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Green Hydrogen Adoption: Where Does India Stand? The cost disparity poses a challenge to the widespread adoption of green hydrogen, especially in sectors where cost competitiveness is crucial.

By Priyanka Tanwer

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With green hydrogen emerging as a transformative solution to mitigate environmental impact and foster sustainable development, India stands at a pivotal point in its energy transition journey.

Green hydrogen which is produced through electrolysis using renewable energy sources such as solar and wind has gained global recognition as a clean and versatile energy carrier.

According to a report by International Energy Agency, seventeen national governments and the European Union adopted targets for deploying electrolysis capacity by 2030. These targets account for 140- 150 GW of capacity by 2030, mainly coming from the announcements by India (54 GW of estimated capacity).

Backed by abundant renewable resources and ambitious renewable energy targets, India is strategically positioned to play a key role in the global green hydrogen market.

Green hydrogen, also known as renewable hydrogen, is generated through electrolysis, a process where water is split into hydrogen and oxygen using electricity from renewable sources such as solar photovoltaic (PV) and wind turbines.

Unlike conventional grey hydrogen derived from natural gas, green hydrogen does not emit greenhouse gases during production, making it a zero-emission fuel with immense potential to decarbonise various sectors, including transportation, industry, and power generation.


As the country is witnessing the dawn of green hydrogen movement in the backdrop of the National Green Hydrogen Mission (NGHM) and Strategic Interventions for Green Hydrogen Intervention (SIGHT) getting notified by the centre, there is a long way to go and the widespread adoption of green hydrogen in India faces several significant challenges that span across economic, infrastructural, and environmental domains.

According Saarthi GreenTech, a company that transforms diesel engine into a hydrogen-diesel hybrid instantly, the production of green hydrogen relies on establishing solar and wind energy ecosystems capable of providing uninterrupted power to electrolyzers, ensuring minimal CO2 emissions. However, the high upfront costs associated with setting up such infrastructures, coupled with the lengthy return on investment, deter many potential investors. This financial barrier inhibits the scalability of green hydrogen production in India.

Alok Kumar, Co-founder, Saarthi GreenTech said, "India's renewable energy infrastructure, while expanding, still grapples with issues of availability, reliability, and transmission. Insufficient infrastructure, including pipelines and storage facilities, adds complexity to the storage and distribution of green hydrogen."

Assessing the current cost competitiveness of green hydrogen compared to traditional fossil fuels in India involves considering various factors such as production costs, infrastructure, and market dynamics. As of now, green hydrogen production remains more expensive than traditional fossil fuels due to the high upfront costs associated with renewable energy infrastructure and electrolysis technology.

For instance, the cost of green hydrogen production in India is estimated to be around INR 250 to INR 450 per kilogram, significantly higher than the production cost of grey hydrogen derived from fossil fuels, which ranges from INR 110 to INR 180 per kilogram. This cost disparity poses a challenge to the widespread adoption of green hydrogen, especially in sectors where cost competitiveness is crucial.

Echoing the same Ramnath Vaidyanathan, AVP & Head, Environmental Sustainability, Godrej Industries Group said, "There has not been a lot of movement on green hydrogen in the industry, mainly due to commercial reasons. The cost of green hydrogen solutions is still prohibitive and unless this is lowered, there's not going to be the adoption that's expected. Blue hydrogen may be a good solution in the interim."

Meanwhile, Santanu Roy, Principal Advisor, GPS Renewables underscored few points and said that the cost of GH2 at present is prohibitively high as compared to Grey Hydrogen.

"In absence of assurance of long term demand, developers are not confident of making huge capital investments at present cost. For India to meet its declared 2030 target of GH2 production capacity to reach 5 MMTPA meeting 40 per cent of domestic demand, it would require a gigantic increase to between 60 and 100 GW of electrolyser capacity, nearly 12 times the current global output of 8 GW per year," he added.

What Policy Frameworks And Incentives Can India Implement?

According to Anish Mandal, Partner, Deloitte India, growing number of nations globally have announced various support measures to increase adoption and de-risk investment in hydrogen infrastructure – Inflation Reduction Act (IRA) in the USA, European Hydrogen Bank and IPCEI in EU, H2Global initiative in Germany, and Green Innovation Fund and CFD subsidy scheme in Japan are few of the prominent incentive schemes. Likewise, India has also announced INR 19,744 cr support measures under the SIGHT scheme to support production of GH2, manufacturing of electrolyser, several pilot projects and R&D in the hydrogen ecosystem.

