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seek M&A opportunities if they are to arrangements when entering new increased their exposure to sustainability Green hydrogen: Gaining traction for energy transition
remain competitive and achieve reliabi- markets or customer segments. In and the circular economy. To remain
lity of supply and lower costs. As they addition, they should prioritize: competitive, other companies need to in India
consider potential targets, they need to follow suit – and developing an effec-
ask themselves the following questions: * Adopting flexible investment strate- tive TSR strategy is a vital first step.
Which segments and regions are most gies and selectively investing in SYNOPSIS transmission charges (ISTS) for renew- CareEdge Ratings
critical to driving our TSR? Should the key areas to maximize returns, Acknowledgments he momentum of Green Hydro- able power, and it remains a key barrier
company focus on fewer steps within the while also maintaining flexible The authors acknowledge the gen (GH2) in India will be driven to the viability and widespread adop- estimated at $3.74 per kg as of CY23.
value chain or on more steps – for ex- make/buy strategies in their value contributions of their BCG colleagues Tby lower renewable energy tion of GH2. In the years ahead, CareEgde Ratings
ample, by creating joint ventures, selling chain operations. Kanishka Agarwal, Jooyoung Ahn, costs and India’s decarbonisation goals. opines that reduction in electrolyser
or acquiring businesses, and purchasing Robert Blaudeck, Prakash Chandrasekar, The prevailing levelised cost of GH2 Besides, as per CareEdge Ratings, cost and effi ciency improvement are
intermediates (from players with a cost * Utilizing robust project manage- Christoph Franck, Jan Friese, Amit (LCOH) stands at ~1.75x times and a signifi cant capex outlay of Rs.2.40 prerequisites to achieve a targeted leve-
advantage in other regions) rather than ment capabilities, effective deci- Gandhi, Abhrajit Guria, Susumu Hattori, ~1.50x times higher than that of grey lakh-crore is required to produce 1-mt lised cost of $2.1 per kg. Additionally,
producing them in-house? sion-making processes, and strong Jingshi Hu, Ryan Jones, Jihoon Kim, and brown hydrogen respectively, pos- of GH2. Capex for renewable energy Production Linked Incentives (PLIs)
controls and reporting systems to Livia Lin, Martin Link, Julia Meisel, ing a signifi cant barrier to its adoption. generation and capex for electrolyser announced by the Government of
Smart deal-making and portfolio ensure they make the right invest- Marcus Morawietz, Eduard Pujol, Arun Economic viability of GH2 requires a are the two major cost components with India (GoI), such as a direct production
management involves: ment decisions and achieve rigor- Rajamani, Katarzyna Raszka, Adam 35-40% drop in electrolyser prices and an estimated contribution of 48% and incentive of up to $0.50/kg of GH2 pro-
ous execution, thereby helping to Rothman, Mirko Rubeis, Ranu Sharma, a 12-14% improvement in effi ciency, 34% respectively in the overall cost of duction for the fi rst two years and an
* Identifying and acting on core value shape the future trajectory of the Priyanka Singh, Siqi Tang, Yaro- apart from supportive policies. the project. incentive on electrolyser capex of $54/kW
drivers by determining where company. slav Verkh, and Han Zhou. They also are welcome moves to help achieve
value originates – whether from acknowledge the contribution made by Refi neries and ammonia production Economic viability of GH2 targeted LCOH.
