Green hydrogen is set to become a game changer in the global energy landscape. Its versatility means that it can be used across various sectors such as transport, power and industries. Thus, both government agencies and private companies are actively exploring opportunities in this space. To give an impetus to this emerging sector, the Ministry of Power, in February 2022, notified the first phase of the Green Hydrogen/Green Ammonia Policy. The policy is a step towards realising the National Hydrogen Mission to make India a green hydrogen hub, producing 5 million tonnes of green hydrogen per annum by 2030. Meanwhile, the industry awaits the next phase of the policy to drive upward growth. At Renewable Watch’s third conference on “Green Hydrogen in India”, leading developers discussed their plans in the green hydrogen space. They also discussed the incentives required and the key challenges that need to be addressed. Edited excerpts…
Shashank Adlakha, Senior Vice-President, Hydrogen and EV Business, ReNew Power
Green hydrogen is expected to be the most important technology that the world has explored in the last six to nine months, and it promises to be the fuel of the future. Not only in India, but globally, every government is pushing for green hydrogen, especially due to issues on the gas pricing front emerging from the Russia-Ukraine war. Energy security concerns have also created a demand shift towards green hydrogen. There are also supply chain concerns that impact the overall supply of gas and coal. Coal pricing is at its peak, driving up energy prices globally. Every country in Southeast Asia and Europe is looking at green hydrogen as a fuel for the future.
ReNew Power is one of India’s largest independent power producers. In terms of existing and commissioned projects, we are currently approaching 10 GW. In fact, we are quite keen on diversifying to the green hydrogen segment as 70 per cent of the cost of green hydrogen production through electrolysers comes from renewable energy. In addition, ReNew Power has signed a joint venture with Indian Oil Corporation Limited and L&T to develop green hydrogen and its derivative projects in the Indian market.
With its large amount of resources in both wind and solar, India is capable of adopting green hydrogen on a large scale. Over the course of a year, we anticipate a lot of activity in this segment. Furthermore, we are anticipating the release of the second phase of the green hydrogen policy, which will outline the hydrogen obligation for industries such as refineries and fertilisers, as well as fiscal incentives to help reduce the overall cost of green hydrogen production.
The green hydrogen commitments should be designed to jump-start the demand cycle. So, in terms of what the government plans to do, those obligations will be required for the next 10 years, if not till 2035. Apart from the lack of clarity on the banking side of green hydrogen, a key challenge is the slew of GST charges. These charges must be rationalised to zero, or a minimum slab of 5 per cent for both green hydrogen and green ammonia. Furthermore, regulation for dollar PPAs for IIPs in India would help reduce the price. In addition, some kind of a carbon tax could be provided for grey hydrogen to move faster to green hydrogen.
Akshay Bhardwaj, General Manager, Hydrogen and New Business, ACME Cleantech
ACME is one of India’s largest solar IPPs, with a 4.12 GW portfolio, of which 1.8 GW is already operational and the rest is under development in various stages. The company’s journey in the solar space is quite well known. However, now our focus is on diversification. We are one of the first few companies globally to foray into the green hydrogen business. We currently have the world’s first integrated facility that produces green hydrogen and green ammonia, which is located at Bikaner in Rajasthan. This project was commissioned in Dec-ember 2021. At this project, we are producing 5 tonnes per day of green ammonia and 1 tonne per day of green hydrogen.
With this project, we have tried to understand the technology makeup and how it will work efficiently, especially considering the intermittency of renewable power. Thus, power balancing is quite critical for running electrolysers. Moreover, the greater challenge was to integrate the different systems and technologies to produce green ammonia. Although ammonia production technology is quite well established globally and very standardised, it was challenging to piece all these different power systems together in an efficient manner. This project also helped us understand the feasibility of developing a larger-scale project outside India or in India.
We are happy to announce that we are currently developing one of the biggest green ammonia projects globally, with our 50-50 joint venture partner, Norway-based Scatec. This project is coming up at the Duqm Special Economic Zone of Oman and will be capable of producing 1.2 million tonnes of green ammonia per annum. This project has been divided into a couple of phases, with the first phase of 300 tonnes per day capacity expected to be commissioned by the end of next year. Subsequently, work on the larger phase of the remaining capacity will begin and is planned to be finished by the end of 2025 or 2026.
Scaling up of green hydrogen and green ammonia production will largely depend on market demand. It is often discussed whether it will make sense for green hydrogen to be at a commercial scale by 2030 or 2035 or even later, but it is important for the current prices to come down for it to compete with other technologies. Our company is now very close to announcing a long-term green ammonia purchase agreement with one of the largest fertiliser companies globally. This is a big testimony for us as an industry in India and also demonstrates how the country can take leadership positions in this market globally. The market itself is now in a position to support the dynamics of producing green hydrogen or green ammonia at scale, especially with the current global political turmoil. This has given a major fillip to green products, and the movement towards green energy and its various derivatives including green hydrogen and green ammonia.
