Electrolyser supply crunch hangs over India’s hydrogen ambitions

Green hydrogen has the best environmental credentials of the various categories of the clean-burning fuel because it is produced using renewable energy.

A global supply crunch of electrolysers needed to produce green hydrogen and a lack of domestic manufacturers to make them pose a major challenge to India’s ambitious targets to use the zero-carbon fuel. India plans to manufacture 5 million tonnes of green hydrogen per year by 2030, half of the European Union’s 2030 target of 10 million tonnes.

Green hydrogen has the best environmental credentials of the various categories of the clean-burning fuel because it is produced using renewable energy. For India, it is critical to cut carbon emissions, it is the counted as the third largest emitter behind China and the US globally. But it would need at least 10 gigawatts (GW) of electrolyser capacity to reach the target of 5 million tonnes of green hydrogen by 2030.

An electrolyser is a system that uses electricity to break water into hydrogen and oxygen in a process called electrolysis. Through electrolysis, the electrolyser system creates hydrogen gas. The oxygen that’s left over is released into the atmosphere or can be captured or stored to supply other industrial processes or even medical gases in some cases.

The hydrogen gas can either be stored as a compressed gas or liquefied, and since hydrogen is an energy carrier it can be used to power any hydrogen fuel cell electric application — whether it’s trains, buses, trucks, or data centres.

In its most basic form, an electrolyser contains a cathode (negative charge), an anode (positive charge) and a membrane. The entire system also contains pumps, vents, storage tanks, a power supply, separator and other components. Water electrolysis is an electrochemical reaction which takes place within the cell stacks. Electricity is applied to the anode and cathode across the proton exchange membrane (PEM) and causes the water (H20) to split into its component molecules, hydrogen (H2) and oxygen (O2).

India is placing a big bet on green hydrogen to transition away from fossil fuels. Green hydrogen can help solve India’s twin problems — energy security and decarbonisation of its economy. The ministry of power took the first step with the notification of a policy on green hydrogen using renewable sources of energy. One of the major highlights of this policy is a waiver of the central inter-state transmission charges for a period of 25 years for green hydrogen production projects commissioned before June 30, 2025. The cost of power constitutes anywhere between 50% and 70% of the total cost of green hydrogen depending on the location of production and the source of renewable energy, whether wind or solar. The open-access charge in turn is a significant portion of the cost of power. According to analysis by the Council on Energy, Environment and Water (CEEW), the cost of green hydrogen production could drop by 17 percent in a state such as Uttar Pradesh (UP) due to the waiving of the central transmission charges for states importing renewable power. However, if India were to become a global leader in green hydrogen, production costs would need to fall further and the following steps would help meet this objective.

A key challenge will be to produce it at affordable costs. Green hydrogen produced by renewables is far from competitive compared to other fuels, costing nearly double the price using coal, India’s main source of electricity generation. Ambani has vowed to produce green hydrogen at $1 per kilogram, a more than 60% reduction from today’s costs. “Reliance will aggressively pursue this target and achieve it well before the turn of this decade,” Ambani said last year.

Reaching a US$1 price point will require a dramatic drop in the cost of electrolysers, the equipment needed to make green hydrogen, according to Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu. In addition, a capacity utilization of more than 80 percent will be required, and that should be powered by constant energy supplies at less than 3 cents per kilowatt-hour, Mishra said. To achieve around-the-clock supplies, supplemental forms of energy such as storage or hydropower will be needed, and that can take the cost beyond the desired levels.