Business Today


Reliance Industries’ big- bang entry into hydrogen is likely to accelerate developmen­t of the nascent industry, and play a critical role in India’s fight against climate change


INDIA’S LARGEST COMPANY, Reliance Industries Ltd (RIL), made a big splash last week when it announced plans to become a net-zero carbon company by 2035. The Mukesh Ambani-led company is investing ` 75,000 crore in clean energy projects. A part of it will be used to build an electrolys­er and a fuel cell Giga factory, in a big boost to the country’s nascent hydrogen economy. Hydrogen is considered the best way to decarbonis­e by many industries.

“Green hydrogen will be a unique energy vector that can enable deep decarbonis­ation of many sectors such as transporta­tion, industry and power. One of the most common methods of generating green hydrogen is by electrolys­is of pure water through electrolys­ers,” Chairman and Managing

Director Mukesh Ambani said at RIL’s annual general meeting on June 24. “This brings me to our third initiative — an Electrolys­er Giga Factory to manufactur­e modular electrolys­ers of highest efficiency and lowest capital cost. These can be used for captive production of green hydrogen for domestic use as well as for global sale,” he added.

It did not come out of nowhere. RIL has been quietly laying the ground for the hydrogen industry of the future. In April this year, the company joined hands with Chart Industries, a Nasdaq-listed global manufactur­er of highend engineerin­g equipment, to form the India H2 Alliance (IH2A). The purpose of the alliance is to work with the government to draw up a blueprint for commercial­ising hydrogen technologi­es and systems to build net-zero carbon pathways in India. Since then, JSW Steel has also joined the alliance.

The government has also been keen on hydrogen. Addressing the virtual RE-INVEST summit in November last year, Prime Minister Narendra Modi announced that India would launch a National Hydrogen Energy Mission (NHEM). It found mention in this year’s Union Budget in February when Finance Minister Nirmala Sitharaman set aside ` 800 crore for the same.

“India has tested the Hydrogen Vehicle. Now we’ve to make ourselves industry ready to utilise hydrogen as a fuel for transport,” Modi said at a webinar after the Budget. “Future Fuel, Green Energy are very important... Hence, ‘Hydrogen Mission’ announced in the Budget is a huge resolution.”

This wasn’t the first time the government has talked about hydrogen. In fact, India had a head start when in 2006 the first Hydrogen and Fuel Cell roadmap was announced. But progress has been tardy since then even as others have marched ahead. Europe and the US have taken the lead in electrolys­ers and fuel cell electric vehicle (FCEV) technologi­es; Japan and Korea are investing heavily to become global champions of hydrogen usage, while Australia and Chile are building global green hydrogen production hubs.

The potential for hydrogen to reduce carbon emissions in India is immense. The demand for hydrogen is around six million tonnes ( MT) per annum, with most of the consumptio­n coming from fertiliser plants and refineries, according to TERI. It needs to go up to 28 MT by 2050 and 40 MT by 2060 if the net-zero carbon target is to be achieved. The demand will be steeper if the deadline is shortened. Potentiall­y, hydrogen can also save over $160 billion worth of imports for India — $112 billion on crude, $9.6 billion on natural gas/LNG, $23.6 billion on coal, $16.2 billion on petroleum products and $775 million on ammonia.

Decarbonis­ing Industries

One of the biggest impacts of clean energy sourced from hydrogen will be on the industrial side where it can be used to decarbonis­e a host of sectors such as power, steel and oil refineries, cement factories, ports and logistics. Primary steel production needs chemical feedstocks like direct reduction of iron ore, which direct electrific­ation does not provide.

“There have been multiple studies done globally as well as in India, on the potential of hydrogen to drive decarbonis­ation in sectors such as steel, chemicals, fertiliser­s and heavy duty transport/freight,” says Jill Evanko, CEO and

President, Chart Industries. “Steel and cement seem most attractive from a short-to-medium-term perspectiv­e followed by fertiliser­s and chemicals on the industrial use case side. In the long term, this could extend to mining,” he adds.

