Once viewed as the fuel of the future, green hydrogen, or hydrogen produced using renewable energy sources, has swiftly assumed centre stage in the global energy transition. Governments, as well as the massive energy industry worldwide, have realised that this hydrogen, produced by the electrolysis of water using renewable energy sources such as solar, wind, biomass and hydro, is a strong solution to the challenges in renewable energy integration, large-scale energy storage and decarbonisation of the energy mix. It has tremendous scope for application across industries, in transportation and power generation, whether in gaseous, liquid or chemical compound forms.
As India moves towards a low-carbon pathway, green hydrogen can help in accelerating this energy transition. While conventional hydrogen has long been used for industrial purposes, green hydrogen is still an area of opportunity. In tune with global trends, there has been a recent spike in discussion as well as action amongst the government and industry stakeholders as they move forward to capitalise on the immense potential and scope of this versatile fuel. With several green hydrogen projects already proposed and large technology players entering the Indian market, the government has actively started its policy formulation. In fact, in the recent budget announcement on February 1, 2021, Finance Minister Nirmala Sitharaman stated that a comprehensive National Hydrogen Mission is proposed to be launched in 2021-22 for generating hydrogen from green power sources.
Prior to this, Raj Kumar Singh, minister of state (independent charge) for power and new and renewable energy, spoke about the government’s plans for green hydrogen at the 3rd Global RE-Invest held in November 2020. “We will be working out the requirements of green hydrogen in the steel industry. We will discuss how we can produce hydrogen using solar energy at competitive prices. We will also see how we can increase the calorific value of natural gas that is piped around the country by adding hydrogen. We can consider blending it with ethanol or green hydrogen. Again, we wish to bring in economies of scale in the green hydrogen space, as we believe this will drive down prices. Going forward, we see green hydrogen powering the long distance transport sector, particularly truck and bus transport across states,” he remarked.
That said, building a green hydrogen economy in India will require the creation of an enabling and competitive ecosystem with a secure supply chain, extensive research and development (R&D) for technology advancements, attractive business models as well as access to affordable finance. Although the green hydrogen market is still at a nascent stage, the huge opportunities that it can create for renewable energy developers, technology providers, oil and gas players, large industries and transport operators cannot be disputed.
Plans and progress
On a global scale, energy giants such as BP, Ørsted, Total, Petronas and Equinor have entered the green hydrogen space with the announcement of ambitious projects, some of which are well into the implementation phase. Although the uptake has been slow in India till now, the future does seem promising on both the policy and the industry front. Following the announcement of the National Hydrogen Mission, the government has strengthened its efforts and is likely to introduce a comprehensive programme in the next few months. It is expected that this mission will draw up the hydrogen road map, covering all aspects including technology, storage, R&D and pilot projects. Further, to promote competition and transparency in this space, as in the case of solar PV, an auction is planned to attract large IPPs and allocate green hydrogen projects.
At the industry level, a large number of public and private enterprises are now actively pursuing pilot and commercial-level developments with a few public-private partnership (PPA) proposals also in the pipeline. To capitalise on the massive opportunity, many leading renewable energy IPPs have already forayed into this space, with technology partnerships in place and pilot projects in the pipeline. For instance, in November 2020, Adani Green Energy Limited announced a strategic collaboration with Italy-based Snam to explore opportunities in green hydrogen. Another large renewable energy developer, ACME is already implementing a project in Rajasthan.
In February 2020, Indian Railways floated an expression of interest for the development of a hydrogen-powered suburban train. Another large player, Reliance Industries intends to replace conventional transportation fuels with hydrogen and clean electricity at a steady pace.
At the PSU level, NTPC Limited is exploring the possibility of making green hydrogen a big part of its renewable energy portfolio. It is working on green hydrogen pilot projects for fuel cell-based buses and cars, production of green methanol fuel cell-based trains on select routes as well as blending of a small fraction of hydrogen in city gas networks. It is also focusing on manufacturing green ammonia using green hydrogen and on green hydrogen microgrids in the power sector. In line with this, it is planning a green hydrogen microgrid in a village in Ladakh. The company plans to run five buses on the intra-city routes of Leh and Ladakh and another five buses on the intercity Delhi-Jaipur and Delhi-Agra routes.
