Establishing A Green Hydrogen Infrastructure in India – Finance and Usage

India has set a target of achieving 5 MTPA of green hydrogen capacity by 2030, for which it requires investments of around $100 billion and a minimum renewable energy capacity of 100 GW. Green Hydrogen is finding increased applications in the steel industry, transportation, as well as gas sectors. These applications in the country could generate additional demand for 3.5 MTPA of green hydrogen in the future. It is expected that if India reaches its target of 5 MTPA, it could save ~ Rs 40,000 crore on its energy import bills annually. The country would also cut carbon emissions by ~2% and natural gas imports by ~70%.

However, this huge target of 5 MTPA would need an investment of about $100 billion as there would be the requirement to raise capital to build huge factories in India. Though large industrial players might find it relatively easier for raising funds, smaller firms will face challenges as Green Hydrogen is still in a nascent stage. Green Hydrogen plants have a life of around 20-25 years and their cost typically comprises 30%-50% for electrolyzers and the balance for RE plants. Though financiers are now well-acquainted with the risks and rewards associated with renewable energy plants, the same for electrolyzer components is still uncertain. Hence new players might face challenges in raising capital to establish a Green Hydrogen ecosystem in our country. This will further result in more power or monopoly being vested with large industrial conglomerates.

The advent and usage of green hydrogen are expected to grant the global energy infrastructure stability. There is a huge demand for industrial hydrogen from industries like steel, refineries, fertilizers, etc. However, most of this hydrogen is sourced from fossil fuels. You can immediately calculate the benefits if we replace these sources with renewable energy sources. Major industries are also thinking about blending green hydrogen in refineries and fertilizer plants. The current supply crisis situation in the world market has led countries to think about energy independence. Many developing countries including India depend a lot on other countries for their energy needs. Suppose, things do not go in a desirable way, then we would be left at the mercy of others, leading to total chaos and wrecking the entire economy. Hence it is important to devise smart energy plans when there is still time.