Green Hydrogen: India's Billion-Dollar Opportunity

Book: India’s Energy Revolution

Tirtha Biswas, and Deepak Yadav
June 2024 | Industrial Sustainability

Biswas, Tirtha and Deepak Yadav. 2024. Green Hydrogen: India's Billion-Dollar Opportunity. India’s Energy Revolution. Routledge eBooks. doi:10.4324/9781003281818.

https://doi.org/10.4324/9781003281818.

Overview

India announced its commitment to achieve net zero by the year 2070 during the 26th Conference of the Parties at Glasgow shortly after announcing the National Green Hydrogen Mission in 2021. In this context, this chapter assesses the techno-economics of various hydrogen production pathways and their subsequent carbon footprint. The chapter also highlights key levers that will drive hydrogen demand across various end-use applications with a focus on industries and mobility. Furthermore, the chapter also summarises the trajectory of the cost of hydrogen across various timelines.

Key Highlights

• In 2020, the cost of producing green hydrogen from solar and wind energy is expected to be 3.5- 5.8 USD/kg of hydrogen. The cost is expected to reduce to 2.4-3.6 USD/kg by 2030. At these prices, green hydrogen becomes cheaper than blue hydrogen and is price competitive with grey hydrogen produced from imported natural gas (LNG).
• The existing grey hydrogen demand in India is 5.6 million tonnes, nearly equivalent to a market size of USD 11 billion. In addition to the existing demand, there is a latent demand for hydrogen in the chemicals and steel sector of 1.9 Million tonne per annum (MTPA).
• Hydrogen can potentially replace coal and coke in iron and steel production, thereby mitigating the single largest emissions source in the industry. A 100 per cent green hydrogen-based steelmaking becomes competitive with the conventional blast furnace process only in 2040.
• An alternate approach to incentivising the uptake of green hydrogen in the steel industry is incremental blending with grey hydrogen. With a 9 per cent blend of green and grey hydrogen, steel production costs are already price competitive with the conventional process. Further, as electrolyser and renewable electricity prices decrease, the share of green hydrogen can be gradually increased to 60 per cent by 2030 and 100 per cent by 2040.

Key Recommendations

• Formulate a policy that incentivises the blending of green hydrogen within the existing end-use applications. This would have manifold benefits: Industries will only pay a marginal premium for a switch to clean fuel, and the gradual scaling up of green hydrogen will reduce the component costs due to the learning rate effects.
• Reduce the cost of hydrogen refuelling stations to increase its uptake in the transport sector. This could be done by indigenising various components like compressors and power electronic units. Since creating the hydrogen infrastructure is a challenge for mobility applications, India could benefit from blending green and grey hydrogen to reduce the initial price barrier in transportation.
• Prioritise investments in hydrogen-ready technologies like shaft furnaces that can eventually enable the shift to green hydrogen.