Another PSU, Indian Oil Corporation Limited is working to improve hydrogen production, storage and infrastructure facilities in the country. In October 2020, it launched 50 buses fuelled by its patented hydrogen-spiked compressed natural gas on a pilot basis in New Delhi. Further, in November 2020, the company signed an MoU with the Indian Institute of Science, Bengaluru, for the development of biomass gasification-based hydrogen production technology.
Since green hydrogen is still an emerging technology, a lot of development is taking place at the research level as well. In this respect, the National Institute of Solar Energy commissioned a hydrogen production-cum-storage and dispensing facility powered by a 120 kWp solar system in 2014. This facility has been used for field trials of hydrogen-diesel dual-fuel vehicles manufactured by Mahindra & Mahindra. Another research facility, The Energy and Resources Institute (TERI), has recently signed an MoU with Greenstat Hydrogen India Private Limited to accelerate the deployment of hydrogen-based technologies in India. As per the MoU, a Norwegian Centre of Excellence on Hydrogen will be established in India to support the growth of hydrogen infrastructure. Further, Intel has set up a MW-scale fuel cell-based power generation unit in Bengaluru. Meanwhile, IIT Delhi and Banaras Hindu University have developed a small-capacity ICE-based genset that uses hydrogen.
Recently, Ireland’s Fusion Fuel Green signed an MoU with India’s BGR Energy to set up a green hydrogen production demonstrator plant. The plant will come up in Cuddalore, Tamil Nadu in the second half of 2021. Following the setting up of the demonstrator plant, there are plans to co-develop larger-scale projects in the region.
The India Energy Storage Alliance (IESA) has launched the Mobility and Infrastructure with Green Hydrogen Technology (MIGHT) initiative to explore potential opportunities for green energy acceleration and adoption of clean transportation in India. Through MIGHT, the IESA aims to identify and remove any barriers in green hydrogen adoption and work on building a technology innovation ecosystem.
Emerging ecosystem
With the series of developments taking place in the green hydrogen space and a national hydrogen road map to be launched soon, a well-defined ecosystem is likely to emerge in the near future. This ecosystem will broadly comprise five key segments: production, storage, stationary power generation, mobility, and industrial use cases.
Green hydrogen will be produced using electrolysers that can be polymer electrolyte membrane (PEM), alkaline fuel cell (AFC) or solid oxide electrolyser cell (SOEC), powered by renewable energy. The hydrogen supply chain will require next-generation technologies for compact, safe and cost-effective storage of hydrogen. Moreover, stationary fuel cells will be used for distributed power generation for industrial and domestic applications. Adequate infrastructure will be needed for distributing hydrogen through land, air and sea routes. Finally, green hydrogen will be used for addressing industrial needs across fertiliser, food processing, steel and cement manufacturing, chemicals and other industries.
In terms of market size, the demand for hydrogen in India today is around 6 million tonnes per annum, contributed mainly by refineries and the fertiliser industry. There is a distributed demand from industries such as chemicals and pharmaceuticals, as well as an upcoming latent demand from the mobility and power sectors, which will gain traction in a few years. Hydrogen production is more centralised than distributed, and hydrogen is almost completely transported in gaseous form using metal cylinders and tanks. Although a small percentage of hydrogen is transported via pipelines, the bulk is distributed through roadways using trucks.
While hydrogen is produced and used by large captive consumers in small quantities, the bulk of it is sold to large- and medium size customers directly from centralised production units. A small share is also sold to small customers through dealers and aggregators, who source hydrogen from various companies.
There are various other emerging business models that are being tried to test their scalability and economic viability, including franchise networks, long-term subscriptions and low-cost, high-volume contracts.
In this respect, a recent report by TERI, titled “The Potential Role of Hydrogen in India”, identifies various sectors where direct electrification is not possible and which need to be targeted for greater hydrogen uptake. First and foremost, hydrogen can fuel long distance heavy transport, where battery electric vehicles may not be competitive. Second, hydrogen can start competing with fossil fuels in certain industrial applications by 2030. Third, hydrogen could provide seasonal storage in the power sector to help address the intermittency issues of variable renewables such as solar and wind when their share in the energy mix becomes quite large.
