The answer to net zero emissions and an alternative to fossil fuels is green hydrogen but it can be a viable alternative and adopted widely only if its cost of production can be slashed 66-80 per cent, said billionaire Gautam Adani in a blog.
“Green hydrogen may be the last mile in the net-zero journey for many sectors, especially in India. However, the cost of green hydrogen must significantly decrease from the current $3-5 per kilogram for widespread adoption,” he wrote in a blog on the World Economic Forum website. He pointed out that at $1 per kg, it would be economically viable to decarbonise even the most challenging sectors without a burdensome carbon price.
Expansion plans
The Adani group is setting up a green hydrogen plant in Mundra, Gujarat at a total cost of $50 billion and 3 million tons capacity over a 10-year time frame.
Adani said that power tariffs from wind and solar have dropped steeply in little over a decade, but their intermittent nature required energy storage solutions. “Decarbonisation of industry, heavy-duty transportation and chemicals require a green molecule to replace fossil fuels. Green hydrogen, derived from water electrolysis using renewable energy, is the answer to both.”
About 60-70 per cent of green hydrogen’s cost is from electricity and therefore the renewables cost of production must fall faster than that of green hydrogen, he said. “For India, green hydrogen presents a home-grown opportunity as it holds the promise, along with renewables, to lift the yoke of expensive energy imports from its economy - more than $230 billion per year for crude imports.”
Key challenges
Storage and transportation of hydrogen are key challenges and the initial focus is likely to be on derivatives such as green ammonia and methanol. “ Hydrogen hubs, where the production, use and export of green hydrogen and its derivatives are co-located, are also being promoted,” Adani said.
He advocated a vertical integration approach to cut costs. “The most significant near-term reductions will come from large-scale, vertically integrated projects encompassing the entire supply chain. These projects will include giga-scale manufacturing of solar modules and their ancillaries, wind turbines, electrolysers, in-house engineering, procurement and construction capabilities and the production of green hydrogen and its derivatives – all in a single location.”
A location with a port that has an industrial ecosystem nearby facilitating the flow of goods and services from source to end consumption and that uses green hydrogen and has the infrastructure to export hydrogen derivatives could lessen the early challenges, he said.
While this approach would be capital intensive it was the fastest path to cost reduction.
“For India, the equitable solution is not to replace one fossil fuel with another but to leapfrog to renewables and green hydrogen.”