenges, including fluctuating electricity supply, which strains crucial components and poses operational risks. [para. 10][para. 11][para. 12]

China is simultaneously working on its broader renewable energy goals. By 2030, the EU aims to produce and import 10 million tons of renewable hydrogen. This aligns with efforts in Chinese regions like Chifeng, which aims to transition from coal dependency to becoming a clean energy hub. The city plans to increase its renewable energy capacity significantly in the coming years, capitalizing on its abundant wind and solar resources. [para. 13][para. 14][para. 15]

Chifeng attracts energy-intensive firms through projects that advocate source-grid-load-storage integration, meeting part of their power needs through self-built renewable resources combined with state-run grid electricity. The global shift towards strict carbon rules, specifically in regions like the EU, further incentivizes the adoption of similar renewable initiatives. [para. 17][para. 18]