Green hydrogen, which is produced through electrolysis using electricity generated from renewables, is a crucial part of India’s energy transition and decarbonisation plans. It has a zero carbon footprint and can be utilised for the production of fertilisers, refinery processing, steel production, methanol blending in conventional vehicles and direct hydrogen transportation in fuel cell-based vehicles. Recently, the National Hydrogen Mission was announced to support the development of an ecosystem for green hydrogen. Key elements for consideration in this direction are the technologies and associated costs of production for hydrogen. Since hydrogen, especially green hydrogen, is still at a nascent stage in India, it becomes all the more essential to chart out an optimal path for scaling up. This would require creating business interest for manufacturers and ensuring lower production costs to benefit suppliers as well as off-takers.
Driving down costs
The two components contributing to the cost of producing green hydrogen are renewable energy costs and cost of electrolysers. A substantial and continuing reduction in renewable energy costs, as seen over the past few years, will lower the cost of producing green hydrogen. Production costs of electrolysers are also projected to decline as the cumulative installed capacity of electrolysers increases, owing to the learning curve effects. According to KPMG, in the coming years, an exponential drop is expected in the cost of electrolysers, which are already at about $800 per kW, with some Chinese electrolysers costing as low as $400 per kW. Overall, green hydrogen costs are expected to reduce by nearly 50 per cent by 2030. The differential between green hydrogen and grey hydrogen can be expected to be covered over the next 10 years.
In line with the projection trajectory, there is inertia in the large-scale development of hydrogen producing infrastructure, which is expected to bring down costs. Recently, at the International Climate Summit, Reliance Industries announced its intent to help bring down the cost of green hydrogen to under $2 per kg by 2030. The current cost of green hydrogen produced by electrolysis is estimated at around Rs 350 per kg. India’s green hydrogen plan aims to bring it down to nearly half at around 160 per kg (close to the $2 per kg announced by Reliance) by 2029-30.
There is an increasing emphasis on the promotion of manufacturing of local components for renewable energy plants and hydrogen production infrastructure, especially electrolysers. This is in line with the government’s Aatmanirbhar Bharat vision. An electrolyser, in its most basic form, contains a negatively charged cathode, a positively charged anode and a membrane. The entire system also contains pumps, vents, storage tanks, a power supply, separators and other components. Electrolysers can be scaled to meet a variety of input and output ranges. These range in size from small industrial plants installed in shipping containers to large-scale centralised production facilities that can deliver hydrogen by trucks or be connected to pipelines.
Types of electrolysers
There are two types of electrolysers that are commercially available — alkaline and polymer electrolyte membrane (PEM). Other emerging electrolysis technologies, which are still in the development phase, include anion exchange membrane (AEM), solid-oxide electrolyser cell (SOEC), protonic ceramic electrochemical cell (PCEC) and photoelectrochemical (PEC) water splitting. Globally, alkaline electrolysers, which accounted for 61 per cent of installed capacity in 2020, dominate the market, while PEMs have a 31 per cent share. The other emerging varieties of electrolysers form the remaining share.
Alkaline electrolysis is the more established technology, and alkaline electrolysers typically are more affordable. An alkaline electrolyte enables the use of low-cost non-precious metal catalysts, such as nickel, for electrodes, to keep cell capital costs relatively low. However, electrolysers based on this technology have limited operational flexibility (although this is improving), a larger footprint and low output pressure. In recent years, market focus has been on the development of acid electrolytes, which typically use a solid polymer electrolyte and not an aqueous electrolyte, such as sulphuric acid, as this enables a compact and higher efficiency system than an alkaline system.
In a PEM electrolyser, the electrolyte is a solid specialty plastic material called polymeric membrane. PEM electrolysers have a more rapid response to changes in power. Furthermore, PEMs are often seen as a safer option, since the membrane provides a physical barrier between the produced hydrogen and oxygen. In addition to the ability to ramp up or ramp down output rapidly, they can work above capacity for short periods, have a smaller footprint, and deliver hydrogen at a higher output pressure. However, such electrolysers have higher capital costs due to the requirement of more expensive catalyst materials. Even though the technology has entered the commercial stage, it is still not very mature. Decreasing the amount of precious metals (such as platinum and iridium) in PEM catalysts is an area for further research and development moving forward.
Some of the emerging technologies are solid oxide electrolysis (SOE) and AEM electrolysis. SOE uses a solid ceramic material as the electrolyte that selectively conducts negatively charged oxygen ions at elevated temperatures. SOE technology is not commercially available and is not yet mature. Meanwhile, AEM is an emerging option and provides the opportunity to combine the advantages of both electrolysers, to create lower cost polymer membrane electrolyser systems, through low material costs.
Overall, there is a trend towards increasing the size of electrolysers. The average capacity of electrolyser projects has increased from 0.1 MW scale during the 2000s to 1 MW scale in the 2010s. Projects at the 10 MW and 100 MW scale are being planned in multiple regions around the world. Another trend is rising efficiency gains for electrolysers. With the advancement in electrolyser technology, the overall efficiency of systems is increasing. While it is expected that PEM electrolyser efficiency can reach up to 86 per cent by 2030, solid oxide electrolyte-based systems have the highest efficiency, which could go up to 90 per cent in the coming years.
Recent momentum
The strategies for bringing down electrolysis costs include consideration of electrolyser design and construction, increasing technical efficiency as well as reaching economies of scale. Larger module size and advancements in stack manufacturing could result in considerable cost advantages. According to a report by IRENA, increasing the plant size from 1 MW to 20 MW could reduce costs by over a third. Further, economies of scale can be achieved by increasing stack production and automating production in GW-scale manufacturing facilities (gigafactories), leading to a reduction in cost. To bring down costs, domestic gigafactories are being encouraged to manufacture electrolysers.
In addition to the focus on self-reliance under Aatmanirbhar Bharat, there is a growing appeal for international cooperation for hydrogen. To aid domestic manufacturing of electrolysers, the government is planning to extend the production-linked incentive (PLI) scheme. It plans to invite bids for 4 GW of electrolyser capacity in the near future.
Many industry players have expressed interest in developing electrolyser manufacturing units. For instance, Reliance Industries has upcoming electrolyser manufacturing projects. The company is currently developing an electrolyser manufacturing project as part of the Dhirubhai Ambani Green Energy Giga Complex, under development in Jamnagar. While there are plans to create a robust pipeline for electrolyser manufacturing, the execution of projects has already begun. Ohmium international, a renewable energy start-up, announced the launch of its green hydrogen electrolyser factory in Bengaluru. The plant will have an initial manufacturing capacity of 500 MW per year, with plans to scale up the capacity to 2,000 MW. Ohmium’s electrolysers are based on PEM technology.
Outlook
The cost and technology challenges are the key hurdles in the development of the Indian hydrogen manufacturing space. Supporting research and development in the technology space and creating a conducive environment to build economies of scale should be the two-pronged approach to facilitate the segment and overcome the barriers to uptake. Moving forward, as recommended by the Indian Hydrogen Alliance, the focus should be on studying and developing a domestic hydrogen manufacturing and supply chain. Further, there should be a greater understanding of its linkages with renewable and electric vehicle plans, as well as plans for new natural gas pipelines, which could accommodate hydrogen blending, or pure hydrogen in the future.