TERI’s report goes on to estimate that hydrogen demand in India could grow fivefold by 2050, driven mainly by industrial applications. Over time, falling renewable energy prices and electrolyser costs would make green hydrogen competitive with fossil fuel-based hydrogen. In addition, the increasing emphasis on green hydrogen production would require significant renewable energy capacities, and this would further decarbonise the country’s power sector.
Techno-commercial landscape
Selecting the most efficient electrolyser technology for producing green hydrogen based on cost, efficiency and the carbon footprint is critical. PEMs and AFCs are already commercial. While alkaline electrolysers have the lowest cost of installation, PEM electrolysers have a much smaller footprint, and higher current density and output pressure. Meanwhile, SOEC has the highest electrical efficiency.
Most of the hydrogen produced today is through steam methane reforming and is, therefore, not green; a very small share comes from the electrolysis of water. The key reason for this is the higher production costs of the latter. According to market estimates, the current production cost of hydrogen, including carbon capture and storage, is roughly $3 per kg while that of green hydrogen using PEM is approximately $6 per kg. Thus, the cost of green hydrogen production is a major limiting factor in its uptake. This, along with the logistics costs, makes it quite expensive. In many parts of the world such as the US (California), Japan and some Scandinavian countries, distributed generation via electrolysers is carried out at hydrogen fuelling stations to save on fuel transportation costs.
That said, according to estimates by IHS Markit, green hydrogen production costs have decreased by 45 per cent between 2015 and 2020 globally. Average production costs using offshore wind power in Germany, onshore wind in the UK and solar PV in Spain have been considered in these estimates. A further decrease of 26 per cent is likely between 2020 and 2025 as well as between 2025 and 2030. The projections take into consideration a year-on-year increase in PEM electrolyser capacity – from a mere 5 MW in 2015 to 10 MW in 2020, 20 MW in 2025 and 100 MW in 2030. Hence, technology advancements are expected to not only lower prices but also expand scale.
The increase in project scale is evident from the global experience. For instance, in January 2021, Air Liquide in Canada commissioned the world’s first 20 MW capacity PEM unit. This represents a doubling in capacity in just one year from the installation of a 10 MW project in Fukushima, Japan, in February 2020. Further, in January 2021, Vattenfall, MHI and Shell announced a 100 MW PEM unit in Hamburg, to be commissioned in 2025.
The rapid decline in global green hydrogen production costs and technology prices is expected to be reflected in India as well, especially with the recent spate of project announcements. However, the country needs to quickly jump on to the technology bandwagon and promote local manufacturing of electrolysers so as to keep costs down. Further, incentives for electrolyser manufacturing need to be formulated in order to attract technology providers to the Indian market.
The way forward
Although green hydrogen is still at a nascent stage and will take some time to become commercially viable, it does have a lot of scope and potential in India. Solar power prices have reached new lows, which is an added advantage for the green hydrogen industry. Moreover, electrolyser costs for green hydrogen are falling rapidly, which makes India suitably placed to seize this massive opportunity and capitalise on the various benefits offered. Significant R&D is going on to improve electrolyser design and efficiency, and India should be proactive in promoting its domestic manufacturing.
Along with large-scale manufacturing, enabling government policies and business models need to be formulated to accelerate the adoption of green hydrogen in India. The timely adoption of these will determine when green hydrogen becomes commercially viable in the country for wide-scale application in transport, energy storage, power generation and other industries. The focus needs to be on PPPs and collaboration between governments and industries, as well as among various sectors. Further, adequate and timely incentives should be introduced to enable a shift from the research and pilot phases to commercialisation. Standardisation of technology parameters, safety measures and transport norms is important. India can learn several lessons from countries that already have a significant hydrogen ecosystem and formulate policies based on international benchmarks.
Much before the recent budget announcement, in 2006, the government had released another National Hydrogen Energy Roadmap to facilitate the adoption of hydrogen energy. It had aimed to establish 1 GW of hydrogen-based energy by 2020. However, the country is nowhere close to achieving that target.
It is hoped that the new mission will give a fresh impetus to this sector and help establish a green hydrogen economy. Falling costs, collaborations and tie-ups between government and private players, as well as enabling policies and adequate incentives are the way forward. The country has a tremendous opportunity to emerge as a market leader in the green hydrogen space, which will also give a big boost to its renewable energy growth story.
By Khushboo Goyal