Sajjan Jindal’s JSW Group wants to be one of the early adopters and considers hydrogen to be at the centre of its plan to go carbon neutral in future. “There are a number of green steel initiative­s currently underway but use of green hydrogen in the steel-making process is one that would make the most significan­t decarbonis­ing impact going forward,” says Prabodha Acharya, Chief Sustainabi­lity Officer at JSW Group. “We are uniquely placed to lead on the green hydrogen topic as we have a portfolio of businesses with significan­t interests in steel, cement and renewable energy. Working with a multi-sectoral approach and across the hydrogen value chain is the right way to build the hydrogen economy in India.”

But there are challenges, the biggest of them being the cost factor. While hydrogen is one of the most abundant elements, it cannot be sourced as gas from the atmosphere since it is lighter than air. Instead, it has to be separated from other compounds like water.

Two of the most common ways to do that are steam forming and electrolys­is or water splitting. While steam forming is less expensive, building plants for scale is still a costly propositio­n. Also, this process produces greenhouse gas emissions that defeat the main purpose of opting for hydrogen in the first place.

The other method of electrolys­is involves passing electricit­y through water to separate it into basic elements, hydrogen and oxygen. It is a very expensive process, and the IH2A is looking to devise a strategy to make it economical.

The alliance has made a six-point submission to the government that talks about among other things, an aim to create a national electrolys­er installed capacity of 15-20 gigawatt (GW) and a national hydrogen-themed energy transition fund with a target of raising $ 1 billion by 2030 for deployment of projects of a certain scale. It also calls for setting up a public-private task force, globally harmonised and interopera­ble hydrogen standards, pre-feasibilit­y studies of at least 10 hydrogen hubs and an industrial group that can look into specifics of using hydrogen as a decarbonis­ation tool.

“As the global use for hydrogen develops, economies that develop local supply chains for hydrogen systems — whether for electrolys­ers, storage equipment or sub-stack systems for fuel cells — will be the ones to benefit from the economies of scale,” says Evanko of Chart Industries. “The availabili­ty of public and private funding for hydrogen projects will be another key determinan­t of national success on hydrogen commercial­isation.”

Hydrogen can help India in geopolitic­s too. In electrific­ation, India is behind the curve as far as securing key raw materials such as lithium and cobalt is concerned. China has

“India has tested the Hydrogen Vehicle. Now we've to make ourselves industry-ready to utilise hydrogen as a fuel for transport. Future Fuel, Green Energy are very important... Hence, 'Hydrogen Mission' announced in the Budget is a huge resolution”

Narendra Modi, Prime Minister

a head start there and experts are worried India may end up being dependent on others for lithium in the same way it is for crude oil right now. In hydrogen, on the other hand, the industry is still nascent with no country having a definitive edge. It offers a much-better chance for India to nudge ahead. Ambani’s big play aims to tap into this opportunit­y.

Green Transport

Another area where hydrogen can play a significan­t role is transport. India has embarked on an ambitious plan to electrify its two- and three-wheelers and passenger vehicle segments. Doing the same for long-haul freight trucks, however, poses a problem since lithium-ion batteries do not have the range for intercity trips. They also need longer time to charge, which could potentiall­y keep the trucks off road.

Hydrogen can solve both the problems. In an FCEV, electricit­y needed to run the vehicle is produced in the fuel cell stack where hydrogen is fed through the tank. This can be refilled in a matter of 5-15 minutes, compared to recharging a battery EV truck that could take hours.

“We believe EVs and FCEVs will co- exist with EVs being preferred for short runs in cities, while FCEVs will be used for long-haul transporta­tion,” says Vikram Gulati, Country Head and Senior Vice president, Toyota Kirloskar Motor.

Like in the case of industrial use, cost is a hindrance here as well. Currently there are only three brands that offer hydrogen-powered fuel cell vehicles worldwide — Toyota Mirai, Honda Clarity and Hyundai Nexo. The Mirai is priced upwards of $50,000 or ` 37 lakh, which would make it out of reach for most Indians. This is also much more expensive than EV offerings such as the Hyundai Kona at ` 24 lakh or MG ZS EV at ` 21 lakh. If imported, the price of an FCEV would double, expanding the gap with a comparable EV or petrol/diesel product even more.

“Eventually, hydrogen is expected to play a major role in the global energy mix, but is still in its infancy and requires a lot of investment before it becomes commercial­ly viable,” say Amit Kapur, Joint Managing Partner and Akshat Jain, Partner, J. Sagar Associates.

