Make Hydrogen in India PDF
Make Hydrogen in India PDF
SUMMARY
$$ The energy transition is continuing at an unprecedented pace and scale, requiring new low
carbon technologies.
$$ To date, India has had limited success in capturing the manufacturing benefits of certain clean
energy technologies, such as solar PV and batteries.
$$ TERI sees green hydrogen as the next ‘clean energy prize’, which will require coordinated action
from industry and government for India to capture the benefits.
$$ Early demand markets for hydrogen include fuel cells for trucking, balancing supply and
demand in the power sector and replacing fossil fuels in industry.
$$ The potential scale of hydrogen use in India is huge; increasing between 3 and 10 times by
2050.
$$ Hydrogen can provide a supplementary role to renewables and batteries, in a transition to a
carbon neutral economy.
$$ Hydrogen can be divided into ‘grey’ (produced from fossil fuels), ‘blue’ (produced from fossil
fuels with carbon capture and storage) or ‘green’ (produced from renewable electricity).
Technology for the energy transition India’s track record on technology
The world is undergoing a transition to clean, low carbon innovation
sources of energy at an unprecedented pace and scale. There are a few clean energy technologies which have
New technologies are required to replace existing fossil dominated the energy transition so far, namely, solar
fuels in order to move towards a net carbon neutral PV, wind (both onshore and offshore) and lithium ion
economy at the earliest. Keeping ahead of the technology batteries. The large-scale manufacture and deployment
curve is a matter of strategic importance for all countries of these technologies has seen their costs plummet, with
but especially India, which will be one of the world’s costs falling by 84% for batteries, 87% for solar PV, 47% for
largest markets for these technologies in the decades onshore wind and 32% for offshore wind between 2010
to come. India needs to position itself at the technology and 2018 (see Figure 1).
frontier to maximise the benefits of the energy transition
– to be a technology maker, not a technology taker. The development and manufacture of these technologies
has occurred largely outside India (apart from onshore
Whilst the markets for clean technologies such as solar PV wind), with companies weighted towards the US,
and lithium ion batteries have already been dominated Europe and China (Mazzucato, Semieniuk, & Watson,
by a few leading companies, there is a need for new 2015). To become technology leaders, these countries
technologies to reduce emissions from other sectors have implemented strong supply-push policies for
of the economy, beyond electricity. One such area is priority technologies, in part by ensuring adequate and
technologies related to the production, transportation, appropriate financing across the innovation chain (see
storage and use of low carbon hydrogen. Figure 2), with both public and private funding playing
-50%
-100%
Source: TERI analysis based on (NREL, 2019; BNEF, 2019). Shows world average data. Data for
different regions and countries will vary.
2 POLICY BRIEF
an important role. In parallel, they have also introduced India has largely lost out on the benefits of manufacturing
demand-side policies to pull technologies towards these technologies, which include high value-added
deployment and diffusion, including subsidies for employment, increased tax return and the ability to
novel technologies or standards and regulations, which innovate on existing manufacturing processes to develop
have limited the deployment of fossil fuel equivalents the next generation of renewable technologies. To avoid
(Mazzucato & Semieniuk, 2017). Deployment, in particular, missing out on the future benefits of the energy transition,
played a significant role here. For example, the German India needs to be proactive in creating a productive
Feed-in-Tariff scheme and subsequent solar auctions innovation ecosystem for the development, deployment
guaranteed markets for the mass manufacture of solar and diffusion of technologies. This policy brief outlines how
panels in China, which in turn caused costs to plummet. this can be achieved for hydrogen-related technologies.
