India's National Green Hydrogen Mission sets a lofty goal of producing 5 million metric tons of green hydrogen annually by 2030. However, the current cost disparity, with green hydrogen priced at $4-5 per kilogram, challenges this mission. A report by the World Economic Forum and Bain & Company suggests lowering production costs to $2 per kilogram, emphasizing increased subsidies and technological advancements. The report advocates for strategic measures to enhance electrolyser efficiency, encourage pilot projects, and invest in research and development to propel India into a leading position in the global green hydrogen market.
India's ambitious National Green Hydrogen Mission, launched in 2022, strives to revolutionize the hydrogen landscape by decarbonizing challenging sectors, reducing import dependence, and abating 50 million metric tons of greenhouse gas emissions cumulatively. However, the journey to 5 million metric tons of green hydrogen annually by 2030 faces a hurdle – cost-parity with grey hydrogen.
Currently priced at $4-5 per kilogram, green hydrogen stands at double the cost of its grey counterpart. The production expenses primarily revolve around the round-the-clock renewable electricity and electrolyser costs, the latter constituting 30-50% of the total expenditure.
The World Economic Forum and Bain & Company's report emphasizes a critical need to bring down green hydrogen production costs to $2 per kilogram. The existing subsidy of $54/kW for manufacturing electrolysers is deemed insufficient. The report advocates a substantial increase in direct subsidies to incentivize early adopters and offset costs effectively.
While the mission targets pivotal sectors like steel, mobility, and shipping, the authors underscore the importance of creating a conducive environment for green hydrogen initiatives. Incentives, pilot projects, and extensive support for research and development become key components in achieving the mission's broader goals.
Despite the potential, the report notes a cautious sentiment among industry players in India, adopting a 'wait-and-watch' approach. The anticipation is for substantial green hydrogen production to materialize post-2027.
The challenge extends to planned electrolyser capacity, with 8 GW in the pipeline falling short of the 35-40 GW baseline requirement. The authors stress the need for indigenous electrolyser technology development and testing to bridge this gap.
To position India as a green hydrogen export hub, the report suggests leveraging the unregulated international market for hydrogen derivatives. Strategic initiatives include developing green hydrogen production clusters, creating a robust pipeline network, and addressing storage and transport costs.
India's recent standards for green hydrogen production, aligning with less than 2 kg CO2 emissions per kg of hydrogen, set a benchmark. The report recommends refining definitions and methodologies for "green steel" or "green cement" to ensure precise monitoring, measurement, and achievement of Net Zero emissions by 2070.
The journey towards a greener hydrogen future in India hinges on overcoming the cost challenges outlined in the National Green Hydrogen Mission. The roadmap, as suggested by the World Economic Forum and Bain & Company, involves strategic subsidies, technological advancements, and a collaborative approach. With a watchful eye on the horizon, India has the potential to not only meet but exceed its ambitious green hydrogen targets, establishing itself as a leader in the global energy transition.