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SUMMARY

Considering the recent surge in metal prices on geopolitical disruptions, the expected reduction in manufacturing costs for electrolysers may be back-ended to close to 2030.

By Shardul Sharma

The recent surge in global commodity prices may delay India’s hydrogen consumption goals, ICRA said in a recent report.

“Electrolysis is the most preferred technology for producing green hydrogen. However, considering the recent surge in metal prices on geopolitical disruptions, the expected reduction in manufacturing costs for electrolysers may be back-ended to close to 2030, rather than in the immediate term,” Rohit Ahuja, head of research and outreach at ICRA said.

Ahuja said that India’s drive to enhance green hydrogen production could entail overall investments of about 4 trillion rupees ($50bn), factoring renewable energy capacity additions of 60 GW and investments in electrolyser manufacturing facilities.

ICRA believes that the global drive towards green hydrogen adoption is dependent on decline in its electrolysers’ costs by about 50% by 2030 to levelised cost of hydrogen (LCOH) of $2-3/kg. However recent surge in metal prices may delay the hydrogen consumption goals, it said.

ICRA said that 98% of the hydrogen in India is produced with use of fossil fuels currently that is grey or blue hydrogen. However, surge in fossil fuels prices has raised the LCOH production, bringing it at par with that for green hydrogen, which is about $5/kg. This, if sustains, may augur well towards a faster adoption of green hydrogen technology, it said.

“The cost of blue hydrogen production via reformation and gasification technologies is highly sensitive to the price of raw material like natural gas, coal etc. Currently, the cost of fossil fuels is very high and will have upside implications on the fuel cost by two to three times,” Ahuja told NGW.

 

Share of green hydrogen to expand in the Indian hydrogen market

The hydrogen demand in India at present of around 6mn metric tons/year is met through grey and blue hydrogen. ICRA expects the share of green hydrogen to reach 30% of the total hydrogen production of about 9mn mt/yr by the year 2030. The share of blue hydrogen is expected to increase by the year 2030 as the government wants to reduce carbon emissions to achieve climate goals.

By the year 2050, the share of green hydrogen is expected to reach 80% of the total hydrogen production of 30mn mt/yr. Rest is expected to be met through blue hydrogen, Ahuja said.

“Incentives from the government are critical for mass adoption and to spearhead investments for infrastructure development for storage, transport and distribution. Also, supporting renewable energy capacity will have to be developed and incentives need to be provided for high capex cost if the government wants to adopt production for green hydrogen,” he said.