Introduction
India has set a goal of becoming energy independent by 2047 and Net Zero by 20701. To achieve this goal, boosting the usage of renewable energy across all economic sectors is critical to India's Energy Transition. Green hydrogen is regarded as a viable option for facilitating this change. Hydrogen can be used for long-term renewable energy storage, as a fossil fuel replacement in industry, for clean transportation, and potentially for decentralized power generation, aviation, and maritime transport.
Green Hydrogen refers to hydrogen produced using renewable energy sources like wind or solar. In simple terms, it is a clean and sustainable form of hydrogen. One of the key methods to produce green hydrogen, the electrolysis process, splits water into hydrogen (H2) and oxygen (O2) using an electrical current traveling across electrodes in the water. This process is powered by sustainable energy, like wind or solar; hence, it is considered green because it does not rely on fossil fuels or release greenhouse gasses.
The interest in hydrogen has been growing rapidly. Green hydrogen has been featured in nearly all recent climate-related conventions and conferences, including the United Nations Climate Change in Glasgow (COP26) and the Green Hydrogen Catapult2. Green Hydrogen is seen as a measure to decarbonise industries, especially hard-to-abate industries like steel, cement, and coal, for two primary reasons. Firstly, the hydrogen in use is currently derived using fossil fuels. It is called 'Grey Hydrogen' or 'Brown Hydrogen' depending on the raw material used in the output–coal or natural gas. Secondly, these hydrogen-based fuels also release carbon dioxide, which contradicts the motive of producing clean energy.3 On the other hand, Green Hydrogen is extracted through electrolysis and has no carbon residue.
India and Green Hydrogen: Legislative Framework
Energy use in India has doubled in the last 20 years and is likely to grow another 25% by 20304. The introduction of a Green Hydrogen Policy was required for two reasons:
- India imports over 40% of its energy requirements, worth over $160 billion of foreign exchange annually5 This demands attention towards such technologies that enable an enhanced share of renewable sources in energy production and decrease the dependence on fossil fuels.
- Most of the hydrogen currently used in India is Grey or Blue Hydrogen, i.e., derived from a non-renewable source like methane or coal.6 This does not align with India's climate change goals of net zero carbon emissions by 2070.
The Ministry of Power released the Green Hydrogen Policy ("Policy") in February 2022 in line with the Prime Minister's launch of the National Hydrogen Mission ("Hydrogen Mission") on India's 75th Independence Day, i.e., 15 August 2021. The Policy aims to produce 5 million tonnes of Green Hydrogen annually by 2030.
The Union Cabinet approved the Hydrogen Mission in January 2023 with an initial INR 19 744 crores budget.7 The breakdown of this budget has been given as INR 17,490 crore for Strategic Interventions for Green Hydrogen Transmission (SIGHT) Programme, INR 1,466 crore for Pilot Projects, INR 400 crore for Research and Development, and INR 388 crore for other components.
The National Hydrogen Mission is to be implemented in two phases. It is planned that the first phase, commencing in 2022-23 and proposed to conclude in 2025-26, will focus more on foundation building, and the second phase, beginning in 2026-27 and proposed to conclude in 2029-30, will focus on the deployment of advanced technology in hard-to-abate sectors.8
A significant outlay of the Hydrogen Mission has been devoted to Strategic Interventions for Green Hydrogen Transition Programme (SIGHT). This program has been designed specially to focus on the supply side issues in green hydrogen production channels. This program has introduced two different financial incentives, which are focused on support for the domestic manufacturing of electrolysers and the production of green hydrogen.
Green Hydrogen Policy
The primary aim of the Policy is to facilitate the implementation of the Hydrogen Mission. A substantial portion of the Policy deals with initiatives promoting green hydrogen production. Some of these are:
- Grant of connectivity to the Inter-State Transmission System: The Policy provides that green hydrogen projects are to be granted connectivity to the Inter-State Transmission System (ISTS) on priority under the Electricity (Transmission System Planning, Development and Recovery of Inter-State Transmission Charges) Rules, 2021.
It also provides for waiving ISTS charges for 25 years for green hydrogen projects commissioned before 30 June 2025.
- Allotment of land and establishment of manufacturing areas: The Policy provides for allotment of land within renewable energy parks for green hydrogen projects.
- Authorisation to the power bank and regulation of banking charges: The Policy allows for banking the renewable energy used in green hydrogen production for 30 days, and charges for power banking are fixed not to exceed the cost difference between the average tariff for renewable energy during the preceding year and average market clearing price in the Day-Ahead Market.
- Regulation of margin of distribution licensees: Where the distribution licensees supply renewable energy to the producers of green hydrogen, the Policy restricts their charge to the cost of procurement and regulates the margin through the state commission.