"We would expect similar measures which help consolidate demand from the industries. Obligatory mandates or incentives for use of green hydrogen replacing the use of grey hydrogen in the refinery sector followed by fertilizer and other sectors could create the requisite domestic demand for developing the local hydrogen ecosystem," Mandal added.

To incentivize green hydrogen production and usage in India, the government could implement a range of policy measures and regulatory frameworks. Firstly, financial incentives such as subsidies, grants, or tax incentives could be provided for upfront investments in solar and wind energy infrastructure necessary for green hydrogen production, offsetting the high initial costs and encouraging investor participation.

Additionally, implementing feed-in tariffs could guarantee a fixed price for green hydrogen generated from renewable sources, providing stability for investors and making renewable hydrogen production economically viable.

"Investing in dedicated infrastructure like pipelines, storage facilities, and distribution networks would facilitate transportation and storage, making green hydrogen more accessible. Public procurement programmes prioritizing green hydrogen use in government fleets and public transportation would create market demand and stimulate investment," Alok said.

The most prominent step that India has to take to fully realise its potential and become a global hub for green hydrogen is to bring down the cost of production of green hydrogen from the current price band of USD 7 per kg to around USd 4.10 per kg.

While India currently does have competitive tariffs in the field of renewable energy, reduction of operating costs, transmission and distribution losses, and wheeling charges among others.

"As the sector is still in its early days of development, research initiatives in the field of generation, storage and particularly transportation of hydrogen is necessary for development of a green hydrogen economy," Arun Kumar, Partner, IndusLaw said.

Speaking to Entrepreneur India, Amit Bansal, Co-founder and CEO, Hygenco Green Energies said that development of a national carbon pricing mechanism and carbon taxation system to promote demand for green hydrogen and green ammonia is needed.

"There is a need to incorporate green hydrogen into the priority sector lending list to expedite the availability of funds and promote green hydrogen projects," he added.

Where Does India Stand?

The current state of green hydrogen infrastructure in India is fast-evolving and is witnessing enthused interest both from domestic and international players. From the announcement by the Indian Government on the National Green Hydrogen Mission, the Solar Energy Corporation of India had called bids for providing incentives for the production of 4,50,000 tonnes of green hydrogen and 1.5 GW of electrolyser manufacturing facilities annually.

"These have witnessed significant interest from considerable number of companies. India's Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme, backed by INR 17,490 crore is aiming to catalyse the production of green hydrogen and electrolysers develop the green hydrogen ecosystem and enable industrial decarbonisation," Amit said.

Government of India has set an interim target of 5 MTPA green hydrogen production by 2030. It is likely that this target will be met through both domestic consumption and export.

While domestic demand is yet to be realized at large scale and is limited to only pilot projects by refinery and steel sector, larger projects are announced with an aim to export to EU, Japan, Korea and Singapore.

MoUs of more than 20 Million Ton of green ammonia capacity have been signed with various states, such as Odisha, Karnataka, Kerala, Tamil Nadu and Gujarat, albeit actual progress of these projects in terms of FEED, selection of contractor. Any demand obligation towards usage in the refinery sector followed by other sectors in a phased manner could provide the necessary thrust to spur the domestic demand.

Santanu said that the infrastructure is still in nascent stage but likely to take shape in next two to three years as the winners of first round of SIGHT programme take actions on ground.

"It is expected that the government to be formed next month will quickly implement definitive steps to usher in the next stage of SIGHT," he added.

India has declared the goal to achieve Net Zero emissions by 2070. As India's growth story unfolds, its demand for energy and resources is set to rise. Energy use has doubled in the last 20 years and is likely to grow by at least another 25 per cent by 2030.

The country currently imports over 40 per cent of its primary energy requirements, worth over USD 90 billion every year. Major sectors like mobility and industrial production are significantly dependent on imported fossil fuels. This necessitates a shift towards technologies that enable enhanced share of renewable sources in the energy mix, and progressively reduce the reliance on fossil fuels.

Priyanka Tanwer

Feature Writer

With eight years of experience covering various beats for the digital and print media, now covering electric vehicles and sustainability for Entrepreneur India, keeping a nose for innovation and new technology in this futuristic sector. You can reach me at     
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