Hydrogen has long been seen as the fuel of the future. Several developments worldwide suggest that the time for a substantial role for hydrogen in the energy system has arrived. First, concern about global climate change is increasing, and it is becoming clear that decarbonisation of the energy system necessitates new low-carbon fuels and chemical feedstock. Second, technology innovation in electrolysers and electricity generation from zero-carbon renewables is making the prospect of abundant low-carbon hydrogen realistic. However, to be deployed at scale, hydrogen will need to compete with incumbent fossil fuels and emerging low-carbon alternatives. It is, therefore, necessary to assess the possible role of hydrogen from a systems perspective, considering all possible end uses, production routes and value chain configurations.
Today, the hydrogen consumed in India comes mainly from fossil fuels. However, green hydrogen, that is, the hydrogen produced through renewable electricity and electrolysers, has significant potential to reduce fossil fuel imports, improve energy security and decarbonise energy supply. High and fluctuating prices of imported natural gas and low solar power prices make India particularly well suited to green hydrogen production in the near term.
The Energy and Resources Institute (TERI), under our Energy Transitions Commission India work programme, has been assessing technological and economic trends in various energy producing and consuming sectors to advance our understanding of the role of key low-carbon technologies in decarbonising the Indian energy system. For India, the scaling up of green hydrogen production would require the use of solar photovoltaic (PV) as the main source of renewable electricity. In other parts of the world, the cost of electricity generation from solar PV is much higher – both in absolute terms as well as relative to natural gas. It would, therefore, be more economical for India to expand green hydrogen production versus grey or blue hydrogen production.
TERI’s recently released report, “The Potential Role of Hydrogen in India”, provides a first-of-its-kind assessment for India of the sector-wise role that hydrogen can play, helping policymakers and businesses plan better for a low-carbon future. By 2050, we project that nearly 80 per cent of India’s hydrogen will be green. Green hydrogen will become the most competitive route for hydrogen production around 2030. As with other clean energy technologies, the falling cost of hydrogen will drive its uptake. Our analysis finds that by 2030, the cost of green hydrogen will fall below Rs 150 per kg ($2 per kg) vis-à-vis Rs 300-Rs 440 per kg ($4-$6 per kg) at present and will start to compete with hydrogen produced from fossil fuels. Improving efficiencies of electrolysers and increasing load factors of solar plants will also have an important role in driving down the costs of green hydrogen.
The balance of evidence suggests that hydrogen will play a major role across many sectors. Hydrogen demand will continue to be largely concentrated in industry, expanding in existing sectors such as fertilisers and refineries, and growing in new sectors such as steel. In transport, green hydrogen can be used to fuel long-range vehicles and heavy duty trucks, in industry as chemical feedstock, and in the power sector to provide longer-term energy storage.
Recent years have seen increasing international commitments, industry activity and civil society interest. It is important that India remains ahead of the curve on clean energy technology development. To meet the estimated green hydrogen requirements of 28 mt by 2050, 150-200 GW of electrolysers would be necessary. Focusing on early investment in research and manufacturing capability to maximise domestic benefits would, therefore, be important. By moving to deployment-led support, India can achieve rapid cost reductions in key hydrogen technologies, as has been the case with solar PV and onshore wind. This will also align well with India’s Make in India and Atmanirbhar Bharat initiatives, through championing domestic technology providers and ultimately reducing dependence on imported fossil fuels.
The initial scale-up will be driven by collaborations between progressive public and private players. The possibility of the economic viability of hydrogen as a fuel or as feedstock in different applications at different prices provides an opportunity to grow this market, reduce hydrogen prices and then grow the market again, leading to a virtuous cycle. India has an opportunity to grow an economically competitive low-carbon hydrogen sector and reduce energy imports, whilst dramatically reducing emissions.