The announcement of the National Green Hydrogen Mission in January 2023 spurred a series of large projects in the rapidly developing green hydrogen market in India. While challenges related to capital costs, supply chains, price parity of green hydrogen and grey hydrogen, and financing still remain, the overall outlook is bright, with significant interest shown by private players. Against this backdrop, top representatives from leading renewable energy firms discuss their plans and views regarding green hydrogen development in India…
Karthik Ganesan
Reliance New Energy Solar Limited is a two-year-old company under Reliance InÂdustries Limited (RIL). The company has anÂnounced its vision of growing end to end in the renewables space, from soÂlar implementation to solar panel manufacturing, going vertically down, eventually producing green hydrogen at a dollar. In terms of batteries and cells, we are a parÂticipant in the production-linked inÂcenÂtive (PLI) scÂheme for solar and battÂery cell manufacturing. TherefÂore, we are investing heavily in building the entire ecosystem for the new energy sector, which includes hydrogen, solar energy and batteries.
The company aims to achieve internal net zero targets by 2035, and align with the national targets by 2070. The automotive industry accounts for 60 to 70 per cent of the total usage of today’s fuels. Even thÂough the market for electric vehicles is expanding, and we are seeing significant penetration, we also anticipate that it will be challenging to incorporate them into larger vehicles such as sports utility vehicles, trucks and buses.
The company is also looking for green hydrogen applications within its mobility division. The company has produced electric fuel cell vehicles and buses. In FebÂruary 2023, RIL and Ashok Leyland unÂveiÂled India’s first internal combustion engiÂne-powered heavy duty hydrogen trucks. The prime minister flagged off the vehicle in Bengaluru during the India EnÂergy WeÂek. Reliance can implement this on a large scale, both on the retrofit model and on the new car model. The company anÂticiÂpaÂtes that this will kick off a beneficial cycle of using hydrogen as a fuel.
Today, we don’t think it is important to consider hydrogen’s colour. Hydrogen proÂduction must, of course, be environmentally friendly; as it becomes economically feasible, everyone will be able to do so. Our viewpoint is that we must develop a viable use case for hydrogen, which is largely overlooked in the global smog of subsidies and market distortions. India would not be able to use it since it lacks the resources necessary to consistently fund the demand side of the equation. As a result, the company is working to innoÂvaÂte and find a solution.
Reliance is now working on GW-scale manufacturing for batteries and electrolysers that will be utilised for both fixed and mobile applications. We are building sizeable solar installations, first for our own internal needs and eventually for external use. The business is also venturing into panel manufacturing, all the way down to wafer level. Many of these are currently in the works; and some pilot-scale electrolyser projects are ongoing. We have also made some progress in terms of hydrogen fuelling.
Ranjit Gupta
Ocior was founded last year with the obÂjective of developing, constructing and operating green hydrogen and green ammonia projects in India and the Middle East and North Africa (MENA) region. The reason for choosing India is that it is a very large market for green hyÂdrogen by itself. We are looking at doing projects in OdiÂsha, Andhra Pradesh and Gujarat. The reÂaÂson we chose the MENA region is that the initial demand for grÂeen ammonia and green hydrogen is coming from the EuÂropean Union (EU), and the MENA region makes more sense for supply of green hydrogen/ammonia to the EU. We hear that the EU hopes to import 10 million toÂnnes of green hydrogen per annum by 2030, which is a really large opportunity for companies like us. Thus, we are developing a couple of projects in the MENA region, including a project in Egypt.
The first two projects that we are looking at are in Odisha and Gujarat. The Odisha goÂvernment has been very helpful in furthering the cause of green hydrogen. They haÂve come out with a very good green hydrogen policy. We expect the Gujarat government policy to also come out soon. The process of preparing feasibility reports is ongoing, and once the policy is clear, the development can pick up speed.
Hopefully, over the next six months to a year, the structure of offtake contracts will be better known. Unfortunately, theÂre is a difference between how traditional oil and gas companies work, and how renewable energy companies work. For reÂnewable energy companies, all the capex goes in on day one, and therefore the energy produced has a fixed cost. The cost of operation is very low, and therefore, when you produce green hydrogen or green ammonia from a renewable energy project, you expect to bear a steady cost.
On the other side, the oil and gas busineÂsses are very dynamic, and the prices change on a day-to-day basis. Therefore, buyers of hydrogen and ammonia have beÂcome used to floating prices in the maÂrket. There is some jostling going on, and we hope that certain frameworks will emÂerge that will help closing contracts. There is a lot of interest, and many offtakers want to get into contracts. However, evÂerybody is seeing a need for finalising frameworks for contracts. We strongly believe that parity between grey and green hydrogen, and ammonia will probably be achieved over the next six to seven years.
