Most nations acknowledge the potential importance and benefits of GH2 in the energy mix of the future and thereby have begun investing heavily into technologies that can help build a GH2 economy. India too is extremely bullish about GH2 and its potential for the Indian economy. Large amounts of private and governmental funds are being directed towards gaining technological leadership and self-reliance in GH2 production and utilization. But whether such investments will be fruitful depends upon how rapidly the cost of GH2 can fall, and how quickly it can be integrated into existing industries with as little cost to transition as possible.
This is the second part of the series, Green Hydrogen in India authored by Megha Rawat and Vijay Prateik from deMITasse Energies. This part is about the green hydrogen policy, technology and the Indian market.
Green Hydrogen Production In India
India already has a fairly mature hydrogen market, with strong domestic demand and supply. However, the vast majority of this hydrogen is gray hydrogen. And this hydrogen demand comes primarily from two industries – methanol and ammonia producers. Of which about half of the over 6 million tonnes of H2 produced in India is used as a precursor to methanol production. Only a tiny fraction of all H2 produced in India is GH2, much like other nations, due to the high cost of production. The prohibitively high cost of electrolyzer is an important factor for the high final cost of GH2. These electrolyzers are often imported and are made of Platinum Group Metals (PGMs) which are typically very expensive metals. Cost of renewable energy/electricity is another major source of the high final cost of GH2. And lastly, catalysts and high-purity materials raise costs significantly.
In addition to these technological costs, other factors also add to the high cost of GH2. T&D losses (Transmission and Distribution), high operational and maintenance costs, high initial capital, and wheeling charges for electricity add to the costs of GH2 production. Currently, high GST is also a bottleneck. And if indian strives to become a leader in the GH2 market, these hurdles need to be overcome very soon.
Possibilities for Hydrogen in the Indian Market
If India can overcome the above-mentioned challenges, GH2 can prove to be a game changer for the Indian economy, its industries, its citizens, and the fight against climate change. While we generate about 6 million tonnes of gray H2 today, the market size for GH2 in India could be over $8 billion by 2030 and by some estimates up to $340 billion by 2050. Such market size is a motivation by itself, but if India can build its GH2 market there is a very real potential for it to capture even more lucrative global markets as well.
To achieve such goals, significant R&D is needed to indigenously build cheaper electrolyzers, ideally with materials that are more easily available. Other clean technologies, beyond electrolysis of water, for GH2 production needs to also be explored. Research by private and governmental organizations (like IITs, ICT, and IISc) needs to be put in full gear for metallurgy and materials, in order to develop catalysts and ultra-pure materials for hydrogen production and distribution (which is a prerequisite when end use is in fuel cells).
India also needs to spend significant capital and resources, as well as put in regulations and policies to begin building infrastructure for GH2 distribution. Cross-country pipelines need to be built, and ports need to be upgraded to handle GH2 at a much larger scale than is the case today. India can also look into developing enormous storage depots in underground caverns and salt/rock formations across the nation to connect its GH2 pipelines. Additionally, India should also invest in other needed forms of smaller-scale transportation technologies like large pressure storage vessels, cryogenic transportation and storage, and metal hydride storage. India could also look at combining its nuclear power plants to generate GH2, directly or through the off-peak electricity it generates.
And lastly, the government needs to promote and incentivise the use of GH2 in energy-intensive industries like refineries, cement, steel etc. While this is a long path, we could begin by promoting blue hydrogen with a clear path to transition to GH2 within a set timeline. Many industries beyond methanol and ammonia can benefit from GH2 supply at the right price point. Cement, iron, steel, textile, chemical and many other energy-intensive industries that currently burn natural gas or coal for their process heat requirements, can be relatively easily upgraded to run on combustion of GH2. Such a transition would be significantly quicker and cheaper than transitioning them to work upon renewable electricity. In fact, certain industries with very high-grade heat requirements, like cement and steel, cannot be transitioned to operate on electricity with existing technologies and infrastructure. GH2 is the perfect, and maybe even only, candidate for such industries to go green. On similar lines, international shipping and aviation may not have any other option but GH2, for them to go green, simply because current batteries do not have enough energy density to power them. EVs and especially long-haul heavy vehicles and trucks can also be powered by GH2 instead of batteries, where range is limited and charging times are high. Promoting such transitions in supply, demand, and distribution sides can give India an edge over other nations in GH2 technology.
If India can develop its GH2 economy and indigenous GH2 technologies, it could potentially become a global leader and supplier of GH2. This would give India energy self-sufficiency and also help grow its economy by becoming an exporting nation with a low fiscal deficit (which is not the case today as we import a large majority of our fossil fuels). This is a very real possibility that can help India become a technological, energy, and economic superpower. This is also the reason why China is already racing ahead and pushing hard to become a global leader in GH2 technology as well. But with the right frameworks, governmental incentives, initial waivers or subsidies, strong policies, and quick and quality implementation of such policies and regulations, India does stand a chance to dominate the global GH2 market by outpacing the slowing Chinese economy.
