Views of Narendra Nath Veluri: Kerala to establish itself as a green hydrogen hub

Kerala aspires to become net carbon neutral by 2050 and 100 per cent renewable energy-reliant by 2040. It is a front runner in green hydrogen adoption and has already kick-started international partnerships, research and pilot projects on green hydrogen across various sectors. At the fifth edition of the “Green Hydrogen in India” conference organised by Renewable Watch, Narendra Nath Veluri, chief executive officer, Agency for New and Renewable Energy Research and Technology (ANERT), expressed his views on the emerging trends and developments in the green hydrogen segment in Kerala. He discussed the potential avenues for development, global partnerships, key incentives offered by the state and the outlook for green hydrogen. Edited excerpts…

It is estimated that Kerala has 8,600 MW of renewable energy potential, but at present only about 10 per cent of this is being utilised. The Kerala State El­ectricity Board (KSEB) and ANERT have proposed to achieve 33 GW of installed clean energy capacity over the next five years (2022-27). Kerala possesses a unique enabling eco­system to establish it­self as a global gr­e­en hydrogen hub, given its ideal location for green hydrogen production. High rainfall, solar insolation, a sound wind potential as well as the pr­e­sence of water bodies for floating solar po­wer generation are key advantages offered by the state.

As a green hydrogen hub, Kerala can ser­ve the mobility, refineries, fertiliser and shi­p­ping sectors as well as become a strategic export hub through a variety of interventions such as transport, renewable po­wer generation and green shipping using ammonia and liquid hydrogen. Given the presence of an enabling geographical, economic and policy environment, Kerala is expected to become an export hub for green hydrogen. With major ports in Viz­hinjam, Kochi, Beypore and Azhikkal connected by seamless inland waterways in the west coast canal running from Kova­lam to Bekal, the state also possesses the required factors to become India’s transshipment hub.

Key demand-pull factors in the state include refineries where hydrogen can be utilised for the desulphurisation of products such as diesel and petrol. Production of ammonia, a compound made of nitrogen and hydrogen, is extensively used in the fertiliser and chemical industries, such as for nitrogen-based (urea) and complex fertilisers like di-ammonium phosphate. Moreover, there is immense potential for the use of ammonia as a hydrogen carrier and fuel in shipping. Hydrogen is also the main feedstock in the production of methanol and is currently produced from natural gas in the country. Methanol is primarily used to produce various chemicals and solvents, as fuel for transport in the form of various blends, as marine fuel, and in cooking. Thus, the use of green hy­drogen in methanol production is likely to be another key driver. The evolution of cl­ean transport would also facilitate greater adoption of green hydrogen given the state’s demand for 30 kg of hydrogen per day per bus/truck. Kerala has set a target of introducing 3,000 buses, 1,000 trucks and 100 boats powered by hydrogen internal combustion engines, fuel cells and methanol. Personal rapid transit po­ds have been planned for 10 cities to function as the feeder network for the Kerala Rail Development Corpora­tion (K-Rail) and for last-mile connectivity. Ad­ditionally, an important use case for hy­drogen exists in its blending with natural gas and LPG. Finally, hydrogen-power is another way to provide storage and flexibility using fuel cells.

Key incentives proposed

The Kerala Draft Green Hydrogen Policy, 2023 has introduced several features to in­centivise the uptake of green hydrogen. These include:

• Open access: Green hydrogen/Green ammonia plants will be granted open access for sourcing renewable energy within 15 days of receipt of an application co­mplete in all respects.
• Exemption from charges: The policy proposes a 50 per cent exemption from wheeling charges, a 50 per cent ex­emp­tion from intra-state transmission charges and a 100 per cent exemption from cross-subsidy surcharge.
• Banking: It shall be permitted for a period of 30 days for the renewable energy used in making green hydrogen/green ammonia.
• Connectivity: Connectivity at the generation end and the green hydrogen/ green ammonia manufacturing end as well as to the  transmission and distribution network shall be granted on priority.
•  RPO compliance: Renewable energy con­sumed for the production of green hydrogen/green ammonia will count towards the renewable  purchase obligations of the consuming entity.
•  Aggregation of green hydrogen dema­nd: In order to achieve competitive pric­es, ANERT may aggregate demand from different sectors and invite consolidated bids for procurement of green hy­dro­g­en/green ammonia through any of the designated implementing agencies.
• Floating solar projects: Plots will be allocated on a long-term lease basis on water bodies, reservoirs, uncultivable farmlands flooded with saline/brackish water, etc. to developers for setting up floating solar power projects.
•  Creation of land bank: Rs 3 billion has been earmarked in the 2023-24 state budget for procuring land along the we­st coast canal waterways and Rs 10 billion has been earmarked for land ac­quisition activities for developing an in­d­ustrial and infrastructure investment corridor around the Vizhinjam interna­tio­nal seaport.
• Viability gap funding/Grant/Equity Su­p­port: Rs 2 billion has been announced in the 2023-24 state budget for setting up green  hydrogen hubs in Kochi and Thi­ru­vananthapuram over the next two years.

