The Next Big Opportunity

Prospects for domestic manufacturing of electrolysers

Derek Michael Shah, Senior Vice-President & Head, Green Energy Business, Larsen & Toubro Limited

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.

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