Challenges with green hydrogen production arise at two different levels. One is at the level of the project itself, specifically project development, with related challenges of land and other issues. The other challenge is related to the bankability of a project, and offtake is the biggest issue here. A related issue is the rush towards market distortion introduced by the InfÂlaÂtiÂon Reduction Act and the EuropeÂan HyÂdrogen Bank, whereby they give unÂreasonable subsidies that can have a very long-term impact on how the market develops across the world. Thus, it will be challenging for developers outside of the EU and the US.
Other issues that we are facing on a broader scale concern the definitions of green hydrogen and green ammonia, and a lack of clarity on banking of renewable power for production of green ammonia and green hydrogen. As a lot of the capex goes in upfront, many parameters are taÂken into consideration when designing a project. Thus, unÂcertainty regarding various certifications, offtake or even subsidies impacts the deÂbt, as lenders want certainty on these maÂtters even for small-scale projects. These challenges could imÂpact the profitability of projects going forward, and it has beÂcoÂme very important to address them upfroÂnt, when the project is being planned.
Shiromani Kant
Although Acme Cleantech was founded in 2003, the real beginning of its solar business journey was in 2010, when it first entered the market. Since then, there has been no turning back. In 2018, the company discovered a historic low tariff of Rs 2.44 per unit at the Bhadla Phase III Solar Park, in an auction held by the Solar EnÂergy Corporation of India. At that point, the coÂmpany began to consider forward integration. Later, the company started to plan for the production of grÂeen hydrogen and grÂeen ammonia. As a result, the company went ahead and opened the world’s first integrated green hydrogen and green ammonia plant in Bikaner, Rajasthan, with a modest throuÂghput capacity of 5 tonnes per day (tpd) of green ammonia production. But the goal was not to commercialise it; it was essentially a semi-commercial pilot project at the time, because the concept itself was weak and there was no reference point as such.
Since November 2021, we have been operating this plant at various levels. The agenda is to derive the maximum amoÂunt of learning from it, and incorporate these learnings in our upcoming larger-scale plÂant in Oman, which will be commissioned in two phases. In the first phase, it will produce 300 tpd of ammonia per day. SubÂsequently, it will be scaled up to 3,300 tpd of green ammonia production. We have already received an MoU for this large project in Oman, and the company has also signed MoUs with various state governments, including TaÂmil Nadu, KarÂnataka, Odisha, and RaÂjÂasthan, to establish projects of similar scÂale in India. Therefore, we anticipate constructing 1.2 million metric tonnes (mmt) of green amÂmonia production caÂpacity, and as a grÂoup, the company has a stated aim of inÂcreasing the production capacity to 10 mmt by 2030.
Oman is one region in the Middle East where horizontal solar irradiation is at a higher level, compared to the rest of the globe. This was a crucial decision factor for choosing Oman. Apart from that, an extensive amount of land is required for these kinds of large-scale projects, and the Omani government supported the coÂmpany by providing land space. To put things in perspective, it takes around four acres of land to produce 1 MW of solar energy. We have already purchased 92 square km of land in Oman for the first phase. The company is also making plans for India, but the biggest challenge in the country is the non-availability of land in a single place; therefore, the projects here will be scattered and sporadic.
Kapil Maheshwari
For the green hydrogen industry, there are many hard-to-abate sectors, such as steel, fertilisers, refineries and chemical inÂdustries, that can have greater demaÂnd for uptake of green hydrogen. HowÂever, there are a few challenges that the green hydrogen industry faces with resÂpect to its adoption. First, the costs of green hyÂdrogen pose a large barrier for the industry. The price reduction can be achieved in two ways – either by deploying a technology roadmap for bringing down costs or by achieving economies of scale. When we compare the major priÂce reduction leÂvers, it is possible to imagine achieving the coÂunÂtry’s vision of attaining a hydrogen production cost of $1 to $2 per km. HowÂever, it can only be achieved if we moÂve toÂwards reducing round-the-clock (RTC) renewable power costs significantly.
The second challenge pertains to electÂrolysers. This could be related to capital exÂpenditure, which is a dollar per kilowatt for electrolysers; or the problems of efficiency improvement in electrolysers, which will impact how many kW-hours is produced per kg of hydrogen, or the lifetime of an electrolyser, impacting the number of cycles it can execute.
The third major challenge is financing these projects and bringing down the weÂighted average cost of capital for them. A lot of entities conduct pilot projects, showcasing their technologies and developing plans to deploy such projects at scale. Thus, projects have to be more viable and bankable. These are all part of the upÂstrÂeam challenges faced by the industry.
