Shaping the future of hydrogen energy in India

India has made significant progress in increasing its renewable energy generation over the last decade. From 2012 to 2022, total renewable energy capacity increased from 35 GW to over 140 GW, with wind and solar being the largest contributors. The government has also set a target of 500 GW of renewable energy capacity by 2030.

As is the case in several countries, hydrogen is seen as a potentially important part of the plan to assist in reducing greenhouse gas emissions in India. As noted in the National Green Hydrogen Mission, launched in January 2023, the Government of India has set a target of producing 5 million tonnes per annum of green hydrogen by 2030.

The Indian government is also promoting several different scenarios, including the use of hydrogen in steelmaking as well as in transportation, utilizing hydrogen fuel as a means of reducing emissions from the transportation sector.

Reality check on the state of hydrogen:

From production to distribution today, hydrogen is produced predominantly for consumption in chemical processes, including ammonia production, desulphurising fuels and to produce methanol. Current hydrogen production is primarily through the consumption of natural gas utilizing steam methane reforming, which liberates carbon dioxide as a by-product. Due to the existing supply chains that are in place, including the capability to leverage international liquefied natural gas (LNG) supply chains, hydrogen production infrastructure is generally located near its end-use applications. As a consequence of the current production processes, whilst hydrogen is often presented as a decarbonization solution, it is paradoxically, a decarbonization challenge.

With numerous announcements promoting the use of hydrogen as an energy carrier and a solution to decarbonize other emissions-intensive activities including power generation and mobility, it is vital to know what this means and what the implications are across all industries.

Notably, the proposed solutions are reliant upon the production of hydrogen with a lower carbon dioxide emissions intensity, either through electrolysis supplied with renewable electricity, or through capture of carbon dioxide from steam methane reformation and permanent sequestration via carbon capture and storage (CCS).

Hydrogen as a new energy vector has potential where countries with ready access to renewables, but without significant opportunities for local use, could develop production infrastructure and couple this with intercontinental shipping and use at destination for electricity or other direct use cases including ammonia production. But such supply chains do not exist today, so the ability to scale up remains the key challenge, as are the economics for end-use applications.

From a technology perspective, the readiness to produce at scale exists. India is also promoting domestic capability to build manufacturing capacity locally, particularly for electrolysers, which are the key technology required for green hydrogen production.

However, the shipping of hydrogen across international waters is currently not sufficiently advanced. As an alternative, ammonia is being proposed as one of the vectors for shipping; however, this alternative presents challenges of its own, including permitting requirements for storage and general safety management considerations due to the toxicity of the product.

But, existing infrastructure in India presents a significant opportunity to produce low carbon ammonia at scale, and the question is, how can the national and local government, the private sector and end users collaborate to reduce capital, operating and distribution costs, making hydrogen affordable and accessible soon?

Transiting into hydrogen: A pragmatic localized approach

India presents very interesting avenues for the deployment of hydrogen at scale. Ammonia production currently accounts for over a third of hydrogen consumption globally, and India is one of the top five ammonia producers in the world. Most of the domestic ammonia production is derived from imported LNG and is used in the production of fertilizers.

With the increasing capacities of renewable generation in India, there is an opportunity to leverage existing ammonia infrastructure, in particular the storage and downstream handling facilities. The benefits of such a strategy would include:

• An overall reduction in capital costs through utilization of storage and handling facilities
• A case that is at significant scale, allowing for the development of renewable hydrogen production infrastructure with a predictable offtake requirement
• The potential to co-locate renewable developments in the regions with existing ammonia infrastructure, thus reducing requirements for large scale overland grid connections.
• A reduction in the reliance upon imported LNG for the domestic ammonia market, increasing energy security.

The demand for current ammonia consumption in India (including imported ammonia) would require around 2.5 – 3.5 million tonnes per annum of hydrogen, which equates to 50- 70% of the national target by 2030.

The current economics and export markets are challenging, as the scale of such projects requires significant investment in infrastructure. If the cost is passed through to the end user, the costs will be prohibitive compared to other existing solutions. Therefore, building domestic use cases presents an opportunity to develop manufacturing capabilities, advance production, and downstream consumption projects at scale, and “build into” export markets.

This approach would differentiate India from several other geographies, where such domestic use cases do not currently exist at sufficient scale, necessitating the requirement to pursue export options in the initial stages of project development. These export projects then face the challenge of securing off-takers who would need to be first movers and may not wish to risk locking in long term pricing that may reduce over time with advances in technology for production, shipping, and end-use applications.

Even though India has set challenging targets for both, the increase in renewable electricity generation as well as national green hydrogen production, present a real opportunity for industry and governments to align on optimal solutions, and tailor strategies to build at scale. With a pragmatic and resilient yet collaborative approach, we are positive that India will take its place in the global hydrogen transition by the end of the decade.