specific industries, regions, or Scrutinize costs BCG’s ValueScience Center. are expected to be early adopters of LCOH is particularly sensitive to
business models – and making A successful value creation strategy GH2, with potential for exporting green electrolyser cost & effi ciency and re- CareEdge Ratings believes a signi-
informed decisions about divesting includes ongoing cost scrutiny to Boston Consulting Group partners ammonia. However, effective storage newable energy tariff. CareEdge Rat- fi cant reduction in the capex cost of
non-core assets. sustain competitiveness and unlock with leaders in business and society and transportation solutions for GH2 ings has outlined various scenarios for renewable energy is unlikely, however,
resources for growth. This can be to tackle their most important chal- and its derivatives will be essential for LCOH based on the capex of electro- there is adequate headroom for the re-
* Avoiding feedstock dependence. achieved by: lenges and capture their greatest its wide-scale adoption. lysers, their effi ciency, and the cost of duction in the electrolyser cost. Econo-
Given the commercial advan- opportunities. BCG was the pioneer in renewable energy. As seen below, the mies of scale, advancement in manu-
tages some regions enjoy due to * Applying rigorous zero-based bud- business strategy when it was founded Cost dynamics of GH2 vis-à-vis horizontal axis of the table represents facturing automation, the use of less
feedstock availability, companies geting principles and leveraging in 1963. Today, we work closely with alternatives the capital cost for electrolysers, while expensive materials in the stack, and
should be cautious about over new technologies, such as genera- clients to embrace a transformational In contrast to other hydrogen alter- the vertical axis indicates renewable the scaling up of stack sizes shall be the
investing in subsectors that are tive AI, which can act as powerful approach aimed at benefiting all stake- natives, i.e., grey hydrogen (produced energy tariffs. key drivers for the reduction in the cost
dependent on specific feedstocks. tools for reducing costs and holders – empowering organizations from natural gas) and brown hydrogen of electrolysers going forward.
improving margins. to grow, build sustainable competitive (produced from coal), GH2 is gene- It is inferred from Figure 1 that
* Prioritizing strategic acquisitions advantage, and drive positive societal rated through the electrolysis of water, LCOH is infl uenced not only by reduc- Key demand drivers for GH2
that enhance market reach, end- * Evaluating asset networks and impact. where renewable energy is used to split tions in electrolyser capex and renew- The demand drivers for GH2 can be
industry coverage, and techno sharing services, which enables water into hydrogen and oxygen, there- able energy tariffs, but is also sensitive categorised as:
logical innovation instead of companies to reduce unnecessary Our diverse, global teams bring by eliminating CO emissions. to enhancements in electrolyser effi - * Near term – Greening the existing
2
focusing mostly on supply and structural costs and channel the deep industry and functional expertise ciency. Considering the waiver of inter- grey hydrogen users.
demand-driven M&A. savings into achieving their growth and a range of perspectives that ques- GH2 has the potential to play a state transmission charges, LCOH was * Medium term – Wider adoption for
objectives. tion the status quo and spark change. crucial role in achieving India’s de- Levelised Cost of Green Hydrogen ($/kg)
Optimize capital project management BCG delivers solutions through lead- carbonisation target as well as reduc-
Faced with larger and more com- Over the last few years, success- ing-edge management consulting, ing India’s dependence on fossil fuels. $900/kg $750/kg $900/kg $750/kg
plex projects, companies need to take ful chemical players have taken bold technology and design, and corporate Nevertheless, the estimated levelised Rs. 2.19/Kwh 3.12 2.85 Rs. 2.19/Kwh 2.84 2.60
a more disciplined capital allocation steps. They’ve reworked strategies, and digital ventures. We work in a cost of GH2 – which includes both Rs. 2.43/Kwh 3.28 3.02 Rs. 2.43/Kwh 2.99 2.75
approach and spend scarce capital on pressure-tested their global asset net- uniquely collaborative model across capital expenditure (capex) and ope-
their core competencies and the most works and integrated value chains, the firm and throughout all levels of rational expenditure (opex) – per unit Rs. 2.67/Kwh 3.45 3.18 Rs. 2.67/Kwh 3.14 2.90
promising steps in their value chains. closed unprofitable sites, invested in the client organization, fueled by the of production is currently ~1.75 times
For example, they should rigorously regions offering higher growth, dou- goal of helping our clients thrive and that of Grey Hydrogen and ~1.50 times Electrolyser energy consumption: 56 kWh/kg Electrolyser energy consumption: 51 kWh/kg
assess their integrated value chains bled down on efficiency measures enabling them to make the world a that of Brown Hydrogen. This disparity Fig. 1: LCOH scenarios
and consider more flexible partnership and improved internal processes, and better place. persists despite the waiver of interstate Source: CareEdge Ratings

180 Chemical Weekly December 17, 2024 Chemical Weekly December 17, 2024 181

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