Context

The ongoing tensions between Russia and Ukraine have led to the prices of crude oil shooting to $130/barrel. Green hydrogen is an emerging option that will help reduce India’s vulnerability to such price shocks.

Four deficiencies in Renewable Energy Technologies

• 1] Intermittent nature of RE: RE can only be generated intermittently.
• Battery technology cannot store electricity at a grid scale.
• 2] Financial viability: There are question marks on the financial viability of green power.
• In India, renewable electricity is a replacement for coal-based power, the cheapest form of energy.
• That’s a big constraint on its viability.
• Moreover, the customers of this power – the state distribution companies – are collectively insolvent.
• A business cannot prosper if its primary customers are not financially viable.
• 3] Batteries are not suitable for heavy trucks: While electric cars and two-wheelers get a lot of visibility, much of India’s oil is burnt in heavy trucks.
• Lithium batteries are not viable for trucks.
• 4] Critical minerals: Electric vehicles require large quantities of lithium and cobalt that India lacks.
• These minerals also have very concentrated supply chains that are vulnerable to disruptions.
• Large-scale investments in electric vehicles may create unsustainable dependencies for the country.

Is green hydrogen a solution?

• Intermittent hydrogen in the energy mix can help circumvent some of these problems.
• Hydrogen is an important industrial gas and is used on a large scale in petroleum refining, steel, and fertiliser production.
• As of now, the hydrogen used in these industries is grey hydrogen, produced from natural gas.
• Green hydrogen produced using renewable energy can be blended with grey hydrogen.
• This will allow the creation of a substantial green hydrogen production capacity, without the risk that it may become a stranded asset.
• Creating this hydrogen capacity will provide experience in handling the gas at a large scale and the challenges involved.
• Blending with CNG: To widen the use of green hydrogen, it can be blended with compressed natural gas (CNG), widely used as a fuel for vehicles in Delhi, Mumbai and some other cities.
• This will partly offset the need for imported natural gas and also help flag off the challenges of creating and distributing hydrogen at a national level.
• By bringing down the price of green hydrogen sufficiently, India can help unlock some stranded assets.
• The country has close to 25,000 megawatts of gas-fired power generation capacity that operates at a very low-capacity utilisation level. The high price of natural gas reduces the viability of such electricity.
• These plants could use hydrogen blended with natural gas. Hydrogen should, however, be used to generate electricity after it has served its utility in other avenue.

Way forward

• To catalyse a hydrogen economy, India needs some specialist players to execute projects as well as finance them.
• Participation of private players: Apart from government-backed players, the hydrogen economy will need private sector participation.
• India’s start-up sector, with over 75 unicorns, is perhaps the most vibrant part of the country’s economy currently.
• This ecosystem has been enabled by a mix of factors, including the presence of entrepreneurs with ideas and investors who are willing to back up these ideas
• Creation of refueling network: One challenge of using new transport fuels, whether CNG or electric vehicles, is the creation of large-scale refuelling networks.
• Bringing hydrogen vehicles on the road too soon will require the creation of yet another set of infrastructure.
• Building fleets of hydrogen-fueled vehicles for gated infrastructure can be a good starting point.
• Airports, ports and warehouses, for instance, use a large number of vehicles such as forklifts, cranes, trucks, tractors and passenger vehicles.

Conclusion

The government’s Green Hydrogen Policy sends the right signals about its intent. It now needs to ensure that investment can freely come into this space.

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