In order to make the green hydrogen industry competitive with other energy sources, the Indian government must work to reduce the cost of production of green hydrogen to as little as one-third of the existing costs.
According to a note released by Crisil today, it is crucial that the government take action to reduce the cost of production from the present range of $3 to $6 per kilogram to less than $2 per kg. In order to compete with other energy sources and advance the government’s National Green Hydrogen Mission, India will also need a combination of technological advancements and regulatory support, according to the report, which also noted that the sector has the potential to eventually change the country from being a net energy importer to a net exporter.
Oil refineries and fertiliser industries may be early adopters of green hydrogen, despite the fact that it is difficult to completely replace conventional energy sources with it. Grey hydrogen is already used by oil refineries to reduce the sulphur content of fuel, and fertiliser manufacturers utilize it to create ammonia. The best option is oil refineries because switching to green hydrogen won’t have a significant impact on production costs because hydrogen only accounts for 10% of overall costs.
But, it will need a few more modifications to be used in fertilizers businesses. According to a CRISIL report, bridging the cost gap by lowering the cost of renewable power generation and electrolysers will prove to be essential for its faster adoption because the adoption of green hydrogen is not much of a problem compared to the cost associated with it and the cost it will add to overall production.
According to the survey, green hydrogen costs in India range from 50 to 65 percent of the entire cost and may need to drop from Rs 2.6-3 per unit to under Rs 2 per unit. Furthermore, a waiver of energy banking fees as well as transmission and distribution fees will aid in cost savings in addition to the already announced waiver on interstate transmission rates.
For the next ten years, domestic industries intend to invest close to Rs 16 lakh crore in various green energy value chains. Although primarily major conglomerates and well-capitalized businesses are joining this market because they can reduce credit risk, technology advancement and legislative support are equally important to keep an eye on.