Deepak Yadav, programme lead, CEEW, ET EnergyWorld

New Delhi: Most consumers of green hydrogen are reluctant for bulk consumption of green hydrogen due to high prices, said Deepak Yadav, programme lead, Council on Energy, Environment and Water, in an exclusive interview with ETEnergyWorld. Edited excerpts:

What is the current state of India’s green hydrogen industry? Do you think we are doing enough to boost its growth?

India’s green hydrogen industry rests on four pillars – Government, Original Equipment Manufacturers (OEMs), green hydrogen (GH2) suppliers and end consumers. Across all these pillars, the domestic GH2 industry is still a work in progress. After the central and state-level policies, ecosystem development will be a prerequisite for scaling up the green hydrogen economy. Therefore, the government is now creating the ecosystem which includes development of safety standards, defining green hydrogen, establishing the governance structure for green hydrogen and derivatives and single window clearance for green hydrogen projects. The domestic manufacturing industry is also developing. A few manufacturers have set shops while many electrolyser gigafactories are in the pipeline. In India, ensuring the indigenisation of electrolysers is a challenge. A few companies are importing stack and assembling in India which would be far from ideal. However, the recently released PLI scheme (SIGHT 1) on electrolyser manufacturing will address these challenges and ensure that India benefits from the green hydrogen economy.

Green hydrogen suppliers are setting pilots in India and exploring export markets. However, the export market is still warming up and it will take some time to see large-scale export projects in India. A few domestic suppliers have also made plans to set green hydrogen/ammonia export hubs in the middle east and even North African countries to benefit from proximity to European markets. However, most of these projects are yet to materialise into offtake agreements. The challenge lies with the end consumers. There is understandably a lack of intent to uptake large volumes of GH2 due to higher prices. Therefore, the demand market will only grow after the green hydrogen tenders for bulk procurement are out. Incentives on green hydrogen consumption provided by SIGHT 2 will help mitigate the effect of higher cost of green hydrogen. However, it will at least be another year before large scale projects start implementing to meet the industrial demand.With so much work-in-progress across segments, do you think Green Hydrogen will become mainstream in the next decade or so?

Within the next decade, green hydrogen could become mainstream and a competitive market like wind and solar today. It has the potential to become a multibillion dollar industry and provide employment to millions globally. While electrolyser technology and manufacturing remains esoteric today, it could become a mass manufacturing moment in an assembly line and will also be a very competitive market globally. Green hydrogen and derivatives like ammonia will occupy a significant portion of the global trade in energy. New technologies like solid oxide electrolysers and anion exchange membrane (AEM) will become commercial. We also expect that with the economy of scale, the price of green hydrogen will reduce, which will unlock new demand in steel, synthetic chemicals like methanol and olefins, synthetic fuels like sustainable aviation fuels (SAF) and green ammonia/methanol in the shipping industry. However, the growth of hydrogen in new sectors will significantly depend on the decrease in the cost of green hydrogen and willingness to pay a premium in a few cases.

What are the top three factors that will be the key to unlocking India’s green hydrogen potential?

Demand generation through guaranteed offtake agreements will be the key to unlock India’s green hydrogen potential and achieve price competitiveness. Most consumers of green hydrogen are reluctant for bulk consumption of green hydrogen due to high prices. As evident from the learnings in the solar industry, the cost of green hydrogen will only reduce with the economy of scale. The second aspect is exports. India has one of the lowest RE tariffs in the world. However, the solar and wind availability in India is not as good as other competing countries like Chile or Australia and the cost of finance is significantly higher than developed countries. While the cost of RE is already optimised due to a competitive domestic market and RE availability cannot be changed, there is a need for innovative financing models to make India cost competitive. Finally, financing and de-risking green hydrogen projects would be critical to the success of the industry. In the early phase, given the technological uncertainty, the cost of finance will be high. Therefore, bringing large investments at low cost would significantly reduce the cost of producing green hydrogen and unlock new opportunities for the fuel.

For the successful integration of any new technology like Green Hydrogen, timely and quality R&D is the key. Where does India stand on that front?

The academic and research institutes in India have been pursuing hydrogen related R&D for decades. The national hydrogen energy roadmap released in 2005 lists these R&D projects. In India, R&D has been happening across the green hydrogen value chain – production, storage, transport and use. A few research labs have demonstrated electrolysers on laboratory scale that can be taken to commercial scale by industry. However, the commercialisation and uptake of indigenous technologies will depend on their performance and will be benchmarked against technologies offered by foreign OEMs.

In the academic circles, while there are a few dedicated centres for research on hydrogen, there are mostly isolated R&D efforts according to the interest of academicians. A significant share of R&D is in areas that might not have commercial viability today and long term viability remains unclear. It is now important to build on the indigenous research capabilities and work towards the goals stated in the National Green Hydrogen Mission (NGHM) by bringing all green hydrogen related R&D under one umbrella. Policy makers can identify priority areas for R&D and academic institutes and laboratories should focus on solving for research in those areas. The synergy between policy makers and research institutes will ensure better utilisation of Rs 400 crore allocated for R&D under NGHM. The government is already working on these aspects and the introduction of the national research foundation bill will support the domestic R&D institutions to work in this direction.

A lot is being talked about green hydrogen, its derivatives, supply chains, bringing down production costs, etc, but is there any major aspect that you think is being missed out or discussed less which could play an important role?

Demand generation and ecosystem development will be critical to the success of NGHM. Pull is always easier than push. The green hydrogen industry has all the supply side push necessary for the sector to grow. However, as of now, the demand side pull is missing. Industry confidence can grow if they are shown a guaranteed offtake trajectory till 2030 by clearly mentioning the annual uptake volumes across various end users. Once that is established, the sector will automatically grow and become a very competitive market. Having mentioned that, the government has already planned for demand generation and armed itself with the energy conservation act (amendment) bill that was passed in parliament. The second aspect is ecosystem development that we have already discussed above.

Many nations have made policy announcements to facilitate and boost the green hydrogen sector. What lessons can India take from it?

According to a CEEW study, at least 38 countries and the European Union (EU) have announced or are developing policies for green hydrogen. Amongst all countries that have announced green hydrogen production targets, India has the third highest target after the EU (10 MT import and 10 MT production) and the US (10 MT). Therefore, other countries can learn from India on setting aggressive targets for GH2 production. India can also learn from other countries in terms of providing support for green hydrogen development. A CEEW study indicates that countries like Japan and the United States have announced higher support for developing a green hydrogen economy in their country. Exports are a big opportunity for India. Countries like Australia are signing bilateral agreements with potential importing countries and positioning themselves as exporters of clean fuels. There is a need for rules-based architecture to secure supply and demand of green hydrogen by governing technology development, production, trade and transport, storage, and use. India can leverage the G20 presidency to develop a rules-based architecture to govern the green hydrogen ecosystem globally.

  • Published On Jul 3, 2023 at 06:11 AM IST

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