The cost of Green Hydrogen: What needs to happen for it to be competitive
UnivDatos(UDS)
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Hydrogen is the most abundant gas in our universe, though its availability in its elemental form on earth is infinitesimally small. As we begin to understand its potential to mitigate climate change by acting as a reservoir of energy storage, deciphering cost-effective ways to generate, store and transport green hydrogen is amongst the top priorities for the world in the immediate future.
Around 75 per cent of all mass in the universe is made up of hydrogen and 90% of all atoms in the universe are hydrogen atoms. Despite its abundance, harnessing its vast potential has remained elusive for mankind, at least until recently. Ever since its discovery, scientists have been experimenting to unlock the versatility of Hydrogen. Even so, it wasn’t until the mid-20th century that we started looking at it as a clean and very efficient fuel source, when experimented with Hydrogen fuel cells for the Apollo missions. The potential of Hydrogen as an alternative to fossil fuels has been acknowledged and grown manifold since. Furthermore, if produced using green energy, Hydrogen can contribute to global decarbonisation and mitigating climate crisis. According to UnivDatos Market Insights, The Clean Hydrogen Market was valued at USD 1.16 billion in 2022 & is expected to grow at a CAGR of 15.69% from 2023-2030. Owing to technological advances in the clean hydrogen likely to drive the market. As of May 2023, more than 1,000 large-scale hydrogen projects have already been announced globally, amounting to $320 billion in direct investments.
India’s current hydrogen demand is around six million tonnes per annum, which is expected to reach 12 million tonnes by 2030. Cognizant of the need to fulfil this need through a green growth strategy, the GOI has presented its roadmap and vision for Hydrogen in the policy document of the National Green Hydrogen Mission. Under this mission, the government plans to achieve 5 million metric tonnes (MMT) of green hydrogen production by 2030 with over INR 8 lakh crore of investments, resulting in the creation of over 6 lakh jobs. The policy is a welcome step and one that was required post-haste, as the development of a green hydrogen economy will be a key component of India’s ambitious economic and environmental agenda.
Indigenous production and self sufficiency India currently imports 40 percent of its energy requirements, shelling out around $90 billion per year. If the National Green Hydrogen mission takes off, it could pivot India from an energy importer to a net energy provider and exporter, besides reducing our import bills for fuel. While all of this sounds great, there are certain techno-commercial challenges that need to be overcome before we can realise this dream.
The key to harnessing green hydrogen lies in the electrolysers used in to generate Hydrogen. We need to support indigenous manufacturing of electrolysers through policy formulations. Local manufacture of electrolysers that meets global quality control standards will give India an important edge in the global market. Worldwide electrolyser sales have more than doubled from 200 megawatts (MW) in 2020 to 458 in 2021. As this trend is expected to continue its upward trend in the near future, the time is opportune for India to aggressively capture this market.
One of the other major concerns inhibiting the scalability of hydrogen apart from production costs are the huge logistics costs involved in transportation. Hydrogen is also a flammable gas which needs to be transported in cryogenic tankers. One solution to this would be the development of generation-on-demand hydrogen, which would replace the transportation of hydrogen with the transport of raw materials like water and hydrocarbons which would then be converted to hydrogen as and when required. However, the technologies to separate Hydrogen are still developing at scale and require considerable investment.
Additionally, as Hydrogen elicits immense interest from industry and government, it makes sense to collaborate for maximising impact, and create pilot projects for green hydrogen. Creating PPP models will help to optimise resources to fullest and minimise risks. The European Commission (EC) in 2020, announced the Clean Hydrogen alliance, a PPP of multiple stakeholders to develop Europe’s clean energy and zero emissions cars mission. India Inc. must work with government bodies like CII and FICCI to form such partnerships.
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