India’s pursuit of inexperienced hydrogen is pushed by the necessity to improve vitality safety, cut back import dependence, and obtain decarbonisation. The nation presently imports 88 per cent of its oil and 50 per cent of its pure gasoline, exposing it to overseas change volatility and geopolitical dangers. It additionally imports a considerable quantity of ammonia for the home fertiliser trade. To handle these considerations, localising vitality and fertiliser manufacturing is essential.
The nation’s over 220 GW of unpolluted vitality capability, together with 108 GW of photo voltaic and over 50 GW of wind energy, supplies a basis for scaling inexperienced hydrogen manufacturing. Constructing on this, inexperienced hydrogen affords a chance to unlock new financial sectors and set up India as a major exporter of unpolluted vitality. Whereas the nation historically exports refined petroleum merchandise, exporting inexperienced ammonia, methanol, sustainable aviation gasoline, electrolysers, and even engineering expertise would mark a brand new frontier. This method aligns with the nation’s objectives of lowering imports, rising exports, and decreasing foreign exchange dependency.
Inexperienced hydrogen export potential
At present, the nation consumes about 7 million tonnes of hydrogen yearly, principally in refineries and fertilisers. That is anticipated to develop at a compound annual development price of 6.5 per cent between 2025 and 2040. India enjoys strategic benefits similar to a unified grid, considerable renewable vitality sources, a talented workforce, aggressive labour prices, and geographical positioning that enables exports to Europe, East-Asian international locations and Australia. Additional benefits embody India’s low engineering, procurement and building prices, quick allowing processes by means of single-window clearances, and fast building timelines, enabling it to construct vegetation in three to 5 years, in comparison with 5 to seven years elsewhere.
The Nationwide Inexperienced Hydrogen Mission allocates $2.4 billion in incentives, of which $2.1 billion helps the Strategic Interventions for Inexperienced Hydrogen Transition (SIGHT) programme. The SIGHT programme supplies incentives for electrolyser manufacturing, inexperienced hydrogen manufacturing, and inexperienced ammonia manufacturing. In complete, 27 corporations have acquired Rs 100 billion in incentives. These corporations are pursuing vertically built-in fashions – from electrolyser manufacturing upstream to ammonia and methanol manufacturing midstream, and inexperienced metal and iron downstream. Whereas these incentives are begin, they’re modest in comparison with world benchmarks such because the US Inflation Discount Act’s $3 per kg credit score or Australia’s $2 per kg Headstart Programme. Nonetheless, India’s benefit lies in decrease labour and land prices, cheaper renewable vitality, and an extended shoreline with entry to many ports. These benefits make even the smaller incentives extra impactful.
The inexperienced hydrogen export market holds huge potential. Europe, which accounts for 50-60 per cent of low-carbon hydrogen demand, is the first goal, adopted by Singapore, South Korea, and Japan. Tender-based demand in Europe – similar to Germany’s Hintco, the EU Hydrogen Financial institution, and SAF-related schemes like Refuel EU – is rising quickly. Hintco awarded 40 kilotonnes every year(ktpa) at €811 per tonne final yr and is providing €2.4 billion extra this yr. The EU Hydrogen Financial institution awarded 158 ktpa, and extra is predicted by means of maritime and aviation gasoline rules.
Ports throughout the nation, each 13 main and over 300 non-major, additional bolster India’s export capabilities. Notably, Paradip (Odisha), Tuticorin (Tamil Nadu), and Kandla (Gujarat) have been designated as inexperienced hydrogen hubs, whereas Gopalpur (additionally in Odisha) is rising as a significant export hub with sturdy state and central authorities help. Gopalpur is surrounded by key fertiliser and refinery items in addition to Odisha’s metal trade, which may gain advantage from inexperienced hydrogen for inexperienced metal manufacturing.
On the export entrance, India is focusing on Europe and East Asia, the place the demand for clear hydrogen is accelerating as a consequence of local weather commitments and decarbonisation targets. A number of Indian corporations have introduced over 9.3 million tonnes every year of inexperienced ammonia manufacturing capability for export, with initiatives by AM Inexperienced, NTPC, ACME, and ReNew, Hygenco Inexperienced Ammonia, Ocior Vitality, and Avaada already underneath method. Many of those are in superior offtake conversations with world corporations similar to Yara, Uniper, BASF, Kyushu Electrical, Ameropa, and the IHI Company. Near 2 million metric tonnes every year of inexperienced ammonia export volumes are already tied up in such offers.
General, India’s export potential is robust. Scaling up home provide, deepening the commercial worth chain, aligning insurance policies throughout central and state ranges, and securing export offtakes can firmly place it as a worldwide export hub in inexperienced hydrogen and ammonia. With the fitting ecosystem, the nation can seize each home and world alternatives within the inexperienced hydrogen economic system.
Price economics
The central problem hindering the expansion of inexperienced hydrogen within the nation is its excessive manufacturing value, which makes offtake tough and slows adoption. This problem is harking back to the early levels of photo voltaic and battery applied sciences, which initially appeared unviable however later turned mainstream as a consequence of falling prices and coverage help. Inexperienced hydrogen is predicted to comply with an identical trajectory. The general value of hydrogen manufacturing might be damaged down into capex, opex, and different influencing components similar to weighted common value of capital, inflation, and financing prices. Capex contains electrolyser prices, stack alternative value, land, and the price of organising a renewable vitality plant if utilizing captive energy. Opex primarily contains electrical energy value, water value, and operations and upkeep value.
