Low solar prices can put India at the helm of the hydrogen sector by 2030
In the race towards clean energy, green hydrogen – or hydrogen produced using renewable energy – is anticipated to be the next big bet. With its high calorific value, versatility in usage and transportation, and wide range of utilisation, green hydrogen potentially holds the promise for a cleaner future.
More than 25 countries have already announced their plans to develop and deploy green hydrogen at scale. In June 2020, Germany released a National Hydrogen Strategy focused on international cooperation and partnerships since the country largely expects to be an energy importer. In July 2020, the European Commission announced a hydrogen strategy for a climate-neutral Europe to generate one metric tonne of green hydrogen by 2024. The commission aims to increase its energy mix contribution from 2% currently to 14% by 2050. In October 2020, Spain announced a Hydrogen Roadmap to achieve carbon neutrality and a 100% renewable electricity system no later than 2050. In December 2020, the Government of Canada also released its Hydrogen Strategy for achieving net-zero emissions by 2050.
India also made its intentions clear by announcing a National Hydrogen Energy Mission (NHEM) by 2021-22.
Unpacking the Green Hydrogen Opportunity for India
Hydrogen is generated through various methods for its industrial applications and is assigned a colour based on the production process. Grey hydrogen is when fossil fuel is used, resulting in carbon emissions. Blue hydrogen is when the carbon produced is captured and not released into the atmosphere. Green hydrogenis generated through the electrolysis of water using renewable energy instead of fossil fuel. This process also leaves behind only oxygen as a residue.
India’s energy consumption is expected to double by 2040 under its current national policy scenario. However, only 18% of the country’s energy needs are for electricity, which can be decarbonised through renewable sources and a big focus for the government. The rest of the energy demand depends on crude, oil, gas, and coal – primarily for industry. Not only are these sources of fuel highly polluting, the majority of its supply is also through imports. This makes them vulnerable to the volatile global markets, threatening the country’s energy sovereignty.
Green hydrogen for these industries presents a high potential for deep decarbonisation. Combined with demand from long-distance freight transport, the demand for green fuel is expected to increase from six metric tonnes (mt) per annum in 2020 to 28 mt per annum by 2050, even though the strategic roadmap to get there is still in the works. With the upcoming National Hydrogen Energy Mission, the industry expectation is that the government will put forth long-term targets with short-term action plans.
Green hydrogen should also be a complementary component to India’s ambitious plan to increase its renewable energy capacityto 450 gigawatts (GW) by 2030 – a five-time jump from current capacity. As energy from solar increases, surplus energy generated during peak hours can be used to scale up the production of green hydrogen. This is also good for the grid that is expected to see a sudden spike in RE. Given the surplus capacity and the anticipated lowered cost of solar energy, the country is well-positioned to be a gamechanger in the hydrogen sector. If the cost of green hydrogen can be reduced to below $2 per kg, green hydrogen will compete with fossil-fuel generated hydrogen by 2030.
Critical Enablers for the Green Hydrogen Market
Early and transformative action through policy push from the government and collaborative action from industry is essential. Five ways to mainstream green hydrogen are:
- Framing a time-bound roadmap and industry standards: Like how the National Solar Mission gave a much-needed push to the sector, the Centre needs to frame a detailed roadmap for the hydrogen sector with time-bound targets for the decade. A staggered transition from grey/blue hydrogen to completely green hydrogen is required. Hence, setting overall ambitious goals for the country and industry specific goals would provide a much-needed impetus to the sector. The Department of Science and Technology also strongly recommends establishing standards for production, storage, and transport to ensure fuel consistency and safety protocols. These standards would be critical for production and deployment at scale.
- Creating demand through mandates: As of now, there are no mandates or incentives for the industry to embrace green hydrogen, and only a few thought-leading companies are experimenting with hydrogen. However, this is set to change soon. Recently, NITI Aayog shared about taking a potential staggered roadmap of focusing first on refineries and fertilisers (in the short term) followed by city-gas distributors and steel (in the medium term) and power and heavy-duty trucks (in the long term). While everyone awaits the NHEM and formal industry targets, it would be critical for the government to provide suitable tax breaks and incentives as an impetus to market movers.
- Pushing electrolyzer market: Availability of electrolyzers is a technological precursor for the green hydrogen agenda. Owing to increased industry and automotive demand, the global hydrogen electrolyzer market is slated to have a 24.6% Compound Annual Growth Rate (CAGR) and is estimated to reach $0.9 billion by 2027 (from $0.2 billion in 2019). This can be enabled by setting targets and developing production-linked-incentive schemes for scaling up the manufacturing of electrolyzers in India.
- Reduction of import solar panels: Production ofgreen hydrogen would have a huge dependence on the availability of renewable energy sources. While solar is the solution for India, there is a huge dependence on China for importing solar panel components – the reason for low solar tariffs in the market today. The demand for Chinese solar panels is expected to grow with the demand for green hydrogen. Therefore, technology alternatives such as Perovskite solar cells (PSCs) as an alternative to silicon cells and bilateral partnerships with other countries need to be explored to reduce import dependence.
A few players are already taking big strides in including green hydrogen in their industrial processes. Reliance has committed to using green hydrogen in their net-zero journey by 2035. Indian Oil Corporation (IOC) has signed a pact with Greenstat Norway for setting up a Centre of Excellence on Hydrogen in India. Several large organisations have also created a coalition India H2 Alliance (IH2A) for commercialising hydrogen technologies.
Carrying the RE momentum
If the past decade was about the rapid growth of solar energy, the next 10 years should be about increasing the country’s green hydrogen supply. The lessons from the solar revolution that began in 2015 should be used for the new fuel. Like in solar, the green hydrogen sector should be encouraged by making it easier for private players to invest, reducing bureaucratic hurdles, streamlining clearances and procedures, and setting up a central agency to coordinate with the different government bodies and private players.
Apart from the lessons in promoting clean fuel, the growth of solar has also made it cheaper for India to produce green hydrogen. This decade can be a turning point for the hydrogen economy if the government and the private sector come together to establish a sustainable demand and supply market by 2030.
Disclaimer: Roselin Minj is the Lead – Partnerships and Pawan Mulukutla is the Director of Electric Mobility at the World Resources Institute India. Views expressed here are personal.