Green hydrogen is attracting significant interest from industry as well as policy makers.In an interview with DHGyanendra Keshri (Kapil Bansal, EY India Partner specializing in energy transition and decarbonization) talks about the economic viability, opportunities and challenges of the green hydrogen sector.
excerpt:
What do you think about the commercialization potential of green hydrogen?
The economic viability of green hydrogen production depends on a variety of factors, including the cost of renewable energy, electrolyser capital investment, regulations, and incentives. Considering current prices for 24-hour renewable energy, the levelized cost of green hydrogen production could range from $3.5 to $6 per kg. Given that hydrogen produced from fossil fuels is currently significantly cheaper, the government announced a focus on building a robust hydrogen supply chain infrastructure, encouraging domestic manufacturing of electrolysers, and reducing green hydrogen costs. It is expected that these policy measures will further strengthen the cost competitiveness of green hydrogen supply.
How much investment and production growth is expected in this sector?
Based on plans announced by private companies and participants, approximately $180 billion to $200 billion is expected to be invested in India’s green hydrogen sector by 2030. Green hydrogen production is expected to be 5 MMTPA (1 million tons per year), which will require an investment of nearly $100 billion, according to the country’s Green Hydrogen Mission. This is expected to be further complemented by ecosystem improvements in terms of infrastructure for transportation/storage, improved ports for export, and growth of renewable energy.
Where will the money come from?
These investments come from a variety of sources. It will be a combination of private equity and government incentives. Private as well as public companies, especially refineries and fertilizer companies, are expected to increase their investments in green hydrogen as part of their decarbonization efforts.
To what extent does the feasibility of green hydrogen depend on government support?
As technology matures and scale increases, costs will decline. Before that happens, something very similar to what happened in the solar power industry needs to happen in the green hydrogen space. The government has provided significant support to the solar power industry through various schemes. We believe that both the central and state governments will introduce similar incentive schemes for the green hydrogen sector as well. At the same time, technological advances will gradually bring costs down, making green hydrogen commercially viable even without government incentives.
(issued April 12, 2024, 23:35 IST)