Green Hydrogen Policy and its Challenges:
India’s energy demand has not reached its peak yet, and as India grows, its energy demand will grow. This gives huge incentives to India to develop its GH2 economy – not only is the market going to be huge, but it will also generate millions of direct and indirect employment while reducing the effects of climate change.
Recognizing this, India has allocated a budget of 19,744 Crores (US$ 2.4 billion) for the National Hydrogen Program, which aims to produce 5 million tonnes of GH2 annually by 2030. Indian Ministry of Power has also announced a Green Hydrogen Policy under the climate action thrust of India’s budget for FY-2022/23. Much like China and Australia, Indian Green Hydrogen Policy (GHP) identifies green hydrogen and green ammonia as the future of fuel and is setting policies to enable smooth production of GH2 within the country.
- The GHP is offering to set up GH2/GA production plants in government Manufacturing Zones and Renewable Parks, connectivity to the Inter-State Transmission System on a priority basis, and a waiver of ISTC (Inter State Transition Charge) to the producer of GH2/FA for 25 years (for the project commissioned before 30th June 2025).
- GH2/GA producers can also set up bunkers near the ports to store GH2/GA for export via shipping.
- The manufacturers of GH2/GA are allowed to purchase renewable power from the power exchange or set up their renewable energy power plant themselves or through any developer, anywhere. GHP provides a facility for GH2/GA producers to bank any surplus of renewable energy used for making GH2/GA with DISCOMs for up to 30 days period.
Challenges of the Green Hydrogen Policy:
- In case the GH2/GA is produced using the RE coming from a remotely located RE plant, the landed cost of power output would range from INR 3.70 to INR 7.14 per kWh. That means. At this price bracket of power, GH2/GA will be made at a cost of about INR 500 per kg.
Therefore, the RE power suppliers should receive incentives/subsidies from the government so that GH/GA producers receive the RE power at lower prices; hence, the per kg GH2 price could become more competitive in the market. Or, by default, the GH2/GA manufacturers should set up the production plants in RE-rich states or not so far away from the RE plants.
- Unfortunately. RE-rich states have shown reluctance in cooperating with GHP including allotment of land in RE parks, proposed manufacturing zones, 30 days banking facility and the relevant SERCs as many public power utilities see this as a threat to their monopoly of power distribution.
- Though the RE generation cost in India is low as compared to other nations, there are many charges levied from the point of generation to transmission.
- Since the GHP waives off the ISTS charges for GH2/GA and directed DISCOMS to supply ER to GH2/GA producers on a very small add-on margin determined by SERCs, this margin might not keep up the enthusiasm of DISCOMs for long-term deals with GH/GA producers.
- India is the world’s most populated country, and therefore sourcing relatively clean water for mass production of GH2 might be a challenge. This is going to be an especially tough problem for India where its citizens often have inadequate access to clean potable water. With climate change and global warming, access to water will become even more scarce, in such a situation water for GH2 production will compete with water for human consumption.
- By some estimates, an additional 125GW of RE supply would be needed annually to meet the goal of producing 5MT GH2 per year by 2030. India’s current RE capacity is only 168.96GW. Such ramp up would thus be an uphill task, within the short period within which such capacity upgrade would be needed.
- Storage of hydrogen would need large scale pressurized and cryogenic facilities. It would also need cross-country pipeline network. Both these infrastructure are capital intensive and dependent on advanced technologies (which will need to be developed indigenously). Certain naturally occurring underground caverns, decommissioned mines, and salt/rock formations can be explored, but developing them will also be capital intensive.
- Finally, even if the government incentivises the transition of industries to hydrogen, technology and policy will need to be developed very swiftly to reduce the price of GH2 along with an increase in its availability and access… else the industry would move to gray hydrogen that is 3 times cheaper than GH2.
In conclusion, GH2 offers enormous benefits and opportunities to nations around the globe, which if utilized properly could bring economic prosperity and energy self-sufficiency to all. It could also be one of the missing links to transitioning the globe to zero emission civilisation. But like all great opportunities, there are few challenges that need to be overcome. With collective human intelligence and the right incentives, there is little doubt that such a technology can be made mainstream. And any nation which achieves this earliest, will probably become a global energy leader and a champion of clean energy, which inevitably would help build that nation’s economy into a superpower. India too has all it takes to achieve this, and it has recently joined the race. Only time will tell if we can make it as a global leader in GH2 technology.
The content of this article is own by Megha Rawat and Vijay Prateik from deMITasse Energies