The Hydrogen Mission, along with the Green Hydrogen Policy, is a step toward a sustainable future that has also started discussions for more tech-enabled renewable energy.
As approved by the Cabinet, the expected results of the Hydrogen Mission are9
- Addition of 125 GW to the Renewable Energy capacity of India
- Reduction in INR 1 lakh crore fossil fuel imports
- Abatement of 50 MMT of annual greenhouse gas emissions
Green Hydrogen: Challenges and Issues
- Reliance on Water:
Under the National Green Hydrogen Mission, India is targeting the production of 5 MMT of green hydrogen by 2030. However, one of the most important things that the Policy needs to pay more attention to is the primary feedstock, water. The electrolysis process, used to split water into hydrogen and oxygen, requires a very high amount of water to produce hydrogen. While water is a renewable source, ensuring a continuous high water supply becomes challenging, especially in areas with limited water availability.
The current consumption of India in terms of grey hydrogen, which is hydrogen produced with natural gas, is 6 million tonnes.10 If India produced the same amount of green hydrogen, it would require 132-192 million tonnes.11
This requirement will further increase if the government pursues its claim of India having the potential to scale up production of up to 10 MMT of green hydrogen annually.12
A report by the International Energy Agency (IEA) states that every kilogram of green hydrogen produced needs nine liters of water. Access to freshwater is an issue for producing green hydrogen in areas where water shortage is prominent.
The Ministry of New and Renewable Energy, in the roadmap of the National Green Hydrogen Mission, has identified industrial and municipal wastewater as the feedstock for electrolysis wherever possible. India produces 72368 million liters of sewage water daily, per the Central Pollution Control Board of India.13 However, using wastewater for the process of production of Green Hydrogen comes with its own set of challenges.
Electrolysis requires 'demineralised' freshwater to produce the best results. The presence of impurities in the electrolysis process often decreases the process's efficiency.
While the production of sewage water is incredibly high, the treatment facility is only up to 31 841 million liters. The issue of who will bear the cost of treating municipal water is a barrier.
Thus, for now, desalination will not only increase the physical footprint of the required infrastructure but will also increase competition for land use, impact biodiversity and create limitations in the location of electrolysers.
- Economic Feasibility:
Though it is easy to perform in a lab setting to produce green hydrogen at an industrial scale, it requires huge investments. According to the International Energy Agency, having a kilogram of green hydrogen can cost $3-$7 right now14.
The cost of setting up green hydrogen production units using renewable energy sources is very high, and the necessary infrastructure to transport and store green hydrogen, such as pipelines and storage facilities, still needs to be improved.
A significant chunk of production cost depends on the capital cost of manufacturing electrolysers as they are yet to be standardised and mass-produced.
- Demand and Supply Mismatch:
The measures introduced in the Green Hydrogen industry to increase demand have not kept pace with incentives for supply. The draft document for the Hydrogen Mission contained specific Green Hydrogen Consumption Obligations for fertilizer production and petroleum refining sectors. It was predicted that increased adoption of green hydrogen would reduce production costs, making the transition smoother. However, in the published version, GHCO was not specified.
The Hydrogen Mission provided the general guidelines for a minimum share of green hydrogen consumption by designated consumers as energy or feedstock. Hence, many companies became cautious about investing in this area due to the uncertainty around the demand factor.
- Energy Loss:
Significant energy loss happens at each stage of the production process of green hydrogen. About 30-35% of the energy used to produce hydrogen through electrolysis is lost15. The conversion of hydrogen to other carriers can result in additional energy loss, and further transporting green hydrogen requires more energy inputs.
Total energy loss depends on the final use of green hydrogen. If the energy loss is high, more renewable electricity capacity is needed to produce green hydrogen. The problem with this is that it is not yet known whether the development of solar and wind potential will be fast enough to meet the needs for electrification of end uses and also the development of a global supply chain in green hydrogen.16
Future Prospects and Suggestions
The intertwining between the production of green hydrogen using renewable energy sources like water is a challenge. As far as the water issue is concerned, the use of wastewater to produce green hydrogen is only partially reliable. There have been discussions to build technologies that clean and desalinize the water, which can further be used for production.
However, the issue is that more energy will be required to treat wastewater. If the aim is to produce 5 MMT of green hydrogen annually, it would require 90 GW of renewable energy if demineralised water is used directly. However, if water has to be treated, the energy required to produce the same amount of green hydrogen can reach 125 GW. Water treatment may lead to a need for extra energy and, thus, an increase in the cost of production.17
This also leads to an increase in the cost of production as the cost of water treatment is added to the actual cost of producing green hydrogen. According to India's Investment Information and Credit Rating Agency, India needs around INR 9 trillion of investments to reach 5 MMT production.18
Furthermore, India needs consistent and low-cost renewable energy to decrease the cost of production of green hydrogen. It is suggested that green hydrogen centers are established where renewable energy centers already exist. This will lead to a lesser loss in transmission.
