Towngas targets construction sites, data centres in hydrogen push

Cost and regulation remain hurdles to wider adoption of the clean fuel.

Hong Kong and China Gas Company Ltd. (Towngas) is targeting construction sites and data centres for its next phase of hydrogen projects as it moves from pilot testing toward early-stage deployment of low-carbon energy systems.

“Over the next one to two years, we are focused on moving from pilot testing to early-stage scaling,” Sammy Kong Siu-kuen, general manager for commercial and industrial marketing and sales at Towngas, told Hong Kong Business.

The company launched Hong Kong’s first hydrogen-powered charging system for a commercial building at its North Point headquarters in April, supplying zero-carbon electricity for electric vehicle charging.

Kong said Towngas is prioritising applications where grid limitations or reliability requirements create immediate demand for alternative power sources.

“These include construction sites with limited grid capacity, commercial operators, and critical-use facilities such as data centres,” he said in an emailed reply to questions.

Construction sites in Hong Kong frequently rely on diesel generators when grid connections are delayed or insufficient, creating an opening for hydrogen-based systems that can deliver high power output for short-duration needs, said Lawrence Iu, executive director at the think tank Civic Exchange.

He said hydrogen systems also let developers and operators test energy demand patterns before committing to permanent grid upgrades, which can be costly and time-consuming.

Hong Kong has begun expanding hydrogen trials under its hydrogen strategy, released in June 2024, which sets out market-led pilots, technical standards, and gradual adoption pathways.

As of the end of May, an inter-departmental working group had approved 38 hydrogen pilot projects covering transport, construction equipment, and generator applications.

Iu said Towngas’ pilot could also support Hong Kong’s efforts to expand electric vehicle charging infrastructure in a city constrained by limited land availability and ageing building stock.

“If we want to fully electrify our commercial fleets, we still need to consider alternative solutions,” he said via Zoom, adding that providing charging infrastructure for more than 800,000 vehicles would be difficult.

Hong Kong’s existing gas network may also support hydrogen adoption, as it already reaches more than 90% of the population and carries a blended gas mix containing as much as 55% hydrogen.

However, experts said regulatory clarity remains essential for scaling up deployment. Kong said more detailed rules on hydrogen import, storage, transport, and usage are expected to be submitted to the Legislative Council in the fourth quarter for vetting.

Cost is another constraint on wider adoption. Iu said shipping accounts for about 20% to 30% of Hong Kong’s retail hydrogen price, whilst current shipment sizes of 400 to 700 kilos remain too small to achieve scale efficiency. Bigger shipments in the range of several tonnes could reduce transport costs.

Officials are exploring options to lower import costs, with agencies including the Electrical and Mechanical Services Department and the Environment and Ecology Bureau reviewing supply and procurement frameworks.

Kong said Towngas could supply about 34 tonnes of hydrogen per day, which he said is sufficient for early and medium-scale projects in Hong Kong.

“By using town gas as a carrier for hydrogen transport and extraction, we avoid the massive upfront capital expenditure required for new production infrastructure,” he added.