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India, the third largest CO₂ emitter in the world, has ambitious plans to build an annual green hydrogen capacity of 25 m tons by 2047 to reduce its dependence on energy imports. While the government is yet to confirm the actual figure, the country’s green hydrogen targets are a part of a strategy for the centenary year of India’s independence.
India’s renewable energy mission
Prime Minister Narendra Modi set the ball rolling when he unveiled the 25-year roadmap for hydrogen development in his address on the country’s 75th Independence Day, August 15, 2022, and announced the National Hydrogen Mission.
“In terms of climate, green hydrogen will help India to take a quantum leap. We must make India a global hub for green hydrogen production and export,” Modi said.
In November 2021, India launched the mission to generate 500 GW of power from non-fossil fuel sources by 2030. However, in August of this year, India dropped this absolute target and gave itself the flexibility to generate 50% of its electricity from non-fossil fuels by then.
“If the demand for power is high, the generation should be high, rather than setting rigid targets,” a government official told the Economic Times.
Green hydrogen is a potential remedy to cut emissions, but there are major challenges in augmenting the technology and making it profitable. Still, it is not certain whether demand growth will occur. Moreover, the fuel may not be the preference for transport and industry.
Need for green hydrogen in India
As the world’s third-largest emitter, India is starved for energy. The country has set a target to achieve carbon neutrality by 2070. A $3.12 tn economy now, the country requires about 1,650 billion units (BU) of energy in fiscal year 2022-23.
According to the Renewable Energy Industry Report by India Brand Equity Foundation, as of April 2022, renewable energy capacity made for 158.12 GW, or 39.43% of the overall installed power capacity in India. And the countries energy demand is expected to reach 15,820 TWh by 2040.
The only alternative to this challenge is to tap green as well as locally available energy sources.
According to the Council for Energy, Environment and Water Research (CEEWR), New Delhi-based climate and energy research firm, to reach the goal of net zero emissions by 2070, India will need 5,630 GW solar capacity, 99% cut in coal usage by 2060 and 90% reduction in consumption of crude oil by 2070.
At the same time, it is essential to produce sufficient green hydrogen to meet 19% of requirements of the industry. CEEWR’s Centre for Energy Finance estimates that the country will need $10 tn in energy investments to achieve this. In addition, $1.5 tn will be needed to create a green hydrogen ecosystem in the industrial sector.
Corporate interest in green hydrogen projects
Prime Minister Modi’s call to make the country self-reliant in energy generation has encouraged the corporate houses in the country to invest in green hydrogen projects. In recent months, Reliance Industries Ltd. (RIL) has already launched several green initiatives with a few deals.
The company plans to set up four mega factories in Jamnagar in western India. It will invest over $75 m to produce energy storage batteries, solar photovoltaic modules, advanced electrolysers and fuel cells.
Reliance New Energy Solar, the company’s renewable subsidiary, has entered a joint venture with Stiesdal A/S, Danish climate change technology company, to develop and manufacture hydrogen electrolysers in Jamnagar. The company is building a $36 bn clean energy business, but analysts at Bernstein Research reckon that RIL will need to gain control of fuel cell technologies to utilise opportunities in hydrogen.
Currently, the cost of producing the green hydrogen is between $2.22 and $4.62 a kilogram in India. However, Reliance chairman Mukesh Ambani said at the International Climate Summit 2021, “India can set an even more aggressive target of achieving under $1 per kg within a decade. This will make India the first country to achieve $1 per 1 kg in one decade – the 1-1-1 target for green hydrogen”. His company is currently assessing new technologies for making electrolyzers to produce low-cost green hydrogen in the country. RIL also plans to bid for any production-linked incentives the government may offer to encourage the technology.
Meanwhile, Gautam Adani’s clean energy company, Adani Green Energy Ltd., plans to develop the largest renewable energy company globally with 45 GW capacity by 2030. The company intends to play a vital role in clean energy business by becoming the largest green hydrogen producer globally. Adani Green Energy Ltd. will spend 80% capital expenditure in green businesses over the next decade.
Solar power producers in India are also eager to utilise the opportunity. Last year, ReNew Power and Larsen & Toubro (L&T) signed a memorandum of understanding to build, execute and operate green hydrogen projects. “The joint venture will enable both the companies to pool knowledge, resources and expertise to make the most of this transition,” ReNew chairman and CEO Sumant Sinha said.
State-run oil marketing companies (OMCs) are also in the fray. Indian Oil Corporation (IOC), the leading OMC, plans to convert a portion of the grey hydrogen produced by it to blue hydrogen. “The company’s Mathura refinery will be converted into a green hydrogen-powered refinery,” IOC chairman and managing director S.M. Vaidya, said. Another OMC, Bharat Petroleum Corporation Ltd. (BPCL), is in the process of floating a tender for a 20 MW electrolyser at the company’s Bina refinery in Madhya Pradesh to build the country’s largest green hydrogen plant.