Stage Research & Demo & proof Pilot & Diffusion / Maturity
Development of concept deployment commercialisation
Government (R)
Finance Venture Capital Project Finance
& Companies (D)
Blue H2 Wind
Cost-competitive
It is also the case that India has played an important role The limits of direct electrification
in helping to bring down the costs of these technologies
India is already experiencing first-hand the range of
by deploying them at scale. From 2014 to 2018, a total of
benefits that come with renewable electricity, including
$42bn was invested in India’s renewables sector, helping
providing greater energy access, reducing local air
to further drive down costs (IBEF, 2019). Whilst there are
pollution and carbon dioxide emissions and reducing
significant benefits of deploying renewables, not least
energy imports. There are clear routes for increasing
reducing local air pollution and carbon dioxide emissions,
the role of renewable electricity in the grid (Pachouri,
unfortunately for India, much of this spending was to the
Spencer, & Renjith, 2019), as well as in end-use sectors,
benefit of companies based outside the country.
4.0
Charging speed
5-15 mins
15-90 mins
> Well over 90 mins
3.0 (assuming charging
BEV
speed of 400w)
Weight (tonnes)
CNG ICE
2.0
LNG ICE
Gas / liquid fuel ICE
FCEV
4 POLICY BRIEF
Industry Power
In industry, full-scale electrification of process heat In the power sector, as the electricity grid approaches
can incur significant costs and is often impractical or higher and higher shares of variable renewable electricity
technically challenging. It is also the case that many generation from the likes of wind and solar, it will become
industrial processes require chemical feedstocks, such increasingly difficult to balance the electricity grid over
as iron ore direct reduction for primary steel production, long periods, without thermal or hydro generation
that switching to direct electrification would not provide (or other forms of long-term seasonal storage). This is
(Hall, Spencer, & Kumar, 2020). Whilst carbon, capture and especially true for India’s renewable generation, which
storage (CCS) has a potential role to play in decarbonising can experience significant seasonal variation during
industry, its future is highly uncertain in India, given the monsoon and winter periods.
lack of understanding around its potential scale and costs.
Batteries will be able to provide cost-effective intraday
Taking the steel sector as an example, pilot plants using storage, as a result of their high round-trip efficiencies
high shares of hydrogen are already being established and ability to cycle multiple times within 24 hours. This
in Europe. The HYBRIT project in Sweden aims to have allows energy to be shifted from times of the day of high
a demonstration plant up and running by 2026, a full- renewable energy production to times of low production
scale plant operating in 2035, with the intention to have and high demand. However, batteries are unlikely to
switched over their entire fleet by 2045 (SSAB, 2019). If provide cost-effective storage on the time scale of several
supplied with zero-carbon hydrogen and combined days or weeks and for this purpose, hydrogen may be
with an electric arc furnace supplied with zero-carbon a more suitable option (see Figure 4). This is due to the
electricity, this has the potential to reduce emissions by lower capital costs of developing hydrogen storage
over 94% compared with conventional technologies. facilities at scale, including salt caverns or steel tanks. The
Residual emissions occur from the use of graphite lower the electricity input cost, the lower the final cost of
electrodes in the EAF, as well as use of lime and natural electricity stored, with hydrogen becoming competitive
gas. These could be brought down to zero with further at lower costs as the capital costs become the dominating
research and development (Vogl & Ahman, 2019). factor, over the operating efficiencies.
Electricity input costs USD 50/MWh Electricity input costs USD 0/MWh
10,000 10,000
USD/MWh
USD/MWh
1000 1000
100 100
10 10
0.1 1 10 100 1000 0.1 1 10 100 1000
Discharge duration (h) Discharge duration (h)
800
Hydrogen Demand (Mt)
600
400 10X
200
3X
0
Global ETC BNEF Hydrogen India India
2020 2050 Council 2020 2050
1
Grey H2 = hydrogen produced from fossil fuels; Blue H2 = hydrogen produced from fossil fuels, with carbon capture and storage (CCS); Green H2
= hydrogen produced using renewable electricity.
