By Dr Hemanshu Bhatt, Co-Founder and CTO, InSolare Energy
Green hydrogen’s potential to decarbonise hard-to-abate sectors such as steel, cement, fertilisers and heavy-duty transportation has positioned it as a cornerstone of the global energy transition. India, with its abundant renewable energy resources and ambitious carbon neutrality target by 2070, has placed green hydrogen at the forefront of its energy strategy being implemented through the National Green Hydrogen Mission. The country’s renewable energy landscape plays a crucial role in this initiative. As of 2024, India has 128 GW of installed solar and wind capacity, with a target of reaching 500 GW by 2030. The cost of renewable power in India is among the lowest in the world, and coupled with extensive renewable energy infrastructure, this positions India as a promising global hub for affordable green hydrogen production. However, the economic viability of green hydrogen remains a pressing challenge. At production costs of Rs 350-Rs 450 per kg, green hydrogen struggles to compete with grey hydrogen (Rs 160-Rs 200 per kg) derived from natural gas, which is used throughout the industry.
The economics of green hydrogen production are determined by four primary cost components – renewable electricity costs, electrolyser technology, balance of plant, and transportation and storage costs. Electricity costs account for the largest portion of green hydrogen expenses, highlighting the importance of optimising renewable energy sources and costs. Hybrid renewable energy systems that combine solar and wind can achieve higher capacity utilisation rates, minimising intermittency. For example, pairing a 100 MW electrolyser plant with a solar-wind hybrid renewable energy system can improve the capacity utilisation factor by 50-60 per cent as compared to solar alone, leading to a reduction in hydrogen production costs.
The availability of renewable energy for operating electrolysers at higher capacity utilisation factors (CUFs) plays a crucial role in reducing the levellised cost of hydrogen (LCOH). In the current energy landscape of India, integrating renewable energy sources with energy storage solutions like batteries or pumped hydro is technically feasible. However, it can also result in significant capital cost increases. Therefore, system architecture with a combination of renewable power sources and capacity, battery storage, hydrogen storage and electrolyser capacity must be optimised for each use case to minimise the LCOH. A more practical and cost-effective strategy is to utilise surplus renewable generation through the existing grid infrastructure. However, this will be feasible only with low electrolyser costs.
India’s grid infrastructure, supported by interstate transmission systems (ISTSs), provides a scalable option for sourcing renewable energy supply at low costs. By integrating renewable power into the grid from solar and wind and using it for hydrogen production where needed, electrolysers can achieve higher CUFs, thereby reducing the need for expensive on-site energy storage systems and hydrogen storage and transportation costs. This method not only maximises the use of renewable energy resources but also supports India’s ambitious renewable energy goals, which aim for 500 GW of installed renewable capacity by 2030 in locations most suited for solar and wind generation.The government’s policy framework plays a vital role in enabling the green hydrogen ecosystem. To facilitate this transition, policies need to adapt and evolve. Specifically, regulatory frameworks that support ISTS banking for green hydrogen projects can be transformative. These policies should aim to eliminate or significantly reduce transmission charges for renewable power banking, encouraging green hydrogen producers to leverage the grid to balance supply and demand. Implementing temporary waivers or subsidies on ISTS charges could be a powerful policy tool until the green hydrogen market in India achieves scale and maturity. Similar regulations are also needed for projects connected to the state-level grid.
This strategy is especially important during the initial phases of market development, where high capital costs and limited production volumes create substantial challenges to economic viability. Furthermore, mandating the use of green hydrogen in sectors such as refineries and fertilisers, providing capital subsidies for electrolyser manufacturers, offering operational subsidies for early adopters, and introducing a carbon trading mechanism can help make green hydrogen more competitive with grey hydrogen. Further, improvements in electrolyser technology are crucial. In a recent achievement, InSolare Energy, through its wholly owned subsidiary Suryaashish KA1 Solar Park Private Limited, received a production-linked incentive under the government’s ambitious initiative to enhance electrolyser manufacturing. The company has been allocated a capacity of 10 MW in the competitive Bucket 2B category, which is specifically designated for domestic technology. The plant will utilise proton or anion exchange membrane technology, initially with a capacity of 250 MW, expanding to 1 GW by 2030, by leveraging its global partnerships.
