Special Focus: Regional Outlook
M. PARIHAR, TATA Consulting Engineers, Karnataka, India
Unexpectedly, the first and lightest element on the periodic table now carries so much weight. This universe is full of energy in various forms, but the challenge is to harness and store it. For decades, fossil fuels have dominated the energy space; however, humankind can no longer afford to rely on them due to global warming. By the start of the 21st century, the world witnessed a sharp focus shift around renewable energy sources, particularly solar and wind, followed by pumped storage. In the last decade, the focus has shifted toward carbon-free energy and renewables.
Any energy conversion process where no carbon dioxide (CO2) is released into the atmosphere is termed carbon-free energy. According to a report by the International Renewable Energy Agency (IRENA), only 20% of final energy consumption is for electricity needs; this is expected to reach 50% by 2050.1 The remaining energy consumption is where direct electrification is not possible, and this requires increased focus. Hydrogen (H2) is predicted to be heavily relied on to meet all such needs.
Although H2 is colorless, it is categorized as grey, blue, green, pink or yellow. The color is determined by the H2 generation method, how the associated CO2 is managed and the power source for water electrolysis. With grey H2, natural gas is split into H2 and CO2, following the steam methane reforming (SMR) or auto thermal reforming (ATR) processes, which release CO2 into the atmosphere. If the CO2 produced is captured, the H2 is considered blue. The remaining three colors are H2 produced through water electrolysis: green H2 is when a renewable source (e.g., solar, wind) is used for power generation; pink H2 uses nuclear as a source of power; and yellow H2 uses solar energy.
H2 end use. H2 is primarily used in the petroleum refining industry to desulfurize products, such as petrol and diesel, and as an industrial feedstock to produce ammonia-based fertilizers. Ammonia, a compound of H2 and nitrogen, is used to manufacture nitrogen-based fertilizers (urea) and other complex fertilizers. Presently, methanol is the third-largest derivative of H2. H2 also has substantial scope for use in the steel industry, transportation [particularly heavy-duty vehicles (HDVs)] and a small portion of the power industry. H2’s use in steel production is a matter of technological advancement to replace natural gas in the direct reduction iron process. Like steel production, using H2 in HDVs will be driven by the technological competitiveness of fuel cells vs. batteries and policy framework toward low carbon. Fuel cells can also be used for power supply as a base load in off-grid facilities or a backup power source.
Global clean H2 story. Although H2 generation through electrolysis is well established, the financial viability of producing green H2 is the global target. H2 production cost primarily depends on the efficiency of electrolyzers and the cost of power consumed in the H2 generation process. An IRENA report predicts that with an increase in electrolyzer installed capacity [in the range of 1 terawatt (TW) to 5 TW] and electrolyzer technology updates, electrolyzer costs will decrease to $307/kilowatt (kW) to $130/kW from the current $650/kW–$1,000/kW.1 As stated earlier, electrolyzer technology updates alone cannot make green H2 affordable—they must be coupled with the decreased cost of power consumed in the electrolysis process. Financially viable green H2 at a price of $1/kg can be produced with electricity available for $20/megawatt-hour (MWh). Countries with a geographical advantage in terms of solar and wind resources have already expanded their renewable power base, helping to reduce the cost of power. Concurrently, most developed countries are investing in upgrading and refining electrolyzer technology. According to the IRENA report, only 4% of H2 is produced through electrolysis and the green H2 share is limited to 0.02%.1
Most operational green H2 projects are in the single-digit-MW scale, and only a few are operating at the 10-MW scale and above. For example, an alkaline electrolyzer in Japan is operating at 10-MW, and a 20-MW proton exchange membrane electrolyzer is operating in Becancour (Canada) by Air Liquide. Countries like France, Japan, Australia, the Republic of Korea, Netherlands, Norway, Germany, the European Union (EU), Portugal, Spain, Chile and Finland have set up clear policies for green H2 by 2050.
The Hydrogen Council published a report highlighting the urgency to focus on final investment decisions (FIDs).2 Of the 680 large-scale project proposals announced in the first half of 2022—requiring an investment of $240 B—only 10% ($22 B) have reached FID. A major portion of the projects (about 534) are targeted to be commissioned (either fully or in part) by 2030. About one-third of the 534 projects with investment commitment (about $109 B) are in the feasibility and front-end engineering design (FEED) stage. Of the $240 B committed, approximately 65% is allocated to producing and supplying clean H2, 25% for end use and offtake, and 10% for infrastructure development (e.g., transmission, distribution). These projects equal about 26 million tons (MMt) of H2 production and aim to be made available by 2030, consisting of 60% of H2 through renewables and 40% through SMR/ATR. Although there are regular announcements for setting up new projects almost on a weekly basis, 26 MMt accounts for only one-third of the H2 supply required by 2030 to meet net-zero targets. Approximately 660 MMt of clean H2 will be required by 2050 to reach global climate goals.
