Ambani, Adani in India’s green hydrogen rush, but there are still obstacles

Hydrogen fills much more than lithium-based batteries. Indian Federal Minister Nitin Gadkari (second from left) is seen here launching the country’s first green hydrogen-based advanced electric fuel cell car (FCEV), the Toyota Mirai, in his residence in March.

Hindustan Times | Hindustan Times | Getty Images

The scorching heat of the sun can be punishing on summer days, and India’s vast coastline makes it a challenge to defend. But huge amounts of water and abundant sunlight have paved the way for green energy that could curb India’s huge appetite for fuel.

Indian companies have promised to commit billions of dollars to green hydrogen projects – but experts warn that the technology is still very new and its commercial viability unproven.

Green hydrogen is a pure fuel produced by splitting water into hydrogen and oxygen using renewable energy such as solar energy. Upon combustion, it emits no exhaust, only water. It claims environmentalists it can help decarbonize heavy industries such as oil refining, fertilizers, steel and cement, as well as help reduce emissions globally.

“At this point, the technology is not mature or cheap enough to be used widely,” Amit Bhandari, senior fellow, energy and investment at Gateway House, a Mumbai-based think tank, told CNBC. He pointed to the example of solar energy, which took about a decade to become viable.

The green hydrogen industry is still in its infancy and pilot plants to study the technology and cost will take at least five years to show results, Bhandari said.

“Ten years ago, if you had asked me if solar energy is viable, I would have said ‘no’, even though the solar energy potential was known and the technology was available. It only gained momentum when the costs became comparable to traditional energy sources over a long period, “Bhandari said, adding that he was reluctant to write off a new technology.

Renewable energy currently accounts for almost 40% of the total installed capacity in India, the world’s third largest crude oil importer after China and USA

But without large-scale energy storage, Renewable energy cannot become a viable alternative to traditional energy sources.

Lithium batteries cannot store energy on a large scale, even though they are widely used to power electric vehicles. Green hydrogen, which can be stored in large quantities, can drive heavy vehicles such as trucks over long distances.

The Indian government last year announced a national green hydrogen policy with a goal of producing 5 million tonnes of fuel annually by 2030. In February, it provided tax breaks and allocated land to set up facilities to increase investment.

Right now, India is vulnerable to all sorts of external and geopolitical shocks. With green hydrogen, that vulnerability will be reduced.

Amit Bhandari

Senior Fellow, Energy and Investment, Gateway House, Mumbai

“Two key resources are needed to become a major global player: water and cheap electricity,” Celeris Technologies chairman Venkat Sumantran told CNBC. “India has a large coastline with access to seawater and plenty of sunlight.”

Several states in India get good sunlight most of the year and this makes it possible to make optimal use of solar panel farms, said Sumantran, whose Chennai-based consulting firm provides new energy alternatives to fossil fuels in the automotive sector.

But becoming a global player also depends on how cheap solar cells – which convert sunlight into energy – are produced. “There are many signs that policies to allow this to happen are being implemented,” he added.

Indian companies investing in hydrogen

In recent months, several Indian companies have announced green hydrogen plans:

  • In January, India’s largest company by market value Reliance Industries announced that it would commit $ 75 billion to green energy, including an undisclosed amount for green hydrogen projects.
  • In early April, the Hyderabad-based Greenko group and the Belgian John Cockerill built a two-gigawatt hydrogen electrolyzer gigabyte plant in India, the largest outside China.
  • In March, the state-owned Indian Oil Corporation, which accounts for nearly half of India’s oil products market share, teamed up with two private companies to launch a joint venture to develop green hydrogen. There are also plans to manufacture and sell electrolysers used in the production of green hydrogen.
  • In November 2021, the world’s largest solar energy developer Adani Group announced that it would invest $ 70 billion by 2030 in renewable energy infrastructure, including green hydrogen.

Reliance Industries and Adani Group have both promised to make the world’s cheapest green hydrogen for $ 1 per. kilograms, or about a quarter gallon – that’s lower than the current cost of $ 5- $ 6. When contacted by CNBC, none of the companies provided details on how they would reduce costs so drastically.

Green hydrogen is also burning India’s geostrategic ambitions.

Reliance Industries chairman Mukesh Ambani predicted that green energy has the potential to become a game changer.

“When wood was replaced by coal, Europe overtook India and China to become world leaders. With the advent of oil, the United States and West Asia grew others,” he told a February conference on renewable energy in Pune, a West Indian city. .

“When India becomes not only self-sufficient in green and clean energy, but also a major exporter, it will help India emerge as a global power,” he said at the time.

Bhandari from Gateway House acknowledges that there has been a lot of hype around green hydrogen, and said it was not necessarily a bad thing.

“A key thing is that hype can create its own reality. If there is the right amount of capital, human intelligence is thrown over a problem. And technology evolves. Costs start to fall and it creates demand,” he said.

“Momentum is on the side of innovation and costs are falling. There is also already demand for green hydrogen, which can be absorbed immediately in the oil refining, fertilizer and steel industries,” he added.

Pilot projects are needed

Green hydrogen only becomes commercially viable when it becomes cheaper, Bhandari noted.

“You can’t start with a 500 megawatt plant,” he said, adding that even a company like Reliance, which has extensive experience handling hydrogen gas at its oil refineries, would not invest in a huge plant without pilot projects. “We are several years away from large-scale capacity,” he said.

Eavesdropping on India’s 7,500 kilometers of coastline is also complicated, Bhandari said.

“There are other requirements on the coastline. It is not uninhabited. There are several large cities and ports. And that must be weighed against the need to also protect mangroves and other fragile ecosystems,” he said.

Still, he admitted that if successful, the green hydrogen push would make India less vulnerable to price shocks on natural gas and oil.

“Right now, India is vulnerable to all sorts of external and geopolitical shocks. With green hydrogen, this vulnerability will be reduced,” he said.

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