India’s strategic advantages, including abundant renewable energy resources, existing consumption markets, and favorable investment opportunities, position it as a potential global green hydrogen hub, finds a new report by United States Agency for International Development (USAID).

By leveraging resources and developing suitable sites as green hydrogen hubs, Indian producers can achieve some of the lowest levelized costs for green hydrogen and green ammonia globally, estimated at $ 3,800-4,800 per ton and $850-1,100 per ton, respectively.

While the price disparity between grey and green hydrogen remains a challenge, demand for green hydrogen is expected to be driven by government incentives, subsidies, and mandates for its consumption.

The government’s proactive approach, exemplified by the National Hydrogen Mission approved at the beginning of the year, further propels the growth of the sector.

Union Minister of Power and Renewable Energy R. K. Singh informed Parliament that the government aims to reduce a total of ₹1 trillion (~$12 billion) worth of fossil fuel imports by 2030, following the targets set under the hydrogen mission.

The hydrogen mission sets forth India’s vision to establish a green hydrogen production capacity of at least 5 million metric tons (MMT) by 2030, leading to a substantial reduction of 50 MMT of carbon emissions annually. The mission also aims to position India as a key exporter of green hydrogen, capturing 10% of the global import demand in target markets.

By 2030, India is projected to achieve an annual demand of 2.85 MMT for green hydrogen.

This demand estimation is based on a “Base Case” scenario, which involves various factors such as a 10% switch to green hydrogen by India’s refineries, blending 10% green hydrogen in existing city gas distribution pipelines, substituting 50% of ammonia-based fertilizer imports with domestic green ammonia, and fulfilling 6% of demand from target importing countries.

Meeting this demand will require substantial investments amounting to approximately $56.7 billion.

India’s renewable energy capacity, including over 62 GW of solar and 42 GW of wind, positions the country favorably for green hydrogen production.

The USAID report said India’s public and private institutions have responded positively to the government’s vision, announcing substantial investments across the green hydrogen value chain.

This includes renewable energy developers, electrolyzer manufacturers, oil and gas players, ammonia producers, steel manufacturers, and financial institutions.

Renewable Energy Requirement

To fulfill the demand estimates, India will need to add 62 GW of additional renewable energy capacity, and 29 GW of electrolyzer capacity and establish 11 MMT per annum of ammonia infrastructure by 2030.

This represents an estimated investment requirement of $36 billion for renewable energy capacity, $15 billion for electrolyzer capacity, and $6 billion for ammonia infrastructure.

The “Pathway to NHM Target” graphic represents an upside scenario, while the downside scenario, known as “business as usual,” assumes that green hydrogen is unable to replace existing alternatives and only a few announcements materialize.

Challenges

The successful realization of these demand estimates will be crucial in driving India’s green hydrogen sector forward.

Several challenges need to be addressed to unlock the full potential of India’s green hydrogen sector.

Project bankability remains a key concern, requiring support mechanisms such as project preparation facilities and development support from the government and financial institutions.

Market demand aggregation bodies can facilitate efficient price discovery and ensure bankable offtake contracts, enabling developers to secure long-term commitments from consumers.

Additionally, regulatory frameworks, certification standards, and a harmonized global approach are needed to provide clarity and ease of compliance.

Furthermore, the domestic supply chain for electrolyzer parts and manufacturing capacity expansion must be prioritized to meet the growing demand for electrolyzers.

Despite the challenges, India’s green hydrogen sector is expected to witness significant growth in the coming years.