Overcoming Barriers to Green Hydrogen Adoption in India
Key Ideas
- Green hydrogen (GH2) faces cost barriers compared to grey and brown hydrogen, needing a 35%-40% drop in electrolyser prices and 12%-14% efficiency improvement.
- A report by CareEdge Ratings estimates a significant capex of INR 2.40 lakh crore to produce one million metric tonnes of GH2, with capex for electrolyser being a major cost component.
- Government incentives, including direct production incentives and electrolyser capex incentives, aim to lower the levelised cost of green hydrogen to $2.1 per kg.
- Potential demand for GH2 in refineries and the ammonia sector could reach 3.75-4.25 million metric tonnes over FY27-FY30, driven by cost parity with natural gas and export potential.
The levelised cost of green hydrogen (LCOH) in India is currently higher than grey and brown hydrogen, creating barriers to its widespread adoption. CareEdge Ratings' report highlights the need for a significant reduction in electrolyser prices and efficiency improvements to achieve economic viability. The estimated capex for producing one million metric tonnes of green hydrogen is substantial, with renewable energy generation and electrolyser costs being major components. Government initiatives such as production-linked incentives aim to bring down the levelised cost of green hydrogen to $2.1 per kg. Refineries are identified as key early adopters of green hydrogen due to their low hydrogen production costs. The report also suggests that ammonia production could drive significant demand for green hydrogen, especially if cost parity with natural gas is achieved. Overall, the outlook for green hydrogen adoption in India is positive, with the potential for significant growth in demand across various sectors.