6 POLICY BRIEF
breakdown of costs; (ii) necessary measures for achieving fertilisers. Most hydrogen in India is produced through
these goals; and (iii) the intention to convene a working reforming methane (CH4), resulting in significant carbon
group to review the status of implementation in each dioxide emissions. There is the potential to capture
area of the roadmap (METI, 2019). Recently, Japan opened these emissions using carbon capture and storage (CCS)
the largest green hydrogen plant, with a 20 MW solar technology, although this is relatively underdeveloped in
array feeding a 10 MW electrolyser plant (RECHARGE, India. An alternative means of production is electrolysis,
2020). Interest is also now growing elsewhere, with the where water (H2O) is split into its component parts
European Union, the United States, Australia and China using electricity. India has claim to one of the first large-
all developing serious plans for the deployment of scale alkaline electrolyser facilities in the world, which
hydrogen technologies in sectors such as steel, shipping, produced hydrogen from electricity at the Nangal Facility
petrochemicals and power. from 1962. Whilst there is significant research activity
around electrolysis, photolysis and biogenic methods of
In terms of companies, there are a number of multinational
producing hydrogen, these low carbon technologies are
corporations undertaking serious activity on hydrogen.
yet to be deployed at scale.
This includes Shell, who has hydrogen refuelling stations
operational in Europe and the US and is working with truck In part, this is due to the costs of hydrogen production
manufacturers to expand into the heavy-duty transport from low carbon sources today, which are higher than
sector. The Swedish steel company, SSAB, along with fossil fuel-based hydrogen or other fossil-fuel equivalents.
partners LKAB and Vattenfall are planning to deploy a It is however possible that these costs could reach parity in
commercial-scale hydrogen direct reduction steel plant future, with green hydrogen undercutting grey hydrogen
by 2026, the first in the world. Maersk, the shipping in favourable regions. This is made more possible in India,
company, have identified low carbon hydrogen as vital where renewable electricity tariffs are already among the
for decarbonising sea-borne freight, through using it to lowest in the world and supplies of natural gas are limited
produce green ammonia. The German-based engineering and costly.
firm, Siemens, is also expanding its activity in hydrogen, Along with electricity prices, the other important factor
continuing to manufacture PEM electrolysers, as well as for reducing the costs of green hydrogen is the capital
developing hydrogen-fuelled turbines to facilitate clean cost of electrolysers (see Figure 6). These are expected to
electricity generation. Lastly, Mitsubishi Hitachi Power continue to fall with a scale-up in deployment, as most
Systems are planning to switch natural gas turbines to electrolysers today are manufactured on a relatively small-
run on 100% hydrogen in Los Angeles before 2035. scale (BNEF, 2019). Marco Alvera, CEO of Snam Chemicals,
There is also growing interest in hydrogen among estimates in his book ‘Generation H’ that the world will
multilateral organisations focused on coordinating need to build 50 GW of electrolyser capacity (vs. 135 MW
innovation activities between countries. This includes today) to help drive the prices of green hydrogen down
Mission Innovation, which India is a founding member of, to $2/kg, where it will become competitive with a range
who launched an innovation challenge on ‘Renewables of fossil fuels (Alvera, 2019; BNEF, 2020).
and Clean Hydrogen’. Also, the Clean Energy Ministerial, In this context, it is also worth comparing electrolysers
coordinated by the International Energy Agency (IEA), with previous clean energy technologies, such as those
launched their ‘Hydrogen Initiative’ in 2019, focused illustrated in Figure 1. Arguably, electrolysers are similar
on the use of hydrogen in industry, transport and to batteries, being modular in design and relatively
communities. easy to transport. Batteries and electrolysers also share
the same electrochemical foundations, both applying
Current status of hydrogen in India electrolyte and membrane materials. As a result, we could
Hydrogen is already used extensively in India, mainly as see global supply chains developing for electrolysers, as
an industrial feedstock in the creation of ammonia-based we have with batteries, where a significant amount is
7 $80/MWh
6 $70/MWh
$60/MWh
Hydrogen ($/kg)
5 Coal SMR
$50/MWh
4 $40/MWh
gasification
$30/MWh
3 $20/MWh
2 $10/MWh
0
200 400 600 800 1000
Electrolyser capex ($/kW)
manufactured in China but used throughout Europe Across Indian industry, there are considerable efforts to
and the US. This provides India with an opportunity to establish a hydrogen economy in India, not least, the
develop a manufacturing hub here, taking advantage work being taken forward by Indian Oil (see box).