Ongoing proposals for global cooperation

Kerala has several proposals in the works to enable it to become a global green hy­drogen hub. These include:

• Kochi Green Hydrogen Hub (KGH2) by IH2A: The proposal envisages potential capital expenditure of $575 million, to build a green hydrogen plant with a ca­pacity of 60 tonnes per day. The plant will include a 150 MW electrolyser and storage infrastructure which would en­able it to achieve gigawatt scale in the long run. The plan focuses on the transport use case in the first phase, aligning with the state government’s plans for zero-emission transport, to power hy­dro­gen-ICE retrofitted bus fleets of 60 buses and build the required infrastructure. In the second phase, industrial de­mand for green hydrogen from refineries, and fertiliser and chemical plants is ex­pected to drive capacity expansion and scale up the KGH2 hub.
• Green hydrogen valleys: The Depart­me­nt of Science and Technology, Mi­nistry of Science and Technology, has invited proposals to set up hydrogen va­lleys under Mission Innovation scheme to demonstrate how the entire value chain of hy­d­ro­gen as an energy vector can be integrated in­to one system. Kerala aspires to develop two green hydrogen valleys in Kochi and Thiruvanan­thapuram.
•  MoU with Port of Rotterdam: The de­partment of ports, government, of Ke­rala, entered into an MoU with Port of Rot­ter­dam in October 2017 the explore the possibility of cooperation in ports, logistics and related projects. The MoU shall be renewed to explore green hy­drogen opportunities.
• Exploring partnership with Hamburg Port Authority to set up a hydrogen hub at Kochi: Hamburg port, known as Germany’s Gateway to the World, is its largest seaport by volume and a pu­blic sector institution. In terms of TEU th­roughput, Hamburg is the third-busiest port in Europe and a potential partnership may result in further streamlining the hydrogen economy of Kerala.
• Exploring possibility of using peat gas for conversion to grey hydrogen or power generation with carbon capture technology: Areas of biogenic gas ac­cumulation at depths of 5 m and 17-22 m at two stu­dy areas of Alappu­z­ha peatlands in so­uth-west India  are being explored.

Outlook

The state has taken a number of initiatives in recent years to become a front runner in the adoption and production of hydrogen.  Travancore Cochin Chemicals (TCC), a pu­blic sector firm, aims to be a major hy­drogen supplier. It has a chlor-alkali unit which generates hydrogen as by-product of the production of caustic soda. Hy­drogen from TCC has been identified as cost-ef­fective enough to meet the need of hydrogen fuel cell buses in the state. The hydrogen ac­quired from TCC will serve both water transport vessels linked to the Kochi metro and public transport vehicles.

Further, the Vytila Mobility Hub will host a major hydrogen dispensing station. Ten feeder hydrogen buses are also planned for the public transit system connecting the Kochi metro. Additionally, CSL has partnered with KPIT Technologies Ltd. to build the country’s first indigenous hydrogen fuel electric vessel. Other than this, BPCL and Air Products are exploring low-carbon hydrogen production at the Kochi refinery.

The state will facilitate green hydrogen hub-related investments in around 1,100 acres of NTPC’s land at the Rajiv Gandhi Combined Cycle Power Plant, Alappu­z­ha, fueled by imported and indigenous naphtha, where NTPC is seeking state assistance for green investment. A 92 MW floating solar power plant has been set up on the lake adjacent to it and will serve as an ideal hub for green hydrogen development.

Kerala plans to roll out a slew of incentives for green hydrogen investors. It has a comprehensive policy on renewable energy and green hydrogen generation. Key incentives and promotions are si­multaneously being formulated. For a certain MW capacity of early-bird investments in green hydrogen and associated renewable po­wer generation in the state, banking facilities and certain relaxations on (such as wheeling charges) shall be provided.

Going forward, the state government will take a leading role in building critical in­frastructure to create a robust hydrogen eco­system and devise new policies from time to time. A centralised hydrogen storage facility will also be developed in Kochi in proximity to major consumption points.