Green hydrogen is emerging as the next mega industry in the green energy space. Hydrogen is both an energy carrier and a feedstock. It is thus considered a key vector in the decarbonisation of the hard-to-abate energy and chemical sectors. Apart from decarbonisation, hydrogen plays a key role in energy self-reliance and reduction of import bills for many oil and gas importing countries, including India. Thus, over 50 countries have announced or are working on a national hydrogen policy roadmap.
Green hydrogen has the potential to play a vital role in India’s vision for decarbonising the economy, reducing its import bills and promoting energy self-reliance. Prime Minister Narendra Modi announced the National Green Hydrogen Mission on August 15, 2021, to boost the hydrogen economy in India.
At the core of the green hydrogen value chain lie electrolysers. Electrolysers produce hydrogen using electricity and water. With the growing demand for green hydrogen across the world, the demand for electrolysers has grown exponentially in just two years. As per the International Energy Agency (IEA), by October 2021, the announced electrolyser project pipeline had reached over 260 GW globally. The Indian market potential is anticipated to grow to 30 GW, with an annual demand of 7-8 GW by 2030. However, there are only a few electrolyser OEMs with established technologies and large production facilities, resulting in a huge demand-supply gap globally. In India, the gap is more prominent as there have been hardly any fully functional manufacturing facilities and suppliers until recently. This provides ample opportunities for India to become an electrolyser manufacturing hub, to not only cater to domestic demand but also export to the global market. The viability of green hydrogen depends significantly on the energy efficiency, reliability and cost of electrolysers. To address this, a focus on two segments is necessary. One is the scale-up of domestic manufacturing of electrolysers and the other is research and development of technology. The primary focus should be scaling up production of available technologies to ensure supply and reduce the cost of electrolysers. Two major types of electrolyser technologies – alkaline electrolysers and proton exchange membrane (PEM) electrolysers – have matured enough for scaled manufacturing today, while technologies such as solid-oxide and anion exchange membrane are being developed.
Speaking of domestic manufacturing, India and Indian organisations have the required state-of-the-art facilities and the right skill set to scale up electrolyser production, making it an attractive manufacturing hub for global players with promising electrolyser technologies. Incentives from the government to create demand for green hydrogen through mandates and to promote manufacturing in India for global markets, such as production-linked incentives, would give a boost to the industry.
Electrolysers have three major subsections – stack, power electronics and balance of stack. Power electronics and stack determine the performance of the electrolysers and contribute significantly to their cost. The heart of an electrolyser, the stack consists of high-value niche components such as membranes, catalyst-coated electrodes and diaphragms. Manufacturing and supply of these crucial components are limited and confined to few geographies today and is practically non-existent in India. Thus, to truly realise the cost reduction potential and to create value in the manufacturing space, India should look at end-to-end manufacturing, from subcomponents of electrolysers such as membranes and electrodes to full electrolyser modules. The policy incentives should facilitate the creation of an end-to-end electrolyser manufacturing ecosystem and domestic supply chain of such critical high-value subcomponents.
While scaling-up production of developed technology should be the first step, research to improvise the available technologies, such as alkaline and PEM, to increase efficiency, improve reliability and reduce material costs is equally important. Along with this, fundamental research to develop new and disruptive technologies is of paramount importance for India to emerge as a true leader in the emerging green hydrogen industry.
We have another big opportunity in front of us. Learning from the lessons of the solar and semiconductor boom period, India should position itself to seize this emerging opportunity with the right impetus from the government and a synced response from the industry. On these lines, taking the nation’s green energy goals and needs into cognisance, Larsen & Toubro is positioning itself to set up gigafactories for electrolysers and to build, own and operate green hydrogen and ammonia assets together with its partners.