The global hydrogen demand is expected to increase from 94 million tonnes per annum (mtpa) in 2021 to approximately 120-140 mtpa by 2030 at a compound annual growth rate of 4 per cent, according to KPMG in India statistics. The total hydrogen demand in India is expected to be 7.4 mtpa, 11-12 mtpa and 26-36 mtpa in 2022, 2030 and 2040 respectively. Meanwhile, the total green hydrogen demand in India is expected to be nil, 2.5-4 mtpa, 20-32 mtpa in 2022, 2030 and 2040 respectively. To meet the domestic demand for green hydrogen, 16-25 GW of electrolysers will be required in 2030. And India could export 1-2.5 mtpa of green hydrogen by 2030, depending on the policy, ecosystem and cost evolution.
In line with the expected increase in demand for domestic use as well as export, the green hydrogen segment and its derivatives have received a major fillip from the government and the industry. Several policies, pilot projects, industry collaborations, targets and plans have been announced. Within the industry, both private and public players have been proactive, gaining experience while working on pilot projects and sharing suggestions with stakeholders. A look at the work done by key players in this space in the past year and their future plans.
Private player plans
Renewable energy IPPs and energy majors have been at the forefront of green hydrogen uptake, announcing a number of large projects in both green hydrogen project development as well as electrolyser manufacturing. Some of the key announcements are as below:
- The ACME Group signed an MoU with the Karnataka government to develop an integrated solar to green hydrogen/ green ammonia facility worth approximately Rs 520 billion. The facility will produce 1.2 mtpa of green hydrogen by 2027. The company has been a forerunner in this space and has commissioned a commercial pilot of an integrated green hydrogen and green ammonia production facility in Bikaner, Rajasthan.
- Greenko is implementing a 200 tonne per day pilot green ammonia project in Himachal Pradesh. It has also formed a joint venture (JV) with Belgian company John Cockerill, which manufactures electrolysers and plans to set up a 2 GW alkaline electrolyser manufacturing unit. They plan to secure some part of the supply chain for producing green hydrogen. Going forward, the company plans to set up a 1 million tonne (mt) green ammonia project on the east coast of the country, primarily for export. It is also planning a JV with the Oil and Natural Gas Corporation for another 1 mt green ammonia project.
- ReNew Power has formed a JV company with Indian Oil Corporation Limited and Larsen & Toubro to develop green hydrogen. It has also signed a framework agreement with Egypt for building a green hydrogen plant in the Suez Canal Economic Zone, which will entail an investment of $8 billion. This project will be implemented in phases. In the pilot phase, 20,000 tonnes per annum (tpa) of green hydrogen and derivatives will produced. The next phase (Phase I) will entail the production of 200,000 tpa of green hydrogen and derivatives, taking the project’s total green hydrogen production capacity to 220,000 tpa. The pilot phase project is scheduled to be completed in 2026.
- Reliance plans to set up four giga-factories that will cover the entire spectrum of renewable energy in India. The first will be an integrated solar PV module factory, the second will be an electrolyser factory for the production of green hydrogen, the third will be a fuel cell factory for converting hydrogen to mobile and stationary power, and the fourth will be an advanced energy storage battery factory. These cover all the products that will be required for a hydrogen economy.
- The Avaada Group has signed an MoU with the Rajasthan government’s Department of Industries and Commerce to set up a green ammonia facility and a renewable energy plant at Kota. It proposes an investment of Rs 400 billion. The group is also planning to buy electrolyser companies in order to cover the entire supply chain.
- Ayana Renewable Power and Greenstat Hydrogen India have signed a joint development agreement for the development of green hydrogen projects in India for the long-term supply of green hydrogen to industrial and commercial users. The pilot project will be set up in Karnataka.
- Hero Future Energies has signed a strategic partnership with Ohmium to develop and build 1,000 MW of green hydrogen production facilities in India, the UK and Europe.
- TotalEnergies has partnered with Adani New Industries Limited (ANIL) for the production and commercialisation of green hydrogen in India. ANIL aims at producing 1 mtpa of green hydrogen by 2030, underpinned by around 30 GW of new renewable generation capacity. ANIL aims to develop a project to produce 1.3 mtpa of urea derived from green hydrogen for the domestic market, to replace current urea imports. Also, it aims to invest $5 billion in a 2 GW electrolyser factory fed by renewable power from a 4 GW solar and wind farm.
