Green Hydrogen Sector in India
Overview
The green hydrogen sector in India is poised for significant growth, despite current challenges such as weak export demand influenced by geopolitical instability and policy reversals in key markets.
Key Challenges
- Export Demand:
- Geopolitical tensions and policy backtracking, notably in the US where the Inflation Reduction Act (IRA) is stalled, create skepticism.
- Weakness in export markets is slowing down the pace of expansion.
- Domestic Initiatives:
- India is working with Europe to ensure smooth transportation and reduce import duties on green hydrogen exports.
- Focus on building domestic demand with government tenders and collaborations with the fertilizer industry.
Current Developments
- ReNew is developing a green ammonia project in Odisha but faces hurdles due to weak export demand.
- Shipping companies are encouraged to use clean fuels, though progress is slow.
Domestic Demand Strategies
- Government initiatives are underway to ensure offtake, including tenders and pilot projects across sectors like transportation and steel.
- Focus on replacing grey hydrogen with green hydrogen in domestic industries, such as fertilizers.
Cost Competitiveness
Green hydrogen is currently more expensive than grey hydrogen. Production costs are around $4-$5 per kg compared to $2.3-$2.5 per kg for grey hydrogen, making it commercially non-viable without mandates.
National Green Hydrogen Mission
- Launched in 2023, targeting 5 million metric tonnes (MMT) of green hydrogen production capacity by 2030.
- Strategic Interventions for Green Hydrogen Transition (SIGHT) programme supports production and electrolyser manufacturing.
Recommendations and Future Prospects
- Immediate strategies include blending green hydrogen into existing supplies for sectors like refineries and city gas networks.
- Encourage substitution in niche industries where switching is cost-neutral, such as glass and ceramics.
- Public procurement, especially for green steel, can help scale domestic demand.
