News

May 14, 2023

Green Hydrogen Upsurge: Plans and perspectives of renewable energy players

The announcement of the National Green Hydrogen Mission in January 2023 spurred

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 In­dustries Limited (RIL). The company has an­nounced its vision of growing end to end in the renewables space, from so­lar implementation to solar panel manufacturing, going vertically down, eventually producing green hydrogen at a dollar. In terms of batteries and cells, we are a par­ticipant in the production-linked in­cen­tive (PLI) sc­heme for solar and batt­ery cell manufacturing. Theref­ore, 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 th­ough 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 Feb­ruary 2023, RIL and Ashok Leyland un­vei­led India's first internal combustion engi­ne-powered heavy duty hydrogen trucks. The prime minister flagged off the vehicle in Bengaluru during the India En­ergy We­ek. Reliance can implement this on a large scale, both on the retrofit model and on the new car model. The company an­tici­pa­tes 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 pro­duction 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 inno­va­te 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 ob­jective 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 hy­drogen by itself. We are looking at doing projects in Odi­sha, Andhra Pradesh and Gujarat. The re­a­son we chose the MENA region is that the initial demand for gr­een ammonia and green hydrogen is coming from the Eu­ropean 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 to­nnes 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 go­vernment has been very helpful in furthering the cause of green hydrogen. They ha­ve 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, the­re is a difference between how traditional oil and gas companies work, and how renewable energy companies work. For re­newable 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 busine­sses are very dynamic, and the prices change on a day-to-day basis. Therefore, buyers of hydrogen and ammonia have be­come used to floating prices in the ma­rket. There is some jostling going on, and we hope that certain frameworks will em­erge that will help closing contracts. There is a lot of interest, and many offtakers want to get into contracts. However, ev­erybody 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 Inf­la­ti­on Reduction Act and the Europe­an Hy­drogen Bank, whereby they give un­reasonable 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 ta­ken into consideration when designing a project. Thus, un­certainty regarding various certifications, offtake or even subsidies impacts the de­bt, as lenders want certainty on these ma­tters even for small-scale projects. These challenges could im­pact the profitability of projects going forward, and it has be­co­me very important to address them upfro­nt, 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 En­ergy Corporation of India. At that point, the co­mpany began to consider forward integration. Later, the company started to plan for the production of gr­een hydrogen and gr­een 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 throu­ghput 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 amo­unt of learning from it, and incorporate these learnings in our upcoming larger-scale pl­ant in Oman, which will be commissioned in two phases. In the first phase, it will produce 300 tpd of ammonia per day. Sub­sequently, 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 Ta­mil Nadu, Kar­nataka, Odisha, and Ra­j­asthan, to establish projects of similar sc­ale in India. Therefore, we anticipate constructing 1.2 million metric tonnes (mmt) of green am­monia production ca­pacity, and as a gr­oup, the company has a stated aim of in­creasing 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 co­mpany 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 in­dustries, that can have greater dema­nd for uptake of green hydrogen. How­ever, there are a few challenges that the green hydrogen industry faces with res­pect to its adoption. First, the costs of green hy­drogen 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 pri­ce reduction le­vers, it is possible to imagine achieving the co­un­try's vision of attaining a hydrogen production cost of $1 to $2 per km. How­ever, it can only be achieved if we mo­ve to­wards reducing round-the-clock (RTC) renewable power costs significantly.

The second challenge pertains to elect­rolysers. This could be related to capital ex­penditure, 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 we­ighted 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 up­str­eam challenges faced by the industry.

The midstream challenges pertain to storage and transportation issues. For the midstream segment, I feel that it is im­portant to create good infrastructure for the storage and transportation of gr­een hy­drogen. There are various ways in whi­ch we can store and transport green hy­drogen, and there will be a need for infra­str­ucture for high pressure compression if pipelines are to be used.

Meanwhile, downstream challenges per­tain to the usage of this kind of hy­drogen. If the sector where we are at­tem­pting 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 trans­port/ mo­bility sector could contribute to a lesser degree to the overall usage of green hy­drogen, 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 in­frastructure 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 hydro­gen/ 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. Mo­re­­over, 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, na­mely, renewable energy supply and electrolysers. Moreover, sourcing water will be a key challenge over the coming years as the scale of projects increases. While fre­sh water may be used for projects at present, its sustained supply for a project ti­me­line of 20-25 years may not be en­su­red. Mo­reover, as multiple plants are de­velo­p­ed across the country, utilising fresh water as a raw material may become a gr­eat challenge. Thus, id­entifying and developing the necessary desalination technologies for sea water will play a significant role in ad­vancing 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 stand­ard definitions of what is locally and glo­bally ac­ceptable. Skill development is another crucial challenge, given the rising de­ma­nd for the specialised skill sets needed ac­ross 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 tra­nsmission 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 es­tablished, the role of ammonia may di­minish, rendering ammonia pla­nts re­dundant. Despite such challenges, in the short run, green am­mo­nia as a vector se­e­ms to be a plausible solution for green hydrogen transmission. Additio­nally, the greening of the hydrogen used in refineries is perceived as a key challenge due to several of the­se refineries being situated in the deep hinterlands, away from the coasts. How­ever, the key is to focus on gradual repla­cement of hydrogen in refineries rather than trying to develop a plan to replace all of the hy­drogen used in refineries at once. Re­place­ment of hydrogen with green hy­dro­gen must first be initiated in refineries closer to the coast, where such a tra­n­sition is feasible given the present eco­system. This can then trickle down to­war­ds refineries in the hinterland as the eco­system develops further and allo­ws 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 ca­pacity in the country. Focusing merely on ex­ports 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 an­other area that will facilitate the gre­en hydrogen economy.