India's Green Hydrogen Revolution: Pioneering Sustainable Energy

Introduction

As renewable energy costs decrease over time, alongside economies of scale, ongoing projects, and technological advancements, green hydrogen's affordability will improve. To fully capitalize on this potential, it is crucial to anticipate these trends and act proactively. This article explores the development of green hydrogen in India, highlighting the incentives provided by state and national governments and delving into the crucial regulatory aspects involved in establishing green hydrogen plants.

About Green Hydrogen

Green Hydrogen is produced using electrolysis of water with electricity generated by renewable energy. The carbon intensity ultimately depends on the carbon neutrality of the source of electricity (i.e., the more renewable energy there is in the electricity fuel mix, the “greener” the hydrogen produced). It can be stored as gas or liquid or integrated into other molecules, making it highly adaptable for numerous uses. Whether employed as a fuel for transportation and heating or utilized as a means for storing surplus renewable electricity, green hydrogen emerges as a pivotal solution in the transition to a low-carbon future. 

India's Strong Commitment

In India's journey towards green hydrogen dominance, a pivotal moment arrived with its partnership with the renowned Fraunhofer Society. Fraunhofer boasts 36 institutes dedicated to advancing hydrogen technologies. This collaboration signifies India's determination to leverage its abundant renewable resources for green hydrogen production. It's akin to joining forces with the world's foremost experts to expedite the transition to clean and green energy.

Furthermore, the National Green Hydrogen Mission – is a program to incentivize the commercial production of green hydrogen and make India a net exporter of fuel. The initial outlay includes Rs.17,490 crore for the Strategic Interventions for Green Hydrogen Transition (“SIGHT”) programme, Rs.1,466 crore for pilot projects, Rs.400 crore for R&D, and Rs. 388 crores towards other mission components. India has earmarked an ambitious target of producing 5 million metric tons of Green Hydrogen by 2030.

What's even more striking is that a significant 70% of this green hydrogen production is destined for global markets. India doesn't just aim to fulfil its energy requirements; it aspires to become a major global supplier of sustainable energy solutions. This grand vision firmly establishes India as a frontrunner in green hydrogen.[1]

Challenges on the Path to Green Hydrogen

Despite the unique possibilities and advantages of green hydrogen production, the industry currently faces several challenges.

• Consistent demand for green hydrogen is also a concern due to the higher production costs compared to grey hydrogen. A policy push from the Government of India is needed to create a market for green hydrogen, including incentives for its use in fertiliser plants, refineries, and blending with natural gas by city gas distribution companies.
• Electrolyser supply is another challenge. The global commercial capacity for manufacturing electrolyser equipment is currently insufficient to meet India's projected demand for green hydrogen production by 2030. India would require an electrolyser capacity of 65GW to produce 5MMT of green hydrogen per year, but domestic production of electrolysers has not yet taken off significantly.
• Additionally, the nascent infrastructure for the transportation and storage of green hydrogen needs to be developed. Compressing or liquefying hydrogen for transportation involves time and costs. Compressed hydrogen storage requires large containers, while liquefaction incurs higher energy costs compared to compressed hydrogen.
• Another obstacle is the lack of harmonized standards and codes for the entire green hydrogen supply chain in India. Developing robust standards and safety regulations is crucial to ensure the smooth and safe integration of green hydrogen technologies into existing systems.

Policy Support: Fostering Green Hydrogen Proliferation

Governments wield a powerful arsenal of incentives, mandates, and supply-demand matching mechanisms to catalyse the growth of green hydrogen:

• Grants and Tax Credits: Governments can extend grants and tax credits for green hydrogen demonstration projects, infrastructure for hydrogen logistics, and the deployment of zero-emission vehicle fleets.
• Mandates: Gradually elevating green hydrogen purchase obligations for sectors such as oil refining, natural gas, and steel production can instil demand certainty.

Crafting Green Hydrogen Standards and Regulations

Standardizing green hydrogen certification is pivotal for international alignment and acceptance. India has proactively proposed discussions on global standards for green hydrogen through international forums.

Reducing the Cost Barrier

The competitiveness of green hydrogen hinges on cost reduction, aiming for a cost of $1 per kilogram.[2] The government can contribute through various avenues:

• Waiving Renewable Power Transmission and Distribution Charges: The government has already waived transmission charges for 25 years on the inter-state transmission system. However, implementation at the state transmission network level is critical.
• Introducing Power Banking Facilities: Facilities for banking renewable power generated for green hydrogen production can enhance cost-efficiency.
• Open-Access Mechanism for Procuring Renewable Power: Implementing a complete open-access mechanism for procuring renewable power for green hydrogen production can simplify procurement from various producers.
• Incentivizing Production and Manufacturing: The government is in the process of introducing incentives of up to Rs 30-50 (USD 0.37-0.61) per kilogram (or 10% of the cost) for green hydrogen production.[3] India has also allocated a total of Rs 174.9 billion (USD 2.1 billion) for production-linked incentives for green hydrogen and electrolyser manufacturing.[4]

Global Collaboration for Standardization

For green hydrogen to thrive on the global stage, standardization is imperative. India actively participates in international forums, such as the G20, to establish common definitions and regulations. This collaborative effort aims to create a seamless global green hydrogen ecosystem. It's akin to ensuring everyone speaks the same language, fostering international trade and cooperation.

Driving Down Costs: The Ultimate Goal

The ultimate objective in India's green hydrogen journey is to drive down costs, making it cost-competitive with grey hydrogen. This multifaceted goal encompasses several key strategies:

• Eliminating transmission charges for renewable power to reduce the cost of green hydrogen production.
• Implementing power banking mechanisms for storing excess renewable energy, ensuring a stable supply.
• Creating an open-access mechanism for procuring renewable power, promoting transparency and accessibility.
• Offering incentives for green hydrogen production and the manufacturing of electrolysers to stimulate investment in the sector.

India's Green Hydrogen Odyssey: A Path to Sustainability

India's pursuit of green hydrogen signifies more than just energy generation; it embodies a transformation in addressing climate change, reducing carbon emissions, and achieving energy self-sufficiency. This journey showcases India's leadership in tackling global challenges and pioneering innovative solutions.

Conclusion

India's Green Hydrogen Revolution is not merely an aspiration; it's a tangible reality in the making. With ambitious objectives, global collaborations, and an unwavering commitment to sustainability, India is on the path to becoming a dominant force in green hydrogen production. This direction brightens the way for a cleaner, more sustainable future for all and inspires the world to partake in the quest for eco-friendly energy.

FAQs

[1] https://ieefa.org/resources/proper-policy-support-will-drive-green-hydrogen-proliferation-india

[2] https://pib.gov.in/PressReleasePage.aspx?PRID=1937993

[3] Analyst Report based on BNEF update

[4] https://www.reuters.com/business/environment/india-approves-2-billion-incentive-plan-green-hydrogen-industry-2023-01-04/

King Stubb & Kasiva,
Advocates & Attorneys

Click Here to Get in Touch

New Delhi | Mumbai | Bangalore | Chennai | Hyderabad | Mangalore | Pune | Kochi
Tel: +91 11 41032969 | Email: info@ksandk.com