Green hydrogen is perhaps the most promising market in the energy space globally at present. Its vast untapped potential and versatile range of applications across transport, power and other industries, as well as rising energy security concerns, are giving this colourless, odourless fuel ample opportunity to grow. India too is a part of this global movement to scale up green hydrogen.
In a short span of time since the announcement of a proposed National Hydrogen Mission in the previous Union Budget address, green hydrogen has come a long way. Several developments have taken place in the past one year at the industry and policy levels to promote growth in this space. Both public and private sector firms have announced various projects and collaborations to explore the green hydrogen potential in various applications. An integrated green ammonia facility has already been commissioned in Rajasthan. Various firms are exploring opportunities in the electrolyser manufacturing and fuel cell space as well.
The government, too, is doing its bit to promote this green alternative fuel. In February 2022, the Ministry of Power introduced the first phase of the green hydrogen policy to encourage the industry to foray into this space. The policy has been largely well-received by the industry, which has been eagerly waiting for policy support to kickstart their plans. In March this year, Union Minister for Road Transport and Highways Nitin Gadkari came to Parliament in a green hydrogen-powered Toyota Mirai car. The move portrayed the minister’s support for green hydrogen and highlighted its potential to become a game-changing fuel, not in the distant future but in the present.
Following the announcement in the Union Budget address in February 2021, the National Hydrogen Mission was formally launched by the prime minister in August 2021. The mission aims to make India a green hydrogen hub and scale up green hydrogen production to 5 million tonnes per annum (mtpa) by 2030.
Six months later, the first phase of the Green Hydrogen Policy was notified on February 17, 2022. The policy has introduced several measures to promote the adoption and production of green hydrogen and green ammonia. Some notable provisions of the policy are a waiver of inter-state transmission system charges for a period of 25 years for projects commissioned before June 2025, banking provisions for unconsumed renewable power, ease in grant of grid connectivity and open access, and single-portal clearances with time-bound addressal. Further, to promote green hydrogen export, bunkers will be allowed near ports for green ammonia storage, with land facilitation being ensured by port authorities. In addition, discoms and producers of green hydrogen and ammonia will be eligible for renewable purchase obligation (RPO) benefits.
The first phase of the policy will certainly give an impetus to the green hydrogen segment and is the first step towards the creation of a well-defined policy framework. However, to create a competitive market for green hydrogen in India, it is vital that the next phase introduces demand-side provisions to facilitate domestic uptake. While the Ministry of New and Renewable Energy has proposed to make it mandatory for industries such as oil refineries and fertilisers to produce or procure green hydrogen as a part of their operations, a formal approval is awaited. According to the proposed policy intervention, the refinery and fertiliser industries will have to use green hydrogen for meeting 10 per cent and 5 per cent of their requirements with effect from 2023-24, rising to 25 per cent and 20 per cent respectively in five years.
Along with demand-related provisions, self-sufficiency needs to be created in green hydrogen production. Thus, it is important to promote domestic manufacturing of electrolysers through incentivisation and also ensure access to low-cost finance for developing the required supply chain capabilities. Finally, as all policy interventions have taken place at the central level, they need to be aligned with different state strategies, especially in the case of transmission, open access, RPO, land procurement and demand provisions, in order to ensure sustainable growth of this emerging but highly attractive market.
Market size and emerging landscape
Green hydrogen is becoming a highly sought-after investment prospect for firms. Various public sector enterprises such as NTPC Limited, Indian Oil Corporation Limited (IOCL), Gas Authority of India Limited (GAIL) and Bharat Petroleum Corporation Limited (BPCL), as well as private companies such as ACME, Reliance, the Adani Group, Hero Future Energies, and others have either already announced projects or indicated their intent to invest in the green hydrogen space. A few tenders have also been launched in the past few months to scale up green hydrogen production. Further, interest has been witnessed in the manufacturing space and many companies have announced plans for electrolyser production.
Oil and gas players: Oil and gas players have been particularly active in the green hydrogen space, as their experience and ready pipeline infrastructure would give them an advantage in hydrogen production, transport and consumption. In April 2022, IOCL, Larsen & Toubro (L&T) and ReNew Power announced the signing of a binding term sheet for the formation of a joint venture company to develop India’s nascent green hydrogen segment. In April 2022, NTPC signed a formal agreement with Gujarat Gas Limited (GGL) for blending green hydrogen in GGL’s piped natural gas at NTPC Kawas. Green hydrogen will be manufactured utilising power generated by NTPC Kawas’ 1 MW floating solar facility.
Prior to this, in November 2021, BPCL announced plans to set up a green hydrogen plant in Madhya Pradesh. It will float a tender for a 20 MW electrolyser to be set up at its refinery in Bina. In the same month, IOCL invited expressions of interest (EoIs) for setting up green hydrogen generation units at two of its refineries – Mathura in Uttar Pradesh and Panipat in Haryana. The plants will have installed capacities of 5,000 tonnes per annum and 2,000 tonnes per annum respectively and will be set up on a build-own-operate basis. Then, in October 2021, GAIL announced its plans to construct a 10 MW green hydrogen production facility to boost its natural gas operations with carbon-free fuel. It has issued a global tender for the procurement of an electrolyser.
