By Prasad Ashok Thakur, Alumnus, IIT Bombay and IIM Ahmedabad; and Labanya Prakash Jena, Senior Manager and Head, Centre for Sustainable Finance, Climate Policy Initiative
In the context of India’s aim to achieve energy independence by 2047 and net-zero by 2070, green hydrogen is increasingly gaining prominence. With an ambition to cater to global and domestic green hydrogen needs, the country aims to manufacture 5 million tons per annum by 2030. It has launched a National Green Hydrogen Mission (NGHM) to bridge the gap between the concept and commissioning of its green hydrogen projects.
Though the green hydrogen ecosystem is in its nascent stages, it is turbocharged by several initiatives from the supply and demand sides. The government declared a funding outlay of approximately $2.25 billion. Out of which the government announced in June 2023 to allocate approximately $1.6 billion for green hydrogen production and approximately $0.5 billion for domestic manufacturing of electrolyser – a key component of the green hydrogen supply chain. Prominent among them are production-linked incentives (PLI), waiver of inter-state transmission system (ISTS) charges for green hydrogen manufacturing, and commitment of facilitation of its uptake in sectors like refining, steel, shipping, fertilizers, road/rail mobility and city gas distribution.
Since the target is ambitious India needs its governments, corporates, start-ups, and academia to work in tandem to enable this energy transformation. However, the development of a fully integrated, user-friendly, and cost-effective value chain entails the creation of a future ready green hydrogen delivery and storage infrastructure.
Understanding green hydrogen delivery: Connecting supply with demand
Hydrogen is the lightest element. Its molecule has low volumetric energy density. To transport large quantities of green hydrogen, it must be either pressurised or liquefied. Due to these reasons, creating green hydrogen delivery networks costs more than conventional fuels while resulting in some safety challenges. In gaseous form, after passing through reciprocating/rotary/ionic/centrifugal compressors, it is transported in tube trailers and pipelines. Presently, India’s existing hydrogen delivery infrastructure has limited and specialised commercial deployment; refining, fertilizers, and metals manufacturing sectors serving as its core custodians.
As envisaged in the NGHM, delivery of Green Hydrogen from production or storage sites to their points of consumption at scale, in a safe and cost-effective manner will emerge as a critical infrastructure requirement in the near future. Hence, the development of new technologies like chemistry-based molecule carriers for high-density green hydrogen transport is the need of the hour. Here, some emerging solutions include metal hydrides, carbon nanostructures, and reversible hydrocarbons. The infrastructure gap that must be bridged includes fibre-reinforced polymer pipelines (FRP) networks for catering to large and stable demand centers. Other facilities include liquefaction equipment, cryogenic liquid tanker trucks, vehicle-mounted and ground mounted cascades, high-capacity compressors, and specialised dispensers working in tandem with contaminant detectors, purification technologies, and smart meters. To start with, such capabilities can support large-scale green hydrogen uptake in centers like industrial complexes, electricity generation assets, city-based cooking-gas distribution hubs, and retail outlets for mobility sectors. Some intangible enablers that can fortify the exponential uptake trajectories include planning region and application specific green hydrogen expansion roadmaps empowered by real-time digital matchmaking solutions. Such an approach can streamline supply and demand dynamics for optimum utilisation of the delivery infrastructure.
Managing risks: key to unlock finance for green hydrogen delivery
Green hydrogen projects often encounter challenging financing conditions from financing entities because of the many real and perceived risks associated with them. The situation is further aggravated as presently, there are not enough numbers of commercial-scale operational projects from where financers can derive confidence and experience. Moreover, investors are adopting a ‘wait and watch’ approach as the requirements of capital expenditure are relatively large vis-à-vis the real and perceived risks. Therefore, they may consider other green projects in solar/wind/bioenergy, electrification of industrial processes, and energy efficiency as relatively better investment opportunities.
In the context of green hydrogen projects, there are risks from both revenue and cost of operation. The uncertain volume of supply emanating from the lack of certainty on offtake duration and volume, and price-points in the context of cyclical business environments make delivery infrastructure business highly risky. Besides, the uncertainty in the maturity of technology, lack of predictable maintenance and operations expenditures make the cost of operation less predictable. To turn the tables in favor of green hydrogen projects, the above risks must be reduced to a level that can attract private financiers to invest in green hydrogen projects.
As elaborated in the NGHM, an initial stimulus from a few major public and private sector entities in the country may substantially scale up the interest in deploying a large number of green hydrogen projects in the near future. This is expected to provide a fillip to all constituent elements of its value chain. Building on the foundations of indigenous innovation and economies of scale in design, manufacturing, and customer services, a virtuous cycle of cost-competitive and high-quality green hydrogen offerings is expected to be set into motion.
Catering to demand: Nationally and globally
The key goals of the upcoming green hydrogen delivery ecosystem include the reduction of costs, improving energy delivery efficiency, ensuring the purity of green hydrogen, and achieving zero-leakage networks. From a systems perspective, for each green hydrogen application and demand region, fact-based models must be created to assess the trade-offs between green hydrogen manufacturing options and its last-mile delivery opportunities. such an approach is in line with NGHM and the creation of green hydrogen hubs/valleys/clusters that can pool-in resources and contribute towards building a national green hydrogen delivery masterplan. The federal structure of our country can be leveraged to create inter-state networks that can lead to the creation of a vibrant national grid. Such successful solutions and giga-scale program management experiences can then be shared with other partner countries to help the world embark on a sustainable, rapid, and inclusive growth trajectory.