Creation of green hydrogen demand is important to turn ambition into reality, say experts

The Union cabinet on Wednesday appproved the National Hydrogen Mission with an initial outlay of Rs 19,744 crore. The aim is to make India a global hub of green hydrogen by boosting production utlisation as well as exports. The government plans to spend over Rs 17,000 crore on incentives on manufacturing and Rs 400 crore on developing green hydrogen hubs in india.

It is also aiming at increasing the production capacity of hydrogen to 5 million metric tonnes per annum by 2030. The renewable energy capacity will go up by 125 GW. The government also expects the mission to attract Rs 8 lakh crore in investments and create six lakh jobs in the next seven years. Among other outcomes, the programme would also increase opportunities for green hydrogen, decarbonising industrial and energy sectors, and reduce India's dependence on import of fossil fuels.

The CEEW has looked at 38 countries, including the European Union, that have missions or national programmes around hydrogen and green hydrogen, and India's mission announced on Wednesday is the largest of its kind anywhere in the world.

"India's target of 5 million metric tonne per annum by 2030, is half of the entire EU's domestic production target, and larger than any major economies stand alone," CEEW's Ghosh said.

He said to convert ambition to reality, it is also important that demand is created.

Shubhranshu Patnaik, a partner at Deloitte India, concurred, saying demand too must be mandated to start with, and said he hopes it would be part of the details that are expected to come out shortly. "Some of the industrial segments, whether it is refineries, or fertilisers and such, would be obligated to buy some of the hydrogen they consume from greener sources. That will jumpstart the virtuous cycle of creating a demand good enough in Indian terms, to make manufacturing producers then come into the equation,"  he said.

Meanwhile, Sandeep Kashyap, COO of ACME Group, said that apart from incentives on the final products — green hydrogen and its derivatives — those for electrolysers will kickstart their local manufacturing as well.

Government sources have told CNBC-TV18 that PLI schemes would likely be rolled out to operationalise incentives for electrolysers and green hydrogen under the National Hydrogen Mission. The outlay for green hydrogen would be Rs 13,000 crore and about Rs 4,500 crore for electrolyser manufacturing. The upper cap for electrolysers incentives would be Rs 4,539 per KW, up with a 15-20 percent incentive on production cost which will be tapering annually, for 5 years. The aim is to have 3GW capacity. For green hydrogen, the incentive could be Rs 50 per kg, 20 percent of the production cost tapering annually, the sources added.

Kashyap said the incentives would prove useful in making India a competitive market as far as the final product is concerned — green hydrogen and its derivatives. "We also believe that over a period of time, once we achieve scale and volumes by 2030, we should be able to compete in the global market without incentives. If we need more incentives then, we can approach the government," he said.

The ACME COO added that electrolysers are not manufactured in India as much till now — companies are working on creating capacities and looking at these incentives. "This is a jumpstart and will provide an initial impetus for setting up manufacturing base in India for the first few projects once we have the scale and and volume in place. With the Indian demand picking up, clubbed with the export demand, we believe that by 2030 and beyond we should be able to compete on our own in the international market as well," he added.