India needs to invest in the manufacturing of Electrolysers and collaborate and partner with global players to procedure critical minerals to overcome production challenges. Research and Development is a significant part of the success of this project as it can enhance the whole process by bringing in innovations to increase electrolysers' efficiency, stack life and reduce water and power requirements.
Conclusion
Green Hydrogen is not the end but the means to achieve India's Sustainable Goals. The Green Hydrogen Policy and the National Green Hydrogen Mission are welcome steps. India has been trying to reduce its carbon footprint and emerge as a green hydrogen hub.
However, the adoption of Green Hydrogen in India has its challenges. Creating a green hydrogen economy that is sustainable as well as cost-efficient is required to create an efficient supply chain that starts with the production of electrolysers.
The upcoming plan is to decrease the expenses for renewable energy sources to lower the cost of electrolysers. The goal is to make the production of green hydrogen economically competitive. Therefore, the success of this mission depends on effective planning and implementation of incentives, creating domestic demand, and putting in place a robust legislative framework.
The Ministry of New and Renewable Energy, in partnership with the Ministry of Petroleum and Natural Gas, Council of Scientific and Industrial Research, and Office of Principal Scientific Advisor to the Government of India, recently organized an International Conference on Green Hydrogen in July 2023 to explore the possibility of establishing a Green Hydrogen ecosystem.19
This conference was a massive step toward Green Hydrogen as it guided the country in ascertaining the focus areas for R&D and the required legislation. Thus, India is taking initiatives in the space of Green Hydrogen to have a robust system in place.
Footnotes
1. India's Nationally Determined Contribution (NDC) at Conference of Parties 26 at Glasgow. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1847812
2. Green Hydrogen Catapult, UNFCC https://climatechampions.unfccc.int/green-hydrogen-catapult/
3. A Ajanovic, The Economics and the Environmental Benignity of different colours of Hydrogen, International Journal of Hydrogen Energy 47, January 2022.
4. India Energy Outlook 2021, International Energy Agency, https://www.iea.org/reports/india-energy-outlook-2021/energy-in-india-today
5. NITI Aayog Report, Harnessing Green Hydrogen: Opportunities for Deep Carbonisation in India, June 2022. https://www.niti.gov.in/sites/default/files/2022-06/Harnessing_Green_Hydrogen_V21_DIGITAL_29062022.pdf
6. Ishika Chauhan, Green Hydrogen in India, Social Policy Research Foundation, June 2021.
7. Press Information Bureau, Cabinet approves National Green Hydrogen Mission, January 2023. https://pib.gov.in/PressReleasePage.aspx?PRID=1888547
8. Ministry of New and Renewable Energy, The National Hydrogen Mission, January 2023. https://mnre.gov.in/img/documents/uploads/file_f-1673581748609.pdf
9. Press Information Bureau, Cabinet Approves National Green Hydrogen Mission, Available at: https://pib.gov.in/PressReleasePage.aspx?PRID=1888547
10. Niti Aayog Report, Harnessing Green Hydrogen, June 2022. https://www.niti.gov.in/sites/default/files/2022-06/Harnessing_Green_Hydrogen_V21_DIGITAL_29062022.pdf
11. OMI Foundation Report, Landscape of Future Fuels in India, February 2023. https://olawebcdn.com/ola-institute/landscape-of-future-fuels-in-India.pdf
12. India's National Green Hydrogen Mission, January 2023. https://mnre.gov.in/img/documents/uploads/file_f-1673581748609.pdf
13. Press Information Bureau, Sewage Water Treatment, 12 December 2022. https://pib.gov.in/PressReleseDetail.aspx?PRID=1882807
14. International Energy Agency, Green Hydrogen Review, 2021. Available at: https://iea.blob.core.windows.net/assets/5bd46d7b-906a-4429-abda-e9c507a62341/GlobalHydrogenReview2021.pdf
15. International Renewable Energy Agency, Making the Breakhthrough: Green Hydrogen Policies and Technology Cost, 2021.
16. Ibid.
17. Manish Kumar, Water is needed for green hydrogen production, but concerns remain around its availability, Mongabay, March 2023.
19. Press Information Bureau, International Conference on Green Hydrogen to be held in New Delhi July 5-7, 2023, June 2023. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1935843
Citation: This Insight may be cited as InfEneTy 'Navigating the Challenges and Opportunities of Green Hydrogen' 21.07.2023
Originally published by InfEneTy.
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