India may export 70pc of its green hydrogen by 2030

Market: Hydrogen
07/07/23

India wants to export 70pc of the 5mn t/yr of renewable hydrogen it aims to produce by 2030, as domestic use may be limited to keep prices for final products in check, according to government officials.

Around 3.5mn t/yr could be earmarked for exports, the ministry for new and renewable energy's (MNRE) secretary Bhupinder Singh Bhalla said at the International Conference on Green Hydrogen in New Delhi on 7 July. This suggests that renewable hydrogen use for decarbonising domestic industry would be somewhat limited.

India now consumes around 6mn t/yr of fossil fuel-based hydrogen, government think-tank Niti Aayog said last year. Provided this remains stable, renewable hydrogen production of 5mn t/yr and exports of 3.5mn t/yr would allow for just a quarter of this demand to be replaced with renewable-based output. Niti Aayog projected at the time that overall hydrogen demand could rise considerably in the remainder of this decade and beyond.

The government is wary that more extensive use of renewable hydrogen in domestic industry could drive up costs for final products.

"If we replace everything [with green hydrogen] your cost of petrol, diesel [and] fertilisers will boost" until the cost of renewable hydrogen comes down, MNRE joint secretary Ajay Yadav told Argus on the sidelines of the conference. This could suggest the government does not expect renewable hydrogen to be cost-competitive with fossil fuel-based output by the end of the decade — although Yadav said reaching cost-competitiveness for renewable hydrogen by 2030 is the goal.

"We would like to reserve some of our capacity for exports," Yadav said, adding there are many potential importers, including the EU. On the sidelines of the conference, the government organised talks with representatives from the EU, Singapore, South Korea and Japan to discuss export opportunities.

No obligations?

Bhalla said today that the government may still oblige key sectors, most notably oil refining and fertiliser production, to ensure a certain share of hydrogen used is sourced from renewable energy.

Consultations on this are ongoing, Bhalla said, after some stakeholders had indicated earlier this week that plans had been shelved because of opposition from major consumers. Oil refiners urged industry body Hydrogen Association of India to steer the government away from consumption mandates, the organisation's president R K Malhotra said.

"Many of the CEOs of the oil refineries called me up and said… you must make a presentation saying that this is not acceptable because [the] cost of fuel will go up and the government will not allow us to increase the market price," Malhotra said. "The fertiliser industry was also reluctant because the fertilisers are already subsidised and if we push costly hydrogen in that sector the subsidy bill will go up, so the government will have to pay one way or the other."

Some key consumers are planning to introduce a certain amount of renewable hydrogen into their operations in the remainder of this decade, even if there are no firm mandates. State-owned oil and gas firms have plans to collectively produce 1mn t/yr of renewable hydrogen by 2030, much of which may be used in their refineries, state-owned IOC's director of research and development Sankara Ramakumar said at the Delhi conference. The government still wants "every molecule of hydrogen… to be turned green as quickly as possible," he said.

Cost declines

While the government is wary that extensive renewable hydrogen use by 2030 could drive up costs for final products, Niti Aayog expects renewable costs to be brought down to a level where they could be competitive with fossil-fuel based hydrogen.

The organisation projects production costs could fall to $1.50-2/kg by 2030 and to around $1/kg by 2050, its advisor for power and energy Rajnath Ram said at the Delhi conference. This is solely based on market conditions and does not include incentives announced by the government, Ram said. Niti Aayog previously said that producing grey hydrogen, from natural gas with unabated carbon emissions, currently costs around $1.5-2.5/kg.

Argus calculates prevailing costs for producing hydrogen using dedicated wind and solar assets in India at $4.92/kg, including recovery of capital costs.

By Akansha Victor and Stefan Krumpelmann

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