Electrolyzer PLI to push green hydrogen output
3 min read . Updated: 21 Apr 2022, 01:18 AM IST
Premium- The power ministry and the govt’s policy think tank NITI Aayog are working on the specifics of the scheme, which is likely to be launched by Sept, the people said on condition of anonymity. The scheme is likely to run for five years.
- This would be the 14th PLI for the government as it pursues its vision to make India self-reliant and a global manufacturing hub
NEW DELHI : India plans to introduce a production-linked incentive (PLI) scheme to encourage the manufacturing of electrolyzers used to extract hydrogen from water, two people aware of the development said.
The power ministry and the government’s policy think tank NITI Aayog are working on the specifics of the scheme, which is likely to be launched by September, the people said on condition of anonymity. The scheme is likely to run for five years.
A favourable policy to encourage the manufacturing of electrolyzers is crucial for India to bring down the cost of green hydrogen. The nation’s richest billionaires, Mukesh Ambani and Gautam Adani have already announced mega plans to make India a green hydrogen hub. State-run Indian Oil Corp Ltd, the country’s largest oil refiner, had earlier this month agreed to partner with clean energy producer ReNew Power and Larsen & Toubro Ltd to produce green hydrogen.
Power minister R.K. Singh has frequently referred to the government’s plan to boost domestic manufacturing of electrolyzers. The government wants to make India a hub for green hydrogen produced by splitting water into hydrogen and oxygen in an electrolyzer using power from renewable sources.
Queries sent to the spokespeople for the power ministry and NITI Aayog remained unanswered till Wednesday evening.
Following the National Hydrogen Mission announced by Prime Minister Narendra Modi on 15 August, the power ministry unveiled the first part of the new green hydrogen policy this February. The policy promises cheaper renewable power, a fee waiver for inter-state power transmission for 25 years for projects commissioned before June 2025, land in renewable energy parks, and mega manufacturing zones to help local industries wean themselves off fossil fuels.
Recently, NITI Aayog chief executive officer Amitabh Kant said the government aims to reduce the cost of green hydrogen to as low as $1 per kg by 2030. “Our aim is to bring down the cost of green hydrogen to $2.5 per kg by 2025 and $1 per kg by 2030," he had said.
The plan to boost local electrolyzer manufacturing also comes on the back of surging global demand and concerns over adequate supplies of electrolyzers. In a recent report, US investment bank Jefferies said that the European Union plans to quadruple its green hydrogen supply by 2030 to reduce demand for Russian gas. This would push worldwide demand for electrolyzers to more than 400GW, while global supply would only reach 70GW by 2030, the report said.
Girishkumar Kadam, senior vice-president and co-group head, corporate ratings, Icra Ltd, said the PLI scheme for electrolyzers and rules regulating offtake of green hydrogen would be key for the adoption of green hydrogen and the growth of the sector. He said the cost competitiveness of green hydrogen would remain contingent upon the reduction in capital cost and an improvement in the energy efficiency level of electrolyzers, besides the cost of renewable energy procurement.
According to a report by Icra, the bulk of India’s hydrogen demand pertains to the industrial segment comprising refining, fertilizers and chemicals at about 6 million tonnes (mt) in FY20, which is projected to grow to 7.3 mt by FY25.
“Even in a scenario of 30% of hydrogen demand being met through green hydrogen by 2030, incremental renewable (RE) capacity requirements are estimated to remain significant at about 60GW. This is over and above the RE addition to meet all-India energy requirements," it said.
India aims to attain net-zero carbon emissions by 2070, as committed by PM Modi at the COP26 summit in Glasgow last November.
This would be the 14th PLI for the government as it pursues its vision to make the country self-reliant and a global manufacturing hub. Recent PLI schemes in which applicants have been chosen this year include those for automobile and auto components, advanced chemistry cell (ACC) battery storage and textiles.