Renewable energy developers: Renewable energy developers with large wind and solar portfolios are suitably placed to get into the green hydrogen business, as renewable power projects are a key requisite for producing this fuel. Many large developers have announced their intent to enter this attractive market. ACME has already commissioned a single-location integrated solar power to green ammonia facility at Bikaner in Rajasthan. This is a 5 MW project, which can be scaled up to 10 MW. It can generate 4-5 tonnes of green ammonia per day. With the success of this project, ACME, in August 2021, signed an agreement to set up a 3.5 GW green hydrogen and green ammonia facility in the special economic zone at the Port of Duqm in central Oman. The company signed an agreement with Norway-based Scatec ASA to invest in its Oman project in a 50-50 joint venture to design, develop, build and operate this facility. The first phase of the facility is expected to produce 100,000 tonnes of green ammonia annually, which will be expanded to 1.2 mtpa, with about 3.5 GW of electrolyser capacity, which will be powered by a 5.5 GWp solar PV plant.
Other large projects are also under development. For instance, in January 2022, Hero Future Energies announced a strategic collaboration to develop and build 1,000 MW of green hydrogen production facilities in India, the UK and Europe. Ohmium will be responsible for the facilities’ design, construction, operations and maintenance. Hero Future Energies will be the build-operate-own partner and will generate green energy to power the manufacturing facilities and assume overall asset ownership. In August 2021, JSW Future Energy Limited, a wholly owned subsidiary of JSW Energy Limited, entered into a framework agreement with Australia’s Fortescue Future Industries to collaborate on assessing the potential of green hydrogen and its utilisation in green steel making, hydrogen mobility, green ammonia and other mutually agreed industrial applications in India.
Another large energy player, NTPC Limited has been making significant efforts to scale up green hydrogen production. In December 2021, the company awarded the “Standalone fuel-cell-based microgrid with hydrogen production using electrolyser” project at NTPC Simhadri, Andhra Pradesh, to California-based Bloom Energy. Hydrogen will be produced using an advanced 240 kW solid oxide electrolyser that will be powered by a nearby floating solar installation. The hydrogen generated during daylight hours will be held at high pressure and powered by a 50 kW solid oxide fuel cell. From 5 p.m. to 7 a.m., the system will run on its own. NTPC developed this project configuration in-house.
In August 2021, NTPC Renewable Energy Limited (NTPC REL), NTPC’s fully owned subsidiary, announced a domestic tender to build India’s first green hydrogen fuelling station in Leh, Ladakh. NTPC REL is also building a separate 1.25 MW solar plant in Leh to make the hydrogen fuelling station completely green. Prior to this, a tender was announced for fuel cell buses in Ladakh. In the same month, NTPC invited global EoIs to set up a pilot project for hydrogen blending with natural gas in India’s city gas distribution network. The project will assess the potential and viability of decarbonising India’s natural gas grid.
Electrolyser manufacturers: For India to become a green hydrogen hub, it is important for the country to be self-reliant in terms of supply chains. A reduction in electrolyser costs will also help reduce the overall cost of producing green hydrogen and thereby improve its uptake. Many domestic companies have tied up with established foreign companies to set up electrolyser manufacturing units in India. In February 2022, the Adani Group and Ballard Power Systems joined hands to assess a combined investment in hydrogen fuel cell production in India. In January 2022, L&T signed an MoU with HydrogenPro AS, a company based in Norway, for a JV to manufacture gigawatt-scale alkaline water electrolysers based on HydrogenPro technology for the Indian market and other select regions. Further, in December 2021, BPCL partnered with the Bhabha Atomic Research Centre to scale up alkaline electrolyser technology for the generation of green hydrogen. In the same month, the Greenko Group signed an agreement with John Cockerill, a Belgian manufacturer of alkaline electrolysers, to jointly undertake market initiatives for green hydrogen electrolysers in India. Greenko also plans to build green ammonia export facilities in India that can produce up to 1 mtpa by 2025, requiring roughly 2 GW of electrolyser capacity.
In August 2021, Ohmium launched India’s first green hydrogen electrolyser gigafactory through its Indian subsidiary. The factory is located in Bengaluru. Proton exchange membrane hydrogen electrolysers are being manufactured at this gigafactory. Its initial manufacturing capacity will be 500 MW per year, with a target of scaling it up to 2 GW per year. In November 2021, Ohmium sent its first electrolyser unit from India to the US through its Indian subsidiary. Ohmium produced the electrolyser at its Bengaluru plant, which is India’s first green hydrogen electrolyser gigafactory.
Industry major Reliance Industries too is planning to build four gigafactories in Gujarat, including an electrolyser factory and a unit for fuel cell production. It will also generate 400,000 tonnes of hydrogen through the use of about 3 GW of solar energy at its proposed electrolyser gigafactory.
India has a target to produce 5 mtpa of green hydrogen by 2030. According to analysis carried out by Renewable Watch Research, the required electrolyser capacity is expected to be 30 GW and the required renewable power capacity is expected to be 60 GW. To achieve these targets, complementary policy incentives will be needed to bring down the cost of large-scale green hydrogen and bridge the gap between fossil fuel-based hydrogen and green hydrogen. Further, uptake will have to be supported by finance from leading lenders and investors.
While these developments are encouraging, a lot still needs to be done to promote large-scale uptake of green hydrogen in India. The positive factor is that countries across the world are at a similar level of development, giving India ample opportunity to emerge as a leader in this space.
By Khushboo Goyal