Will demand for hydrogen keep up with green hydrogen production being set up?

The government of India has focused on production of green hydrogen, but demand of the same remains a key issue. The hydrogen market being created in India is setting up a string of suppliers, with most energy companies lining up impressive plans. But experts aver it will be a difficult task will be to generate the demand for the fuel to create another alternative market to oil, gas and coal.

The green hydrogen policy announced by the power ministry last week makes a compelling case for manufacturers such as Indian Oil Corporation (IOC), Reliance Industries Ltd (RIL) and others to expand the level of production. Most energy companies have announced massive targets to ramp up hydrogen production.

The policy has removed interstate charges for renewable electricity (RE) needed to produce green hydrogen. The waiver will be applicable for all projects set up before 2025 and run for 25 years. Other benefits include land for manufacturers of green hydrogen to set up bunkers near ports for storage for export.

S.S.V. Ramakumar, director for research and development at IOC, said the latest policy could cut generation costs to produce hydrogen by up to 50 per cent from the current average of Rs 500 per kg. But experts reckon that for hydrogen to be competitive as a fuel with alternatives such as solar or oil and gas, it needs to be available at less than Rs 100 per kg.

The next stage in cost reduction will, therefore, depend on what the government can do to spur industry and transport sectors to adopt the use of hydrogen in a big way. Only then will large-scale investments flow into the sector. For this to happen, the power ministry must prod a clutch of other ministries to generate demand — steel, shipping, heavy industries, civil aviation and, most significantly, road transport and highways.

An S&P Platts report predicts that by 2030 hydrogen demand for industry and power generation will make up, respectively, 43.8 and 24.5 per cent of annual fuel consumption. Despite these advantages, creating the enthusiasm for such a large-scale shift is a formidable task for any government in any major economy. 

HYDROGEN PRODUCTION UNITS IN THE PIPELINE

  • Reliance Industries’ arm Reliance New Energy Solar Ltd has signed an MoU with Danish company Stiesdal A/S for hydrogen electrolysers. RIL also plans to be one of the largest global producer of blue hydrogen 
  • GAIL will build India’s largest GH (green hydrogen) making plant. Investment details not known 
  • IOC setting up GH plant at Mathura refinery; Rs 100 crore investment made for pilot on GH fuel infrastructure at Kochi and Thiruvananthapuram in Kerala 
  • NTPC has won a tender to set up a GH microgrid at Simhadri, AP. Also, a GH plant at Ladakh 
  • L&T plans a hydrogen electrolyser plant in tie up with Norway’s HydrogenPro AS. Will jointly develop and operate GH projects in India with ReNew Power 
  • Adani has announced plans to be India’s largest GH producer 
  • BPCL tied up with Bhabha Atomic Research Centre to develop electrolyser technology for GH production 

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