Public player plans
Public sector undertakings have also been proactive in the green hydrogen/ green ammonia space. A few key initiatives are listed below:
- NTPC Limited has signed an MoU with Gujarat Alkalies and Chemicals Limited to set up green ammonia and green methanol plants. NTPC Renewable Energy Limited (NTPC REL) issued a notice for invitation of bids to select electrolyser technology providers to participate in green hydrogen tenders. The selected technology providers will be required to support NTPC in bids for various tenders including either 400 MW PEM-based projects or 600 MW non-PEM-based projects. NTPC also signed a formal agreement with Gujarat Gas Limited (GGL) for blending green hydrogen in GGL’s piped natural gas (PNG) network at NTPC Kawas. Green hydrogen will be manufactured utilising power generated at NTPC Kawas’ current 1 MW floating solar facility. This will be mixed with PNG in a predetermined quantity and utilised at the NTPC Kawas township for cooking purposes. According to media reports, the initial percentage of hydrogen blending in PNG will be approximately 5 per cent, which will be gradually increased following successful completion.
- By the end of 2023, GAIL plans to develop one of India’s largest PEM electrolyser-based green hydrogen projects in Guna, Madhya Pradesh. The project will produce 4.3 tonnes of green hydrogen per day (approximately 10 MW capacity) and be mixed in natural gas for supply to industries.
- ONGC has signed an MoU with the Greenko Group to collectively work on determining opportunities in the renewable energy space, including green hydrogen, green ammonia and other green hydrogen derivatives.
- Meanwhile, Indian Oil Corporation Limited targets green hydrogen production of 70,000 tpa by 2030. Oil India Limited plans to develop a small 100 kW electrolyser plant to manufacture green hydrogen at its Jorhat oilfield in Assam.
- Gujarat Industries Power Company Limited issued an expression of interest to set up 5 MW-10 MW of electrolyser capacity for green hydrogen projects and associated facilities in Gujarat.
The way forward
A number of pilot projects are under way in this space. However, they are not expecting returns on their initial small-scale projects, which are being undertaken solely for R&D purposes. The developers are also facing several challenges in undertaking these pilots. With respect to financing, banks are not able to take all the financing risks for the capital-intensive green hydrogen and green ammonia projects.
According to data provided by Rashtriya Chemicals and Fertilizers Limited, the current cost of green ammonia is around 2.5-2.7 times that of indigenously produced grey ammonia. In addition, to produce 1 mt of urea, 0.74 mt of CO2 is required. Overall, higher green ammonia costs and additional costs of CO2 recovery will make the option economically very challenging. Technical issues are also present for stakeholders. Green ammonia projects involve high upfront costs and there is limited requirement of ammonia in complex NPK fertilisers.
The mandate of green ammonia use will further increase the production cost of complex fertilisers. Further, if a mandate is given for green ammonia use, many fertiliser companies would like to start with procuring green ammonia rather than setting up their own infrastructure. Therefore, considering the high cost of green ammonia, financial assistance is needed to make such projects viable and comparable with market prices.
In addition, delayed decisions on key policy matters relating to green hydrogen (Phase II of the Green Hydrogen Policy) are a key challenge for developers as they have to delay the signing of various MoUs. The second phase of the policy is expected to have mandates/obligations in place for green hydrogen consumption. However, the enforcement and compliance of green hydrogen obligations are key. Experience shows there is a lack of compliance with renewable purchase obligations; hence, developers are doubtful that such obligations in the green hydrogen space will be enforced properly. Further, according to the industry, the government should avoid e-reverse auctions initially for green hydrogen projects. They prefer a fixed feed-in tariff.
A key positive is that the government is reportedly planning incentives for the export of green hydrogen and manufacture of electrolysers through the production-linked incentive scheme. In addition, the state-owned oil companies are planning to use abandoned oil wells for storing green hydrogen.
Fertiliser factories and refineries are connected to the gas pipeline. Therefore, green hydrogen blending with natural gas is a low-hanging fruit that can be tapped. However, for this, customer agreements will have to be reworked as the calorific value and efficiency of gas changes.
Overall, the government and the industry have made significant progress in this segment with policy releases, collaborations and initiation of pilot projects. The industry should prepare itself for large-scale commercial projects from next year.