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India’s Strategy to Scale up Green Hydrogen Production

by Vaishali Basu Sharma - 20 June, 2024, 12:00 335 Views 0 Comment

India’s first multi-purpose green hydrogen pilot project at 1,500 MW Nathpa Jhakri Hydro Power Station (NJHPS) in Himachal’s Jhakri was inaugurated on April 24 this year. The project is the nation’s first multi-purpose (combined heat and power) green hydrogen generation plant with the capability to cater to the high-velocity oxygen fuel (HVOF) coating facility of NJHPS to meet its combustion fuel requirements, in addition to generating electricity through its 25kW capacity fuel cell. It will produce hydrogen gas by splitting hydrogen and oxygen from water with the help of an alkaline electrolyzer of 20Nm3/hr capacity by utilising renewable energy supplied from the 1.31 MW solar power plant of Satluj Jal Vidyut Nigam (SJVN) located in Wadhal, Himachal Pradesh.

Aligned with the National Green Hydrogen Mission of the Government of India, such projects are poised to accelerate the development of green hydrogen production infrastructure in India’s power sector. Union Minister Nitin Gadkari has hailed hydrogen as the future fuel, promoting green fuels in India. He envisions ethanol-based vehicles dominating the market, leading to job creation in agriculture.

Hydrogen, particularly green hydrogen, is being viewed as the next big alternate source of energy revolution. Since green hydrogen is proven to release little to no greenhouse gases, it has become highly favoured. In terms of energy requirements, India’s economy is currently the third largest in the world, and it is estimated that by 2030, the nation’s demand for energy is expected to increase by 35 percent.

India’s National Green Hydrogen Mission, which was launched in January 2023 with an overall outlay of Rs 19,744 crores aims to develop a green hydrogen production capacity of at least 5 million tonnes per year with an associated renewable energy capacity addition of about 125 GW in the country. At present, non-fossil fuel-based capacity constitutes about 42% of India’s installed energy generation. The government aims to raise the share of non-fossil fuel in India’s electricity generation capacity to 50% by 2030.

Till May 2024, the Ministry of New and Renewable Energy (MNRE), the nodal ministry for the National Green Hydrogen Mission, has awarded tenders for setting up 412,000 tonnes of Green Hydrogen production capacity and 1,500 MW of electrolyzer manufacturing capacity.  Nearly Rs 40 million has been allocated for research and development activities for 2025–26, and US$2.1 billion is allocated to the Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme, which provides incentives for the production of green hydrogen. As part of the Green Hydrogen Mission, the government is also aiming to develop a skilled workforce of about 600,000 people over the next six years.

Currently, the manufacturing cost of green hydrogen in India stands at approximately Rs.300 per kilogram. The government has initiated the process of inviting bids in three tranches for green hydrogen supply and in two tranches for electrolysers. In terms of production capacity, the government will support 3.6 million tonnes of hydrogen production over the next three years and approximately 3,000 megawatts of annual electrolyser capacity for a span of five years under this program.

The technology for hydrogen production is developed indigenously and has high local material content. Recently, Bharat Heavy Electricals Limited (BHEL) has entered into a Technology Transfer Agreement (TTA) with Bhabha Atomic Research Centre (BARC) for a 50 kW alkaline electrolyser system for Hydrogen production. This is a crucial step in terms of scaling up Indigenous Alkaline Electrolyser Technology and its commercialisation for application in sectors such as refineries, fertiliser, steel, transportation, etc. Reliance Industries has also entered into a technology licensing agreement with Oslo-based Nel Hydrogen Electrolyser AS for manufacturing electrolysers.

The primary goal of the mission is to position India as the leading global hub for the production, utilisation, and export of green hydrogen and its derivatives. Green energy alliances are also being initiated at state levels. Power giant NTPC, which is India’s largest power utility having a total installed generation capacity of more than 76 GW, has entered into a pact with Mahatma Phule Renewable Energy and Infrastructure Technology (MAHAPREIT) for the development of renewable energy parks and projects in Maharashtra. The agreement envisages joint development of grid-connected renewable energy parks and projects including solar, wind, hybrid etc. and/or solutions thereof up to 10 GW in Maharashtra.

This year for the first time, India’s Ministry of New and Renewable Energy set up its pavilion at the World Hydrogen Summit 2024, held in Rotterdam, Netherlands from May 13-15.

In keeping with the goals set for an increase in green hydrogen, the government recently exempted solar and wind energy plants located in a special economic zone (SEZ), or export-oriented units for the production of green hydrogen and its derivatives that are also in the same zone, from buying modules and turbines from the approved list of models and manufacturers. According to a May 28, 2024 notification by the Ministry of New and Renewable Energy, the exemption will apply to the renewable energy plants to be commissioned by December 2030 to produce green hydrogen and its derivatives.

Under the existing foreign direct investment (FDI) policy of the Government of India, the renewable energy sector allows up to 100 percent FDI under the automatic route. The Boston Consulting Group (BCG) in its report  “The Next ‘Digital’: Unlocking a $50 Billion Green Tech Opportunity,”(2022) has projected that the green tech sector in India will achieve a market size of US$45-55 billion by 2027. The report highlights that the growth of green technology is spurred by the increasing adoption of sustainable applications across IoT (Internet of Things), cloud computing, data platforms & analytics, digital twin (digital model of an intended or actual real-world physical product, system, or process), and blockchain.

Finally, aside from explicitly encouraging investment in hydrogen technology, the government is trying to address major issues like high costs, policy and technology uncertainty, value chain complexity and infrastructure requirements, regulations and standards, and public acceptance of fuel sources free of emissions. The country’s ambition to produce 5 million metric tons (mt) of renewable hydrogen by 2030 and secure a 10 per cent share of the global trade by that time underscores its commitment to renewable energy.

Vaishali Basu Sharma
Author is an analyst on Strategic and Economic Affairs. She has worked as a Consultant with the National Security Council Secretariat (NSCS) for nearly a decade. She tweets at @basu_vaishali
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