The midstream challenges pertain to storage and transportation issues. For the midstream segment, I feel that it is imÂportant to create good infrastructure for the storage and transportation of grÂeen hyÂdrogen. There are various ways in whiÂch we can store and transport green hyÂdrogen, and there will be a need for infraÂstrÂucture for high pressure compression if pipelines are to be used.
Meanwhile, downstream challenges perÂtain to the usage of this kind of hyÂdrogen. If the sector where we are atÂtemÂpting to use hydrogen, such as steel, uses coal-based direct reduced iron (DRI) furnaces, then it will be very difficult for the industry to quickly change to hydrogen fuel. However, if it uses gas-based DRI, then it can think of blending some hydrogen to test the limits. Thus, I believe that while the transÂport/ moÂbility sector could contribute to a lesser degree to the overall usage of green hyÂdrogen, accounting for 8 to 10 per cent, it will largely be deployed in the industrial fuels and feedstock sector.
The Indian government has been playing an active role by introducing various PLIs to bring down the cost of renewable power for the production of green hydrogen. I feel that we need to look at the inÂfrastructure from the export perspective and make India not just energy sufficient, but also a net energy exporter.
Arnava Sinha
Green hydrogen is emerging as the fuel of choice in India’s energy transition. One of the key advantages of green hydroÂgen/ green ammonia is that it is an inflation-proof product. The cost of production will not fluctuate because of geopolitical variables. With an increasing focus on the green molecule segment, Greenko has planned to establish pumped storage projects of 100 GWh capacity to provide RTC power with the lowest-cost electrons over the next five years.
Our immediate plan entails the development of medium- and large-scale green ammonia plants with an aim to produce more than 3 mt of green ammonia over the next five years. To this end, the company is in the process of partnering with India’s oil and gas giant, ONGC, to establish a 1 mt green ammonia project. MoÂreÂÂover, we are now actively participating in green hydrogen projects and tenders. While not many tenders have been introduced so far, the ongoing developments in the green hydrogen ecosystem seem promising.
An important parameter for executing green ammonia projects is the ability to secure raw materials. In the case of green ammonia, these are primarily the same as those for green hydrogen, naÂmely, renewable energy supply and electrolysers. Moreover, sourcing water will be a key challenge over the coming years as the scale of projects increases. While freÂsh water may be used for projects at present, its sustained supply for a project tiÂmeÂline of 20-25 years may not be enÂsuÂred. MoÂreover, as multiple plants are deÂveloÂpÂed across the country, utilising fresh water as a raw material may become a grÂeat challenge. Thus, idÂentifying and developing the necessary desalination technologies for sea water will play a significant role in adÂvancing in the sector.
Currently, there are four key challenges in green hydrogen/ammonia production that demand attention from stakeholders. The first is market development, and the second is the development of standÂard definitions of what is locally and gloÂbally acÂceptable. Skill development is another crucial challenge, given the rising deÂmaÂnd for the specialised skill sets needed acÂross the green hydrogen supply chain. Finally, and most importantly, creating a robust manufacturing set-up remains a crucial limiting factor in India’s green hydrogen journey.
Moreover, our ecosystem is not yet ready for green hydrogen to be supplied as the final product to an offtaker, although traÂnsmission through pipelines is feasible in some cases. Green ammonia can play the role of a vector through which hydrogen can be carried. But this use case of ammonia introduces another crucial challenge in the long run. As the industry progresses, and green hydrogen storage and transport are further esÂtablished, the role of ammonia may diÂminish, rendering ammonia plaÂnts reÂdundant. Despite such challenges, in the short run, green amÂmoÂnia as a vector seÂeÂms to be a plausible solution for green hydrogen transmission. AdditioÂnally, the greening of the hydrogen used in refineries is perceived as a key challenge due to several of theÂse refineries being situated in the deep hinterlands, away from the coasts. HowÂever, the key is to focus on gradual replaÂcement of hydrogen in refineries rather than trying to develop a plan to replace all of the hyÂdrogen used in refineries at once. ReÂplaceÂment of hydrogen with green hyÂdroÂgen must first be initiated in refineries closer to the coast, where such a traÂnÂsition is feasible given the present ecoÂsystem. This can then trickle down toÂwarÂds refineries in the hinterland as the ecoÂsystem develops further and alloÂws such a replacement to be economically and operationally feasible.
We hope to see a policy that offers the desired incentives geared towards facilitating manufacturing capabilities in the country. Ultimately, however, there is a significant need to create a demand push that will truly boost the production caÂpacity in the country. Focusing merely on exÂports may not be the correct strategy, as the ecosystem in the country will only be successful if we have thriving domestic demand. City gas distribution is anÂother area that will facilitate the greÂen hydrogen economy.