No wonder then, carmakers are yet to warm up to the idea of fuel cell vehicles (FCVs) in India. It is a different story in commercial vehicles, where an FCEV has a significan­tly better chance of success, compared to a pure-play battery EV truck or bus. Commercial vehicle makers are already working on this. India’s largest CV maker Tata Motors has showcased FCEV buses at different auto expos. Recently, it also won a tender for supply of 15 FCEV buses to Indian Oil Corp. To be used in Delhi/NCR, these buses are part of a first- of-its-kind joint project to take the hydrogen and fuel cell journey in India to the next level.

“Key benefits that hydrogen has over lithium-powered battery electric vehicles are — high- energy density, faster fueling time, long-range applicatio­ns which become nonviable with BEV ( battery electric vehicle) due to LI-Ion battery constraint­s (weight, size and cost for high capacity batteries),” says Rajendra Petkar, President and CTO, Tata Motors. “On a standalone basis, hydrogen fuel cells for EVs are more eco-friendly as they do not have emissions related to metal oxide processing and recycling. Lithium-ion batteries also have concerns about continued long-term supplies of rare earth materials and severe supply chain constraint­s. From an applicatio­n standpoint, fuel cells make

sense for trucks and buses, and high- end SUVs.”

Even in commercial vehicles right now, an FCEV costs significan­tly more than electric or diesel-powered trucks and buses. But the gap is expected to narrow in the next five years. India still does not have an FCEV truck or bus available in the market for a cost comparison, but in Europe, the total cost of ownership (TCO) of an electric truck is still lower by 20 per cent, compared to an FCEV truck. In case of a fossil fuel-powered vehicle, TCO is 35 per cent lower, compared to an FCEV. The biggest reason is the disparity in the purchase price of the vehicle. But FCEV costs are expected to fall, and together with policies that penalise fossil fuel vehicles, the TCO of an FCEV in countries, including the UK, Latvia, Estonia and the Netherland­s, is expected to fall below fossil fuel vehicles by 2024. It is a trend likely to be replicated in India, too, albeit with a few years lag.

Hydrogen contains more energy — 130 megajoules per kg — compared to petrol or diesel (45-46 MJ per kg), which means it offers better range on a full tank. A car consumes 1 litre of hydrogen to cover around 28 kilometres, compared to around 18 kilometres for a litre of petrol. But, the current price of hydrogen in India is estimated at ` 880 per kg, which increases the fuel cost. Lack of hydrogen- dispensing stations is another roadblock.

“The future of FCEVs depends on its performanc­e and cost- competitiv­eness. FCEVs have a higher TCO mainly due to the initial acquisitio­n cost, driven by input prices of fuel cell stack, balance of power plant parts, hydrogen storage and EV propulsion system-related parts,” says Tata Motors’ Petkar. “As these cost go down, with government incentives and localisati­on of parts, the overall economics of FCEVs is likely to improve. Market demand and increased volumes are expected to occur during the second half of the current decade.”

According to Niti Aayog, low cost of renewables that powers the grid together with economies of scale in future can lower the cost of hydrogen fuel to $4 per kg. At that level, an FCEV truck will become competitiv­e with its diesel counterpar­t.

“The price of delivered power is the biggest driver of cost for green hydrogen. The recent bids of around ` 2 per unit for solar power in India are among the lowest in the world. We also have competitiv­e wind tariff, which gives us the advantage to disrupt the hydrogen industry,” says Amitabh Kant, CEO, Niti Aayog. “If we make the right policy decisions, we can be a net exporter of hydrogen by 2030 with a cost of just $1.5 per kg. Manufactur­ing electrolys­ers is a huge $20-billion opportunit­y.”

The higher energy content of hydrogen poses risks as well. Automotive fuels are highly inflammabl­e, but a vehicle laden with hydrogen is likely to be more vulnerable in case of a major accident. Hydrogen-dispensing stations would need to adopt to more stringent safety measures.

Having missed out on many technology-led innovation­s in the past, hydrogen presents India with the opportunit­y to lead the change. The parts of the puzzle just need to be put together.

“Green hydrogen will be a unique energy vector that can enable deep decarbonis­ation of many sectors such as transporta­tion, industry and power. One of the most common methods of generating green hydrogen is by electrolys­is of pure water through electrolys­ers” Mukesh Ambani, CMD, RIL

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