Global energy giant Shell plc has started operations at the power-to-hydrogen electrolyser in Zhangjiakou, Hebei province, on Friday.

The facility is the largest in its portfolio to date, and reflects the company's confidence in the country's huge market potential, industry insiders said.

The electrolyser, Shell's first commercial hydrogen development project in China, will provide about half of the total green hydrogen supply for fuel cell vehicles at the Zhangjiakou competition zone during the Beijing 2022 Olympic and Paralympic Winter Games, set to begin on Feb 4, it said.

"We see opportunities across the hydrogen supply chain in China, including its production, storage and shipping," said Wael Sawan, director of Shell's integrated gas, renewable and energy solutions.

"We want to be the trusted partner of our customers from different sectors as we help them decarbonize in China."

Shell is one of the multinational corporations in China that has been actively laying out plans to further tap the potential of hydrogen, together with Siemens, Thyssenkrupp, Toyota, Ballard and Hyundai, which have all been actively laying out hydrogen business plans in the country, eyeing the potential of the sector's future development.

The development of industry chains in the production, storage, transport and application of green hydrogen has picked up pace in recent years, with cities across the nation actively laying out plans to tap into the hydrogen sector.

Ivy Yin, energy transition analyst at S&P Global Platts, said China is expected to become a key global hydrogen equipment supplier by bringing down manufacturing costs, similar to how it has led global solar panel production.

The China Hydrogen Alliance predicts that by 2025, the output value of China's hydrogen energy industry will reach 1 trillion yuan ($152.6 billion) and by 2030, China's demand for hydrogen will reach 35 million metric tons, accounting for at least 5 percent of China's terminal energy system.

The Shell project is part of a joint venture between Shell China and Zhangjiakou City Transport Construction Investment Holding Group Co Ltd, formed in November 2020.

The 20 megawatt power-to-hydrogen electrolyser and hydrogen refueling stations in Zhangjiakou are Phase 1 of the joint venture. The companies have plans to scale up to 60 MW in the next two years under Phase 2.

Utilizing onshore wind power, the project will initially supply green hydrogen to fuel a fleet of more than 600 fuel cell vehicles at the Zhangjiakou competition zone during the Winter Olympic Games. After that, the hydrogen will be used for public and commercial transport in the Beijing-Tianjin-Hebei region, helping to decarbonize its mobility sector.

According to Bai Jing, director of the Zhangjiakou Municipal Development and Reform Commission, the hydrogen industry is critical for Zhangjiakou's transition to low-carbon energy and to achieve the city's carbon peak and carbon neutrality targets.

"This project will help secure hydrogen supply for the 2022 Beijing Winter Olympics and make it a green one while contributing to the development of the hydrogen industry in the city and the Beijing-Tianjin-Hebei region," he said.