Green hydrogen policy in India has received an impetus in the form of an incentive plan of Rs 19,744 crore announced by the government. National Green Hydrogen Mission has been flagged off in the wake of increasing need to reduce reliance on non-renewable energy sources and cut down greenhouse gas emissions. Striving to achieve net-zero state by 2070, the country plans to shed its image of being one of the largest greenhouse gas emitters.
Out of the total outlay of Rs 19,744 crore, government has allocated Rs 17,490 crore for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, and Rs 1,466 crore to support new pilot projects. It has assigned Rs 400 crore for R&D, and Rs 388 crore to fulfill the remaining objectives of the mission. The mission for
green hydrogen in India aims at developing a production capacity of not less than 5 MMT (Million Metric Tonne) per year by 2030. It also means that the country will have to ramp up its renewable energy capacity by about 125 GW.
Notwithstanding the positive outlook of the industry, to reap the purported benefits of export opportunities, decarbonization, reduced dependence on fossil fuels and more, the
green hydrogen companies in India, will have to overcome some herculean challenges.
Cost and Complexity in Production
The main hurdle in production of green hydrogen in India is the fact that hydrogen production from renewable energies like wind and biomass is considerably costly compared to hydrogen generation using conventional non-renewable sources. If we look at the hydrogen production
cost from electrolysis, it is primarily influenced by the capital costs of electrolyzer. It depends on its utilization and the electricity purchase price during the time of operation. While on one hand, high electrolyzer utilization reduces the specific share of electrolyzer capital costs in hydrogen production costs; on the other hand, a higher utilization increases electricity costs, as hours of expensive electricity will increasingly be included. Hence, in order to minimize hydrogen costs, electrolyzer utilization has to be balanced with the electricity price.
The current price of hydrogen in the country ranges from INR 340 to 400 per kg. The cost parity is expected to be achieved when green hydrogen is produced at INR 150 per kg. Once it is achieved, the road to green hydrogen production will become viable for business.
In addition to the cost factor, there is also a challenge of transportation. Hydrogen, being a hazardous gas, will require new methodology and infrastructure for storage and transportation which is lacking in the country. Majority of low-cost renewable energy resources are located far from potential demand centres. As a result, the cost of transportation from the plant to the demand centre rises. Hence, this will be a crucial challenge to be addressed going forward.
Lack of Research and Development
Looking at the current capability of the industry, it is evident that there is considerably low production of electrolysers. There is currently no major Indian manufacturer of electrolysers. As a result, India is reportedly importing electrolysers, which makes the cost uneconomical. In Australia, Fortescue Future Industries has announced a plant that will produce up to 2GW of electrolysers from 2023. This scaling up alone might cut costs by 65-75%, according to Bernd Heid, a consultant at McKinsey.
Similar initiatives and considerable research and development will be required in India to bring down the cost of electricity consumed to create the high temperatures needed for water to split, and subsequent costs like drying, cleaning and compression of the gas, as well as transport.
“The Govt. of India, approving the much-awaited National Green Hydrogen Mission, with an outlay of INR 19,744 Cr will be a critical enabler to make India a global leader in Green Hydrogen Production as well as export. While the finer details of the SIGHT program are yet to be released, we are hopeful that the initiative shown by the GOI through this move is reflected on the ground through quick and effective implementation of a policy framework to support the fledgling Green Hydrogen Ecosystem and transform India into a Global Green Hydrogen Hub,” says Srivatsan Iyer, Global CEO, Hero Future Energies.
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