Need for Accelerated Investments for Green Hydrogen India

India is the third largest energy-consuming country in the world (~7% of global CO2 emission) and is only expected to increase with time. Alongside the government’s accelerated efforts to pursue strong efficiency standards, there is an increased need to adopt alternatives to strengthen national energy security. Historically, India’s limited oil and gas production has meant dependence on imported fuels for local requirements. However, post the COVID-19 pandemic, countries have realised the need to diversify their energy demand and geographical reach. After achieving great success in ramping up efforts for solar and wind expansion, India is now striving to become a world leader in the green hydrogen sector. To support India’s target production of 5 MT of green hydrogen by 2030, and become self-reliant (Aatmanirbhar) in meeting its energy needs, the Indian government launched the Green Hydrogen Mission (2021).

To meet this goal, the targeted measures include an ambitious 450 GW of electric power generation through renewable energy (RE) sources by 2030, Perform, Achieve, and Trade (PAT) scheme for enhancing industrial energy efficiency across 13 intensive energy sectors, and increasing the share of electric vehicles (EVs) in both public and private transport. In the Union Budget 2021-22, the Indian government proposed spending INR 800 Cr. by 2024 for undertaking pilot projects, infrastructure and supply chain, research and development, and regulations and public outreach as key focus areas to support the green hydrogen transition. The recently launched Green Energy Corridor Project will look to offer 25 years of free power for any new renewable energy plants set up for green hydrogen production before July 2025. Initially, this will support the implementation of RE power projects of 20 GW capacity across 7 implementing states of Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu, and Uttar Pradesh.

India’s transition to green energy will not just reduce the country’s import dependency but also significantly contribute towards better air quality. Oil India Limited (OIL) has been the Country’s first to launch a green hydrogen pilot plant in Assam with an installed capacity of 10 kgs per day. The plant utilizes 100kW from Anion Exchange Membrane (AEM) electrolyser array, a technology used in India for the first time. Similarly, h2e Power
, a clean tech start-up, is also setting up an electrolyser plant in Pune. The h2e steam electrolysis system, based on solid oxide fuel cell (SOFC) technology, promises lower onsite hydrogen production costs, and maximises efficiency. Despite various efforts, India still needs significant investments to boost infrastructure and advance technology to solve barriers relating to high costs, enabling policy, and attracting investments. 

To meet the MTPA green hydrogen production, India will need about $ 100 bn of investments. This would result in the reduction of carbon emissions by 1.6%, natural gas imports by 68%, and save about INR 40,000 Cr. on annual energy import bills. Evidence has suggested that since the cost of renewables is the cheapest in India, it will also minimize the costs of renewable levelized cost of electricity (LCOE). To understand the various models for setting up a hydrogen plant, analysis from a spatial analysis study conducted in India has found that the cost of production for a wind-based hydrogen plant is higher than for a solar-based system, due to the wind-based plant’s double storage capacity and seasonality. Although, the configuration of a hybrid plant seems to need less than half the hydrogen storage size compared to a solar-based plant. But for a business model to succeed, the costs need to be further lowered. It has been noted that since solar-based plants are predominant in India and their curtailed energy is significantly higher compared to hybrid plants, there is a need to evacuate excess electricity to the grid at the LCOE values. There is high potential that the cost of green hydrogen will slide down from $ 3.5–4.5/kg to anywhere between $ 2.4 and 3.6/kg of hydrogen in 2030 across favourable locations. However, for this to happen, the costs of electrolyser and storage technologies will have to be significantly brought down. Thus, there is a huge need to strengthen investment capacities to support the entire green hydrogen value chain starting from adequate storage to the costs of building compatible infrastructure. The green hydrogen field would require highly skilled and specialised workforce to drive a faster adoption of the technology. Thus, institutes such as IIT need to focus on training and upskilling a substantial number of its youth in this field. As next steps, some of the potential sectors and states need to lay down an action plan detailing the adoption of new technologies. Thus, having focus on R&D efforts to identify cost effective models for green hydrogen and its sustainability will be key. Importantly, investment facilitation will help India take a lead role in accessing low-cost climate finance through either multilateral institutions or by capitalising on bilateral agreements with developed nations to access part of the $ 100 bn/year commitments made during COP16. Germany’s focus on “green hydrogen” with zero CO2 emissions made of electricity from additional renewable resources like solar, wind etc, can be an important partnership for India’s transition to green energy. It will also be interesting to see India leverage technology for better integration of operation and information to support its effective transition to low carbon operations.