Page 181 - CW E-Magazine (17-12-2024)

Special Report

Green hydrogen: Gaining traction for energy transition

in India

SYNOPSIS transmission charges (ISTS) for renew- CareEdge Ratings
he momentum of Green Hydro- able power, and it remains a key barrier
gen (GH2) in India will be driven to the viability and widespread adop- estimated at $3.74 per kg as of CY23.
Tby lower renewable energy tion of GH2. In the years ahead, CareEgde Ratings
costs and India’s decarbonisation goals. opines that reduction in electrolyser
The prevailing levelised cost of GH2 Besides, as per CareEdge Ratings, cost and effi ciency improvement are
(LCOH) stands at ~1.75x times and a signifi cant capex outlay of Rs.2.40 prerequisites to achieve a targeted leve-
~1.50x times higher than that of grey lakh-crore is required to produce 1-mt lised cost of $2.1 per kg. Additionally,
and brown hydrogen respectively, pos- of GH2. Capex for renewable energy Production Linked Incentives (PLIs)
ing a signifi cant barrier to its adoption. generation and capex for electrolyser announced by the Government of
Economic viability of GH2 requires a are the two major cost components with India (GoI), such as a direct production
35-40% drop in electrolyser prices and an estimated contribution of 48% and incentive of up to $0.50/kg of GH2 pro-
a 12-14% improvement in effi ciency, 34% respectively in the overall cost of duction for the fi rst two years and an
apart from supportive policies. the project. incentive on electrolyser capex of $54/kW
are welcome moves to help achieve
Refi neries and ammonia production Economic viability of GH2 targeted LCOH.
are expected to be early adopters of LCOH is particularly sensitive to
GH2, with potential for exporting green electrolyser cost & effi ciency and re- CareEdge Ratings believes a signi-
ammonia. However, effective storage newable energy tariff. CareEdge Rat- fi cant reduction in the capex cost of
and transportation solutions for GH2 ings has outlined various scenarios for renewable energy is unlikely, however,
and its derivatives will be essential for LCOH based on the capex of electro- there is adequate headroom for the re-
its wide-scale adoption. lysers, their effi ciency, and the cost of duction in the electrolyser cost. Econo-
renewable energy. As seen below, the mies of scale, advancement in manu-
Cost dynamics of GH2 vis-à-vis horizontal axis of the table represents facturing automation, the use of less
alternatives the capital cost for electrolysers, while expensive materials in the stack, and
In contrast to other hydrogen alter- the vertical axis indicates renewable the scaling up of stack sizes shall be the
natives, i.e., grey hydrogen (produced energy tariffs. key drivers for the reduction in the cost
from natural gas) and brown hydrogen of electrolysers going forward.
(produced from coal), GH2 is gene- It is inferred from Figure 1 that
rated through the electrolysis of water, LCOH is infl uenced not only by reduc- Key demand drivers for GH2
where renewable energy is used to split tions in electrolyser capex and renew- The demand drivers for GH2 can be
water into hydrogen and oxygen, there- able energy tariffs, but is also sensitive categorised as:
by eliminating CO emissions. to enhancements in electrolyser effi - * Near term – Greening the existing
2
ciency. Considering the waiver of inter- grey hydrogen users.
GH2 has the potential to play a state transmission charges, LCOH was * Medium term – Wider adoption for
crucial role in achieving India’s de- Levelised Cost of Green Hydrogen ($/kg)
carbonisation target as well as reduc-
ing India’s dependence on fossil fuels. $900/kg $750/kg $900/kg $750/kg
Nevertheless, the estimated levelised Rs. 2.19/Kwh 3.12 2.85 Rs. 2.19/Kwh 2.84 2.60
cost of GH2 – which includes both Rs. 2.43/Kwh 3.28 3.02 Rs. 2.43/Kwh 2.99 2.75
capital expenditure (capex) and ope-
rational expenditure (opex) – per unit Rs. 2.67/Kwh 3.45 3.18 Rs. 2.67/Kwh 3.14 2.90
of production is currently ~1.75 times
that of Grey Hydrogen and ~1.50 times Electrolyser energy consumption: 56 kWh/kg Electrolyser energy consumption: 51 kWh/kg
that of Brown Hydrogen. This disparity Fig. 1: LCOH scenarios
persists despite the waiver of interstate Source: CareEdge Ratings

Chemical Weekly December 17, 2024 181

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