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Renewable energy

India's Green Hydrogen Ambitions: Challenges and Uncertainties

Strategic Insights

— 2 min read

India's efforts to produce green hydrogen, ammonia, and methanol have garnered significant attention, with various pilot projects and initiatives underway to develop eco-friendly solutions. However, the production costs of green hydrogen are significantly higher than traditional grey hydrogen, making it an economically unviable option for industries to switch. The Indian government's National Green Hydrogen Mission aims to produce 5 million tonnes of green hydrogen annually by 2030, but the lack of competitive production costs remains a major challenge.

Key Takeaways:

  • The majority of hydrogen produced globally is grey hydrogen, derived from steam reforming of fossil fuels, with China also producing a significant portion from coal, classifying it as brown hydrogen.
  • Green hydrogen costs range from USD 3.50 per kilogram and above, with a significant portion of the cost driven by renewable electricity prices.
  • India's grey hydrogen produced from natural gas costs roughly ?150 to ?200 per kilogram, depending on the natural gas price.
  • The production cost of brown hydrogen is approximately USD 2.20 per kilogram, while blue hydrogen can be produced at costs as low as USD 1.50 per kilogram in some regions.
  • Several projects are being proposed for green ammonia and green methanol production in India, including Sembcorp's plan to produce 200,000 tonnes per annum of green ammonia at Tuticorin for export and ACME Group's solar-to-green hydrogen-to-green ammonia facility worth ?52,000 crore.
  • The Indian government's National Green Hydrogen Mission aims to produce 5 million tonnes of green hydrogen annually by 2030, but the lack of competitive production costs remains a major challenge.
  • The production of green ammonia and methanol requires large quantities of hydrogen, making the production of green ammonia and methanol highly uneconomical.
  • India remains a large importer of both ammonia and methanol, and its green ammonia and methanol projects would need to compete with imported alternatives.

Statistics:

  • India's annual installed capacity for ammonia stands at 19.8112 million tonnes.
  • Production of ammonia has increased from 15,195 thousand tonnes in 2020-21 to 19,521.1 thousand tonnes in 2023-24.
  • India remains a net importer of ammonia, with imports rising from 2,175,803 tonnes in 2023-24 to 2,535,796 tonnes in 2024-25.
  • The average annual CIF price for imported ammonia has been around ?35,000 per tonne.
  • Methanol production in India is approximately 122,240 tonnes per annum, whereas imports have increased from 2,815,925 tonnes in 2022-23 to 3,066,223 tonnes in 2023-24, with an average CIF price of around ?25 per kilogram.
  • The Government of India has set a target to achieve 500 GW of installed renewable energy capacity by 2030, having already reached 250 GW.

Sources:

  • Jawaharlal Nehru Centre for Advanced Scientific Research in India.
  • GAIL (Gas Authority of India Limited).
  • Indian Oil Corporation.
  • National Thermal Power Corporation (NTPC).
  • Gujarat Industries Power Company Limited (GIPCL).
  • Indian Railways.
  • Reliance Industries.
  • ReNew Power.
  • Larsen and Toubro.
  • Adani Group.
  • TotalEnergies.
  • Assam Petrochem Chemical.
  • Indian government's National Green Hydrogen Mission.
  • Sembcorp.
  • ACME Group.

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