of competitive labour costs and a technically proficient Despite these positive moves from Government and
workforce. industry, current activity is still an order of magnitude
below where it needs to be to fully take advantage of a
The Ministry of New and Renewable Energy (MNRE) has
transition to hydrogen technologies, with manufacturing
seen hydrogen as an area of strategic interest since at least centred in India. In terms of the investment requirements,
2006, when the first Hydrogen and Fuel Cell Roadmap if India is to deploy green hydrogen as a clean energy
was launched (MNRE, 2006). More recently, in 2016, solution for key sectors, including transport, industry and
MNRE published a report laying out a comprehensive power, by 2050, this would require significant investment
plan for increasing R&D activity. This included significant in electrolysers. Beyond this, additional investment in
funding for different electrolyser technologies and their renewable electricity would be required, at a time when
other demands for electricity in India will still be growing
integration with renewable electricity sources, which has
rapidly. This would clearly be a challenge to deliver, which
strong potential in India given the cost and availability of
is why it is imperative that India begins now in scaling-up
renewable electricity. activity.
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Indian Oil Corporation Limited (IOCL) has been proactive in pushing for the adoption of hydrogen technologies
in India, motivated by environmental considerations, energy security, positive technology developments and
the versatility of hydrogen as an energy carrier. IOCL see hydrogen’s potential across the economy in mobility,
industrial heating, domestic / commercial uses and in the power sector. In terms of their R&D focus, IOCL has
projects investigating new hydrogen technology solutions in the following areas:
Hydrogen production
In terms of hydrogen production, IOCL has a wealth of experience looking across the range of production
technologies, including hydrogen from biomass, methane reformation, electrolysis and photolysis (photoelectrical
water splitting).
Most recently, they have announced plans to establish a hydrogen production station, outputting 95Nm3/hr,
which will test three different electrolyser technologies:
$$ Polymer electrolyte membrane (PEM) electrolysis
$$ Alkaline electrolysis
$$ Solid Oxide Fuel Cell (SOFC) electrolysis
Hydrogen storage
The development of the Type-3 High Pressure Hydrogen Cylinder, in collaboration with IIT Kharagpur, which
increases the energy storage density over existing cylinders.
1.125
1
0.975
0.75 Max. stress
0.625 Tsai- Hill Failure
Tsai- Wn Failure
0.5
0.375
0.25
0.125
0
Mission statement:
‘India is committed to the rapid expansion of the hydrogen economy, ensuring the cost-
effective deployment of low carbon hydrogen technologies across the transport, industry
and power sectors by 2030’
$$ Clear recognition of hydrogen’s cross-economy role, with outlines for scaling-up use in
transport, industry and power
$$ Commitment to update existing regulations to permit the safe use of hydrogen, at high
pressure, across a number of end-use sectors
$$ ‘Make in India’ policy support to maximise domestic manufacturing content across all
parts of the value chain, including joint ventures with multinational companies
$$ Champion electrolyser manufacture and commercialisation, realising their suitability to
the Indian market and significant potential for emissions reduction
$$ Significant increases in existing hydrogen R,D&D spending, to support demonstration
projects in the steel and power sectors, as well as the commercialisation of more mature
technologies
$$ Policies to create a guaranteed market for hydrogen technologies, where they are not yet at
cost parity with fossil-fuel equivalents, for example in the steel sector
$$ Meaningful engagement in international collaborations on developing hydrogen
technologies, including Mission Innovation and the Clean Energy Ministerial
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