When categorizing the investments geographically, Europe is leading, followed by North America, Latin America, Oceania (dominated by Australia), Asia (excluding China is dominated by Japan and Korea), China and Africa. However, for the committed investment of $22 B, North America is leading with a 35% share, followed by Europe and Asia (excluding China and Oceanica) with 25% each. For clean H2 supply, Europe (8 MMt), North America (4.8 MMt) and Latin America (4.7 MMt) account for 70% of the announced supply.
Only 10% of announced investments have reached FID: the major roadblocks developers are facing today are unclear demand visibility since many are waiting for regulatory frameworks, thus blocking funding to enter long-term supply contracts.
Why India is betting heavily on green H2. To achieve the ambitious target of energy independence by 2047 and net-zero emissions by 2070, India must push heavily on greener forms of energy and not only green power. According to India’s Ministry of New and Renewable Energy and a special report published by the International Energy Agency (IEA), although India’s per capita CO2 emissions are 1.8 t—much less than the U.S. (14.7 t) and China (7.8 t)—India is the third largest CO2 emitter in the world. This is attributed to its population of 1.417 B, which is expected to rise to an estimated 1.515 B by 2030.3,4
India’s annual energy consumption has doubled from 420 MM tons of oil equivalent (toe) to 900 MMtoe in the past 20 yr. The country’s 2019 per capita energy consumption was about 0.6 toe. Although this is close to 40% of the world average, considering the rapid industrialization, urbanization and improving living standards, energy demand is expected to increase by 25% toward the end of 2025.
Geographically, India has a massive advantage in renewable power sources (e.g., solar, wind), which is the primary requirement for green H2 production. Solar power costs in India have significantly decreased in the last 15 yr from $0.225/kWh in 2008 to $0.035/kWh in 2022. According to an Energy and Resources Institute study, the levelized cost of energy from solar is expected to reach a low of $0.024/kWh.5 Subsequently, sea connectivity and developed port infrastructure make the transportation of H2 derivatives feasible.
To fulfill its net-zero commitment, the Government of India (GoI) announced a $2.3-B production-linked incentive as a part of the National Green Hydrogen Mission (NGHM), aiming to produce a minimum of 5 MM metric tpy of green H2 by 2030 for energy use with an extension potential of 10 MM metric tpy. India is moving fast to become a green H2 hub with a positive policy framework and support from the government. The NGHM for the GoI has two phases; phase 1 will focus on creating demand and ensuring adequate supply simultaneously, making green H2 cost competitive with fossil fuels by increasing the base for electrolyzer manufacturing capacity in India and advancing technology. This will lay the foundation for phase 2, where penetration will be made in hard-to-abate sectors such as steel, mobility and shipping, and pilots will be taken up to explore the possibility of usage in railways and aviation sectors. Additionally, waivers for interstate transmission charges for target-based projects, pooling of renewable power from remotely located energy plants, banking of renewable energy, setting up bunkers for green ammonia storage near ports and creation of a single portal for all statutory clearances in a quick turnaround time of 30 d are some of the critical pointers of NGHM.
Several prominent governments and private industrial groups in India, such as Reliance Industries Limited, Tata Group, Gas Authority of India Ltd., National Thermal Power Corporation, Indian Oil Corporation and Larsen & Toubro, have laid down the internal framework and investment plans toward this step. Most of the above players already have a pilot or are in the process. In the last 3 yr, government and private players have announced plans to deploy 200-GW electrolyzer capacity by 2030 in India. With the positive framework of GoI and efforts made by enthusiastic industrial mammoths, there is no stopping India from hitting the target.H2T
1 International Renewable Energy Agency (IRENA), “Green hydrogen cost reduction,” December 2020, online: /-/media/Files/IRENA/Agency/Publication/2020/Dec/IRENA_Green_hydrogen_cost_2020.pdf?rev=4ce868aa69b54674a789f990e85a3f00
2 Hydrogen Council, “Hydrogen insights 2022,” September 2022, online: https://hydrogencouncil.com/wp-content/uploads/2022/09/Hydrogen-Insights-2022-2.pdf
3 Ministry of New and Renewable Energy, “National green hydrogen mission,” January 2023, online: https://mnre.gov.in/img/documents/uploads/file_f-1673581748609.pdf
4 International Energy Agency (IEA), “India energy outlook 2021,” February 2021, online: https://www.iea.org/reports/india-energy-outlook-2021
5 Energy and Resources Institute, “Make hydrogen in India: Driving India towards the clean energy technology frontier,” June 2020, online: https://www.teriin.org/sites/default/files/2020-06/Hydrogen-Policy-Brief.pdf
About the author
MUKESH SINGH PARIHAR is the Assistant General Manager for TATA Consulting Engineering Ltd. (TCE), specializing in green H2 and ammonia. Parihar has been associated with TCE for 7 yr and has been in the engineering consulting business for more than 14 yr, assisting with multiple domestic and international power projects.