Reliance Industries chairman and managing director Mukesh Ambani’s recent announcement to bring the cost of green hydrogen to under $2 per kg by 2030 sent a clear message to the global energy community that the fuel has the potential to be a game changer for India.
What does the announcement mean?
The cost of green hydrogen made by electrolysis is estimated to be around ₹350 per kg and the Centre plans to bring it down to ₹160 per kg by 2029-30. Ambani also said India can set even more aggressive target of achieving under $1 per kg new-age emission free fuel cost within a decade. Such low pricing will make India’s plan to build green hydrogen plants to run on electricity produced by green energy sources a value proposition. Apart from providing grid-scale storage solutions and feedstock for ammonia production, hydrogen can be used for fuel cells and is being leveraged for mobility applications and transportation.
Is all that glitters really gold?
Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyzer powered by electricity from green energy sources such as wind and solar. With most parts of India receiving 4-7 per kilowatt-hour (kWh) of solar energy per square metre per day, the green hydrogen play looks like an ideal solution to help India meet its energy needs. India’s large landmass and low wind and solar tariff can be leveraged to produce low-cost green hydrogen and ammonia for exports, thus bolstering India’s geopolitical heft. Prime Minister Narendra Modi on 15 August announced a National Hydrogen Mission.
Will this result in large savings?
India spends around ₹12 trillion annually for its energy needs. Any savings because of reduced energy imports following the domestic ramp up of green hydrogen production will be a boon. The valuable foreign exchange savings can be deployed towards infrastructure creation, health and education. It will also help India meet its nationally determined contribution targets.
What are the planned policy interventions?
The Union government plans to implement the green hydrogen consumption obligation (GHCO) in fertilizer production and petroleum refining, similar to what was done with renewable purchase obligations (RPO). Also, India plans to shortly kick-start the play by calling bids for 4 GW electrolyzer capacity and extending the PLI scheme for manufacturing electrolyzers. Also, the draft Electricity Rules, 2021, floated by the power ministry have allowed green hydrogen purchase to help meet RPOs.
What is being done at present?
A raft of Indian firms, including NTPC Renewable Energy, have forayed into green hydrogen play. The NTPC unit is setting up India’s largest solar park of 4.75 GW in Gujarat and plans to make green hydrogen there on a commercial scale. NTPC has also called bids for setting up a pilot project for mixing green hydrogen with natural gas for the city gas distribution network. Input requirements are in place to drive production cost down with more than half of 817 GW of India’s electricity requirement is to be met from clean energy by 2030.