On September 6, Donghua Energy (002221) announced that the company signed a "Strategic Cooperation Agreement" with China National Nuclear Corporation (CNNC), and the two parties are expected to invest over 100 billion yuan in the next five years to jointly build a zero-carbon industrial park. In addition, the two parties will also make efforts in the fields of green hydrogen production and storage and transportation.

Moreover, China National Nuclear Corporation also intends to become a strategic investor in this polypropylene leader, with a planned shareholding ratio of 5%-15%, and will send directors to participate in the company's board of directors.

China National Nuclear Corporation plans to hold 5%-15% of the shares

According to the "Strategic Cooperation Agreement", the two parties will jointly promote the high-temperature gas-cooled reactor project. It is expected to invest over 100 billion yuan in the next five years to jointly build a zero-carbon industrial park. Through the cascade utilization of high-temperature steam, the clean supply of steam, electricity, refrigeration and even hydrogen energy in the "Donghua Maoming Light Hydrocarbon Industrial Park" is guaranteed.

In addition, China National Nuclear Corporation and Donghua Energy will jointly establish a hydrogen energy alliance, set up a hydrogen energy research institute and a pilot plant, mainly focus on the Sinothermochemical hydrogen production technology route in the green hydrogen production process, and develop solid-state hydrogen storage materials and equipment. "Strive to seize the strategic commanding heights of hydrogen production, storage and transportation in the wave of national development of the hydrogen energy industry," Donghua Energy said in the announcement.

At the same time, Donghua Energy also stated that the two parties will also actively promote China National Nuclear Corporation or its member units to become strategic investors of the company (accounting for 5%-15% of the shares), and appoint directors to participate in the management of Donghua Energy’s board of directors. This also means that Donghua Energy will be deeply tied to the nuclear power giant.

What is the origin of Donghua Energy?

Teaming up with nuclear power giants, they plan to invest more than 100 billion yuan as soon as they make a move. What is the origin of Donghua Energy? According to the data, Donghua Energy was established in 1996 and is a comprehensive operator of alkane resources. Since 2011, the company has been targeting the propane dehydrogenation to propylene (PDH) project, that is, the two hydrogens in propane (C3H8) are separated through catalytic reactions to produce propylene (C3H6) and hydrogen, and then further processed to obtain polypropylene ( PP), hydrogen is an important by-product of the company.

At present, Donghua Energy has three 600,000-ton/year PDH units and four 400,000-ton/year PP units in operation. The company plans to add another 4 million tons of PP production capacity in Maoming and other places in the next five years. in the forefront of the world. In addition, in terms of hydrogen energy business, the company has a hydrogen filling station with a capacity of 8000m3/h in Ningbo, which is the largest in China. Donghua Energy also has a 1000Kg/12h capacity hydrogen refueling station.

It is worth noting that although the hydrogen energy business is a by-product of Donghua Energy, it plays an increasingly important role. Donghua Energy's mid-term report shows that the company achieved hydrogen sales of about 12,200 tons in the first half of this year, with revenue of about 166 million yuan, an increase of 102% compared with the same period last year. The expansion of PDH has brought about the expansion of the comprehensive utilization of by-product hydrogen.

In fact, hydrogen energy has recently been regarded as another outlet for new energy. On August 25, the Ministry of Industry and Information Technology mentioned promoting the development of the hydrogen energy industry in the "Guiding Opinions on Promoting the Development of the Energy Electronics Industry". Since the beginning of this year, many policies have been introduced to support the hydrogen energy industry. The IEA report shows that hydrogen energy storage projects in various countries are basically expected to start one after another by 2030.

However, in the hydrogen energy industry chain, the hydrogen energy industry chain is mainly divided into multiple links such as hydrogen production, storage and transportation, hydrogen refueling stations, and hydrogen fuel cell applications. Compared with the lithium battery industry chain, the hydrogen energy industry chain is more longer and more complex. Among them, how to green hydrogen production, storage and transportation has always been a pain point restricting the development of hydrogen energy.

Green hydrogen production is worth looking forward to

This time, the "Strategic Cooperation Agreement" between China National Nuclear Corporation and Donghua Energy focused on hydrogen energy cooperation. According to a research report by Huaxin Securities, the company's PDH adopts electric drive technology, especially in Maoming, 70% of the electricity comes from hydropower. In this sense, the company's hydrogen belongs to "green hydrogen".

The agency estimates that with the current annual output of 75,000 tons of hydrogen, after all the existing planned installations are completed, the annual output of hydrogen can be 350,000 tons, equivalent to 2.282 million tons of standard coal, equivalent to 5 million tons of carbon dioxide emission reduction. By then, Donghua Energy is expected to become one of the largest by-product hydrogen suppliers in the country.

"PDH companies choose the appropriate industrial chain to extend downward and increase the utilization of hydrogen, and can also strengthen the resistance to pressure in the later stage to achieve the purpose of increasing efficiency," said a chemical industry analyst at Tianfeng Securities. In his view, in recent years, with the concentrated production of PDH production capacity, the PDH industry has been under obvious pressure, with increasingly meager profits and even losses.

Donghua Energy's performance in the first half of the year also declined. In the first half of the year, Donghua Energy achieved operating income of 15.192 billion yuan, a year-on-year increase of 6.54%; net profit attributable to the parent was 146 million yuan, a year-on-year decrease of 80.60%. Donghua Energy said that in the first half of 2022, affected by the situation in Ukraine and the new crown pneumonia epidemic, the price of C3H8 skyrocketed, the downstream construction was insufficient, and the performance declined significantly due to the squeeze on both sides.