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Global Trends

As per International Energy Agency (IEA)’s Hydrogen Projects Database, about 320 green hydrogen production demonstration projects have been announced worldwide representing a total of about 200 MW of electrolyser capacity, with new project announcements being made regularly.

According to International Renewable Energy Agency (IRENA), green hydrogen production costs have begun to drop owing to a decline in renewable power costs (electricity costs represent 60 to 70% of renewable hydrogen costs) and capital costs can go down with expected reductions in cost of electrolysers as more projects scale up. It makes the case for aggressive electrolyser capacities to be built within the next decade. Its estimates for annual global PEM electrolysers manufacturing capacity in 2030 is 100 GW, up from maximum estimated 3-7.5 GW currently.

Last year, a number of countries have spelt out aggressive national hydrogen strategies, with strong electrolyser deployment targets by 2030. Some of these are as follows:

  • European Union -A regional hydrogen strategy announced in July 2020 sets electrolyser capacity targets of 6 GW by 2024 and 40 GW by 2030, with separate country-specific electrolysers capacities (Germany –5 GW, France - 6.5 GW, and Spain 4 GW, by 2030), and an ambition to half electrolyser costs by 2030.
  • Japan -Japan’s New Energy and Industrial Technology Development Organization (NEDO) along with an industry consortium started operation of the 10-MW Fukushima Hydrogen Energy Research Field, the largest green hydrogen project, using alkaline electrolysers, in March 2020. Japan is targeting electrolyser costs of USD 475/kW, efficiency of 70% (4.3 kWh/Nm3), and a production cost of USD 3.30/kg by 2030
  • Chile -Target of 25 GW by 2030
Green Hydrogen in Developing Economies – ESMAP World Bank Report 2020
Green Hydrogen Costs – Scaling up Electrolysers – IRENA Report Dec 2020

IH2A Position

India has the potential to produce green hydrogen from 15-20 GW installed capacity by 2030[1] from expected renewable energy excess capacity and resultant curtailment (with a 450 GW national RE target by 2030) as well as link to hydrogen as an energy storage vector. Capital cost of electrolysers (estimated 2030 electrolyser capital cost at USD 250-300/kW) rather than renewable energy feedstock, is expected to be the only hurdle to electrolyser deployments and indigenisation/domestic electrolyser manufacturing will play a determining role in driving hydrogen commercialisation. Electrolyser capital costs, collectively estimated at USD 5-6 Bn, is expected to be privately funded with public funding being utilised for hydrogen offtake and infrastructure. This is an opportunity to create a National Electrolyser Manufacturing Mission, aligned with the existing FAME II scheme and create 3-4 large Indian electrolyser manufacturing companies in India.

[1] Assuming 10% total 2030 RE capacity of 450 GW i.e., 45 GW of RE is available through curtailment for conversion to green hydrogen, and assuming half of it is converted through installed electrolysers.

Following are some of the recommendations made by IH2A to the Government of India:

  1. PLI scheme should be extended for all hydrogen related domestic manufacturing (as for solar and EVs)
  2.  National Hydrogen projects with renewable linkages should get similar tax and policy incentives as renewable energy projects
  3.  State offtake guarantees for hydrogen - critical for financial viability of electrolyser production plants, backed by incentives (e.g., similar to Renewable Purchase Obligations for Renewable Energy) to improve financial viability of projects
  4.  Incentives to encourage formation of hydrogen project consortia for projects over a certain size in identified areas
  5. Initiate a domestic hydrogen manufacturing and supply chain study, and its linkages with renewable and electric vehicle plans, including plans for new natural gas pipelines (to accommodate hydrogen blending as well as 100% hydrogen pipelines in the future)
  6. Develop a Bharat H2 exports vision to become a Green H2 export hub in Asia to Japan and Korea beyond 2030

NOTE: The 2016 Kasturirangan Report prioritized manufacturing of LT-PEM fuel cells in India with a target of 20kW stack development and high indigenisation. This is still at R&D stage and not ready for commercial deployment.

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