Only 3 Hydrogen Refueling Stations Turned a Profit Last Year... 1.4 Billion Won Injected to Cover Losses

Ministry of Environment to Cover 70% of Deficit from Fuel Purchase Costs

[Sejong=Asia Economy Reporter Joo Sang-don] Last year, among the 19 hydrogen charging stations operated by small and medium-sized private companies, only 3 turned a profit. The government decided to support 1.37 billion KRW for hydrogen fuel purchase costs to improve the operating conditions of 12 loss-making charging stations.

The Ministry of Environment announced on the 9th that it will provide hydrogen fuel purchase cost support to loss-making hydrogen charging stations. This means that each station will receive an average of about 110 million KRW in hydrogen fuel purchase costs. This is the first time the government budget has been used to support hydrogen fuel purchase costs.

The support targets are hydrogen charging station operators who received a completion inspection certificate (license) by the end of 2019 and had operating performance in 2020. Hydrogen charging stations operated by large corporations, some public institutions, and research hydrogen charging stations were excluded from the support.

Accordingly, among the 19 hydrogen charging stations operated by small and medium-sized private companies with operating performance last year, 3 stations that turned a profit, 1 station that did not apply for support due to a small deficit, and 3 stations where the hydrogen supplier also handles sales making it difficult to assess the operator’s profit and loss, totaling 7 stations, were excluded. The remaining 12 stations will receive fuel purchase cost support.

An official from the Ministry of Environment explained, "The fuel purchase cost support budget for this year is limited to 1.47 billion KRW, so it was difficult to support all loss-making charging stations. Since the original purpose of the fuel purchase cost support is to assist small and medium-sized companies that would find continuous operation difficult without government support, charging stations operated by large corporations and some public institutions were excluded."

The Ministry of Environment did not disclose specific information about the hydrogen charging stations receiving hydrogen fuel purchase cost support due to losses last year. However, considering that the 12 selected stations are located in Gyeonggi, Busan, Daejeon, Gyeongnam, and Ulsan, it means that most charging stations operating in cities and provinces other than Seoul suffered losses last year.

The Ministry of Environment established this support criterion in consultation with hydrogen charging station operators. The 12 hydrogen charging stations receiving fuel purchase cost support recorded an average deficit of 183 million KRW last year. Their income was 307 million KRW, but expenditures were 490 million KRW, which was higher. 87% of the expenditures were fuel purchase costs and labor costs. Accordingly, the Ministry decided to support 3,443 KRW/kg, which is 70% of the difference between the average hydrogen purchase price (6,777 KRW/kg) and the break-even price where income equals expenditure (1,859 KRW/kg).

The Ministry of Environment has agreed with the Ministry of Economy and Finance to compensate 70% of the deficits of hydrogen charging stations for five years starting this year. For now, hydrogen fuel purchase costs corresponding to 70% of the deficit until 2024 will be supported through this method.

According to the government’s policy to expand hydrogen infrastructure to revitalize the hydrogen economy, the number of charging stations is expected to increase rapidly, and the number of loss-making hydrogen charging stations will also rise. The number of hydrogen charging stations increased from 34 at the end of 2019 to 60 at the end of 2020, and reached 69 by the end of March this year. The government plans to increase hydrogen charging stations to 310 by 2022 and more than 1,200 by 2040. If the supply of hydrogen charging stations cannot keep up with the increasing distribution of hydrogen vehicles, the number of loss-making stations is likely to surge.

This content was produced with the assistance of AI translation services.