On the domestic front, policy measures have been announced with respect to grid banking and storage. However, land aggregation will be a herculean task for this industry. Moreover, key ports need to be identified for exports from India. Further, green ammonia and hydrogen purchase obligations should be considered. On the exports side, for India to become a hub, production-linked incentives will be crucial as electrolyser manufacturing needs to be incentivised. In India, the first part of the policy is already in place and we expect the second part to come in soon. The next phase will be critical for us to make India competitive in terms of global markets and make the country emerge as a leader.
Manoj Gupta, Vice-President, Solar and Waste Energy Business, Fortum
Fortum has so far installed roughly 1 GW of solar power in India and has a pipeline of over 800 MW. Looking at the new developments in the clean energy market, we are exploring new segments such as EV charging infrastructure, wind-solar hybrids, storage and bamboo-based biorefineries.
India is heading towards round-the-clock renewable energy demand. Green hydrogen can play a significant role in this regard. Uniper, a subsidiary of Fortum, is developing green hydrogen projects in the European market. Fortum is likely to utilise the technology and experiences in the European market in India as well. In the European market, the focus is primarily on gaseous hydrogen. In India, however, we are yet to determine the type of hydrogen that will be required – liquified or gaseous. Renewable energy players such as Fortum are waiting for the right policies to be announced that promote electrolyser manufacturing and create demand through various incentives. The decision to adopt a particular technology would be taken accordingly. Our investment decisions would largely focus on the long-term demand aspect.
While a policy for green hydrogen export is important, we must recognise the large in-house consumption capacity that India possesses. A policy for domestic consumption is going to play a crucial role and should not be ignored. Another area of concern is that the price range of hydrogen is very high. At present, it costs $4-$7 per kg and is expected to reach $1 per kg in the coming years. The journey to lower the price from $7 to $1 presents several challenges. Furthermore, not only does the price differ for different technologies, but there also exists a variation in prices for the same technologies. Understanding the reasons for this gap and eventually bridging it is indispensable in this journey.
The Indian government has announced a target of 5 million tonnes of green hydrogen generation per year from 2030. However, the targets must be divided in terms of scale as has been done in the case of solar energy targets. It is important to consider the retail market as well. As hydrogen can be utilised for storage, policies should focus on both the retail and industrial markets. Recent events across the world have also highlighted the importance of energy security and the significance of increasing the dependence on green energy. European nations are now revising their targets upwards to boost green energy development. India can also increase its target to 10 million tonnes.
With respect to tenders, as the electrolyser and green hydrogen technology is new and we are entering the market at an initial stage, the government must be liberal in its provisions. At this stage, the government must provide capex support and production-linked incentives for in-house production of green hydrogen and ammonia. The risks associated with electrolysers are also not clearly known. IPPs may not be willing to take this risk without adequate policy support. Moreover, there are different types of hydrogen. While obligations for green hydrogen will range from 10 per cent to 30 per cent for various industries, some amount of grey or blue hydrogen would still be used. It is, thus, important to analyse whether green, blue and grey hydrogen mixing is possible. Despite the challenges, India has the potential to become a leader in green hydrogen production. This can be achieved if the industry and the government come together.
Abhishek Shukla, Director, Strategy and New Initiatives, Azure Power
Azure Power has a total portfolio of 7.4 GW, of which 2.6 GW is operational while the remaining 4.8 GW is at different stages of construction and commissioning. The company is listed on the NYSE.
Green hydrogen is not just a decarbonisation medium, but also helps in broad basing of renewable energy. It helps in increasing the use cases of renewable energy beyond the grid and discoms and takes renewable energy to the doorstep of end-users.
Azure Power is actively observing this space and waiting for the right time when the technology can be leveraged. India already has one-tenth to one-twelfth of the global hydrogen demand due to the sheer size and scale of refineries and fertiliser industries. These industries provide massive potential in India to push green hydrogen.
The European Union seems to have taken the lead in this space due to policy enablers and incentives, but it has only announced a 10 mt green hydrogen target by 2030. In India, the first phase of the policy talks about producing 5 mt per annum, which is quite ambitious. To this end, the policy document is the right step, but we look forward to the second part of the document highlighting certain specifications. To drive demand, the cost must be controlled and the right technology should be promoted.
The first phase of the green hydrogen policy touches upon the right points such as banking. This provision will allow one to optimise green hydrogen production and design the concept to run electrolysers for the maximum amount of time. The intent is right but demand creation incentives must be there. Some quantification and hydrogen purchase obligations must be introduced as a priority in the second part of the policy.
Currently, much of the electrolyser manufacturing happens outside India. To meet the targets mentioned in the first phase of the policy, the equipment for production should ideally be manufactured in India. Tax incentives and duty waivers must be given to bring in those specific technologies in the country.
There is a need for pace-setters such as demand factors and mechanisms for enforceability to incentivise private sector investments. A key issue is that it takes a long time to evaluate technologies, as the commercial readiness of different technologies has still not been established.
India has two objectives – to meet domestic demand and to tap export opportunities. Different sets of incentives will be required to facilitate the export of green hydrogen. In sum, the top priorities in the green hydrogen space are to look at the cost curve and how it can be brought down with specific incentives, and to vouch for technological independence.