Green hydrogen is produced through water electrolysis, utilising renewable energy sources like solar and wind energy. The Indian energy sector is undergoing a significant transformation. While the country was once heavily dependent on traditional energy sources, it is now rapidly moving towards renewable energy, with hydrogen energy playing an increasingly important role.
This article delves into the current state of the hydrogen energy sector in India, its growth trajectory, the challenges it faces, and its future outlook.
Current Status of Hydrogen Energy in India
India imports over 40% of its primary energy needs, spending more than USD 90 billion annually. By promoting green hydrogen, India is not only working towards fulfilling its domestic energy requirements but also aims to become a major player in the global hydrogen market.
Green hydrogen technology is one of the emerging technologies worldwide, and India has set an ambitious target of increasing its production from a few kilotons to 5 million tons per year (MTPA) by 2030. Currently, India produces around 6 million tons of hydrogen annually, mostly derived from natural gas steam reforming (grey hydrogen), which is primarily used in fertiliser production and oil refining.
National Green Hydrogen Mission
Launched in 2023, this mission aims to promote green hydrogen production and achieve energy self-sufficiency. The government has allocated Rs 19,744 crore for the mission, of which Rs 17,490 crore is for green hydrogen production and Rs 1,466 crore for pilot projects.
Additionally, India has set a target to develop 125 GW of renewable energy capacity by 2030 to support green hydrogen production. The mission is also expected to generate 6,00,000 jobs and save the country Rs 1 lakh crore in energy imports by producing green hydrogen locally.
Challenges in Green Hydrogen Production
Despite its potential, the adoption of green hydrogen production faces several challenges:
Production Costs: The cost of producing green hydrogen is significantly high, with the cost of electrolysers accounting for 30-50% of the total cost. The components needed to build electrolysers, such as membranes, are still reliant on imports. Additionally, minerals like platinum and iridium, which are used in electrolysers, are also imported.
Infrastructure Development: The current systems for production, storage, and distribution are not fully developed. Renewable energy sources, crucial for green hydrogen production, cannot supply energy consistently around the clock. The existing battery technologies are also not economically viable, making continuous hydrogen production challenging.
International Competition: India faces stiff competition from countries like the USA and China, where governments provide significant subsidies for hydrogen production. Furthermore, stringent trade standards in countries like Germany make it difficult for Indian hydrogen to establish a foothold in global markets.
What Does This Mean for Investors?
Green hydrogen is becoming a crucial part of India’s clean energy future, and the good news is that there are several promising companies in the sector for investment. Green hydrogen is being increasingly used in industries to reduce carbon emissions and make energy production more environmentally friendly.
In India, companies like Reliance Industries, Jindal Stainless Limited, Adani Green Energy, JSW Energy, NTPC Limited, and Indian Oil Corporation are actively investing in the green hydrogen sector. These companies are heavily investing in modern technologies for hydrogen production and its applications.
The Future of Hydrogen Energy
According to IBEF, Market Research Future predicts that India’s green hydrogen market will reach USD 12.95 billion by 2032. Hydrogen energy will not only ensure energy security for India but also open up new avenues for the country’s growth.
The Indian green hydrogen market is expected to grow almost three times from 4.53 in 2022 to approximately 2032.
Globally, the landscape for hydrogen-based energy is changing rapidly. According to McKinsey’s Global Energy Perspective 2023, as cited by IBEF, clean hydrogen could meet 73-100% of total hydrogen demand by 2050.
Additionally, many countries are planning to significantly contribute to green hydrogen production by 2030. The USA has set the highest target, aiming for 10 million tons per year. India’s target stands at 5 million tons, while South Korea aims for 4.80 million tons and Japan 3 million tons annually.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
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