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The pursuing of inter-regional power transmission to address renewable power curtailment in China has resulted in disappointing gains. This paper evaluates the case of local green ammonia production to address this issue. An improved optimization-based simulation model is applied to simulate lifetime green manufacturing, and the impacts of main institutional incentives and oxygen synergy on investment are analysed. Levelized cost of ammonia is estimated at around 820 USD/t, which is about twice the present price. The operating rate, ammonia price, the electrical efficiency of electrolysers and the electricity price are found to be the key factors in green ammonia investment. Carbon pricing and value-added tax exemption exert obvious influences on the energy transition in China. A subsidy of approximately 450 USD/t will be required according to the present price; however, this can be reduced by 100 USD/t through oxygen synergy. Compared to inter-regional power transmission, green ammonia production shows both economic and environmental advantages. Therefore, we propose an appropriate combination of both options to address renewable power curtailment and the integration of oxygen manufacturing into hydrogen production. We consider the findings and policy implications will contribute to addressing renewable power curtailment and boosting the hydrogen economy in China.

Green ammonia production as an important application for propelling the upcoming hydrogen economy has not been paid much attention by China, the world's largest ammonia producer. As a result, related studies are limited. This paper explores potential supply chain design and planning strategies of green ammonia production in the next decade of China with a case study in Inner Mongolia. A hybrid optimization-based simulation approach is applied, considering traditional optimization approaches are insufficient to address uncertainties and dynamics in a long-term energy transition. Results show that the production cost of green ammonia will be at least twice that of the current level due to higher costs of hydrogen supply. Production accounts for the largest share of the total expense of green hydrogen (~80 %). The decline of electricity and electrolyser prices are key in driving down the overall costs. In addition, by-product oxygen is also considered in the model to assess its economic benefits. We found that by-product oxygen sales could partly reduce the total expense of green hydrogen (~12 % at a price of USD 85/t), but it also should be noted that the volatile price of oxygen may pose uncertainties and risks to the effectiveness of the offset. Since the case study may represent the favourable conditions in China due to the abundant renewable energy resources and large-scale ammonia industry in this region, we propose to take a moderate step towards green ammonia production, and policies should be focused on reducing the electricity price and capital investments in green hydrogen production. We assume the findings and implications are informative to planning future green ammonia production in China.