The price of electrical energy stays essentially the most vital driver, typically figuring out the viability of hydrogen initiatives. Whereas India is thought for its low renewable vitality costs, the precise landed value of renewable vitality for hydrogen manufacturing typically reaches Rs 5-Rs 5.5 per unit for big grid-connected initiatives, which considerably impacts the hydrogen worth. The price construction varies based mostly on the kind of electrolysis know-how used. Amongst electrolyser varieties (alkaline, PEM, stable oxide, and AEM), alkaline is the commonest as a consequence of its comparatively decrease value. PEM is gaining recognition however is 10-20 per cent costlier as a consequence of its use of treasured metals similar to platinum. Stable oxide electrolysers are nonetheless within the analysis and growth section, whereas AEM is rising as a promising hybrid with enhancing value viability.
A case research of Odisha, the place incentives are most strong, exhibits that the landed value of hydrogen for a ten MW PEM plant is round Rs 477 per kg, with electrical energy accounting for Rs 329 per kg of this. Scaling as much as a 100 MW plant brings the fee right down to Rs 448 per kg as a consequence of economies of scale. With Odisha’s incentives – together with subsidised land, energy tariffs, and exemptions – costs can fall additional to Rs 374 per kg, or roughly $4.5-$5 per kg. Compared, alkaline electrolysers present higher economics, lowering prices to Rs 365 per kg underneath related circumstances. These figures are aggressive globally, particularly when in comparison with inexperienced hydrogen costs within the US ($5-$7 per kg), China ($5-$6 per kg), and even cheaper than gray hydrogen in refineries the place pure gasoline is used. Solely the Center East presently produces inexperienced hydrogen under $3 per kg, primarily as a consequence of low-cost renewable vitality and GW-scale initiatives.
To additional cut back prices, key drivers embody scaling up undertaking measurement to GW stage, bringing down electrical energy tariffs by means of low-cost solar energy, leveraging concessional finance for decarbonisation initiatives, and increasing state-level help such because the Odisha mannequin. The carbon market may also assist, with inexperienced hydrogen doubtlessly incomes carbon credit price $20-$30 every.
Nonetheless, financing dangers and market uncertainties stay a problem. Inexperienced hydrogen initiatives face points similar to a scarcity of economic offtake agreements, unproven know-how at scale, and inadequate long-term coverage readability. To handle these, the federal government is introducing demand-creation tenders for sectors similar to refineries and fertilisers, organising analysis centres for know-how growth, and inspiring end-use purposes in transport, metal, and metropolis gasoline networks.
General, whereas information from choose initiatives is displaying that India has world value competitiveness to faucet the export market, it nonetheless stays to be seen if such value competitiveness might be achieved from all initiatives within the nation. Going ahead, a mix of scaling up of undertaking measurement, know-how maturity, central and state incentives, and market creation will steadily shut the fee hole. With prices projected to fall and world demand rising, India can turn into a low-cost, high-volume inexperienced hydrogen producer supporting each home decarbonisation and worldwide export ambitions.
The best way ahead
India has made some progress within the inexperienced hydrogen area, with sturdy export potential and inherent value benefits. Nonetheless, to solidify its place as a worldwide chief, a number of essential steps should be taken shifting ahead. To reinforce exports, builders should faucet worldwide demand factors and purposes like RFNBO-compliant metal, aviation fuels, and maritime fuels aligned with the Worldwide Maritime Organisation and EU rules. On the identical time, constructing a sturdy home provide chain is equally important. Whereas electrolyser stacks dominate the highlight, they account for simply 25 per cent of a hydrogen plant’s capex. The remaining 75 per cent, comprising piping, stability of plant, civil works, and infrastructure, should even be localised to create a resilient and cost-effective undertaking ecosystem.
Moreover, whereas over 9-12 million tonnes of inexperienced ammonia export capability has been introduced by India (greater than double the 2030 nationwide goal of 5 million tonnes), the true take a look at will likely be in execution. Initiatives should safe closing funding choices, monetary closure, and binding offtake agreements. This can decide which bulletins flip into actual property. Though India has a value benefit together with entry to land and labour, infrastructure similar to port-side bunkering, liquid gasoline logistics, and hydrogen/ammonia licensing should additionally evolve. To additional cut back the price of inexperienced hydrogen, India should optimise renewable vitality prices, remedy the water problem, manufacture electrolysers domestically, cut back financing prices, and preserve environment friendly allowing methods. At present, inexperienced hydrogen in India prices $4-$4.5 per kg, however with concerted efforts, the goal of reaching round $1.8 per kg by 2030 is possible.
Web, internet, inexperienced hydrogen is now at a midpoint – now not prohibitively costly, however not but mainstream. With continued efforts to boost competitiveness, scale up initiatives, and create enabling infrastructure, India is well-positioned to turn into a significant exporter of inexperienced hydrogen and its derivatives.
Based mostly on shows by Harish Jayaram, Adviser, Hygenco; Arjun Mehta, Adviser, Inexperienced Hydrogen India (GH2 India); and Sushmita Ajwani, Director, Energy & Renewables, ICF, at Renewable Watch’s ninth annual version of Inexperienced Hydrogen in India convention.
