This paper “Benchmarking Green Hydrogen in India’s Energy Transition: Expensive but Important for Some Uses” has been published by the Centre for Social and Economic Progress. It examines the economics of producing and using green hydrogen in India, focusing on the 2030 timeframe.
Green hydrogen is intended to decarbonise ‘hard-to-abate’ industries, such as fertiliser and steel, and certain end-use applications in transport, such as shipping and long-distance road freight. In the analysis, the authors link green hydrogen production costs with the cost and availability of renewable energy (RE) generation, which is measured by its capacity utilisation factors (CUFs). They also calculate the premium, if any, of using green hydrogen compared to energy-basis equivalent costs of fossil fuels for a range of applications.
The authors emphasise that defining the conditions for “green” electricity is essential to ensure that green hydrogen and its derivatives, thus produced, have low or zero carbon emissions. This is especially important if the products are to meet international emission standards. Current green hydrogen standards in India allow electricity “banking” with the electricity distribution company (DisCom) for up to 30 days, where an RE generator can overproduce RE at some times of the day and feed it into the grid and reclaim it from the DisCom when RE is not available. This means that some of the electricity consumed for electrolysis may not actually come from renewable sources, and the hydrogen so produced may have significant carbon emissions. The conditions to define “green”, hence, should be based on the additionality, deliverability, and timing of the RE supply. This is key to determining the cost and availability of RE, which disproportionately affects the cost of green hydrogen production and, thus, the cost of decarbonisation.
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