Exclusive: Low renewable energy costs to aid India’s green hydrogen push

Low renewable energy production costs will give India a leg up in green hydrogen production amid increasing competition, according to India’s renewable energy minister.

“We have an installed capacity of 106,000 megawatts of renewable energy [and] that is not something every country has,” Raj Kumar Singh, Minister of Power and New & Renewable Energy, told The National.

“[About] 75 per cent of the cost of green hydrogen is the cost of energy and setting up renewable energy capacity in India is cheaper than anywhere else,” said Mr Singh.

The cost of 1 megawatt of solar capacity in India is about $600,000, “which is the cheapest in the world”, he said.

As part of India’s green hydrogen plan, called the National Green Hydrogen Mission, the country aims to produce 5 million tonnes of green hydrogen annually by 2030, with the potential to reach 10 million tonnes as export markets grow.

Hydrogen, which is produced from renewable energy and natural gas, is expected to become a critical fuel as economies and industries transition to a low-carbon world.

It comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas, while green is derived from splitting water by electrolysis.

By May, India plans to invite bids for subsidies for setting up green-hydrogen manufacturing and utilisation hubs, fertiliser and steel plants based on the fuel, and factories for making electrolysers, Reuters reported earlier this week.

“We are going to have bids, but apart from that many of our companies are setting up green hydrogen and green ammonia plants … there’s requirement from countries such as Germany and Japan,” said Mr Singh.

“We see the manufacturing of green hydrogen and green ammonia [to start by] by 2025 or 2026-end.”

Global hydrogen demand reached 94 metric tonnes in 2021, a 5 per cent increase on demand in 2020, driven mainly by the chemical sector and refining, according to the International Energy Agency (IEA).

India, the world’s third-largest crude importer, is heavily dependent on fossil fuels, with coal accounting for 70 per cent of its electricity generation.

Last year, the Group of seven advanced economies (G7) offered financial aid to India, South Africa, Argentina, Senegal and Indonesia to help turn their economies green.

However, efforts to bring India on the board the G7’s Just Energy Transition Partnership failed to move forward as the South Asian country refused to phase out coal, according to media reports.

“Every major fund is invested in [India’s] renewable energy sector…we don’t need the finance,” said Mr Singh.

“Our rate of renewable energy capacity growth is the fastest in the world even though our per capita emissions are one-third of the global average.”

India has come under criticism for boosting imports of discounted crude from Russia since its invasion of Ukraine in February. Russia, which had a tiny share in the Indian crude basket before the conflict, is now among the country’s biggest oil suppliers.

“[Energy] transition is not going to happen overnight … you will need storage for that,” said Mr Singh.

“[The countries] that were talking about energy transition have suddenly realised that energy security is more important … you can talk about trends after you have the availability of energy,” he said.