‘Producing green hydrogen is commercially viable, even without govt support’

WITH ANSHUL GUPTA CO-FOUNDER AND VP (STRATEGY & PARTNERSHIPS), HYGENCO

IN MARCH, Haryana-based Hygenco commissioned India’s first green hydrogen plant for steel production and plans to commission three more by the end of FY25. In a detailed conversation with AGGAM WALIA, ANSHUL GUPTA, Co-founder and VP (Strategy & Partnerships) of Hygenco, which was set up in 2020 as a pure play green hydrogen and derivatives company, talked about the commercial viability of green hydrogen projects, boosting domestic electrolyser manufacturing capacity, exploring overseas projects, and more.

What considerations go behind deciding the renewable energy source for a green hydrogen project?

Our specialty is to produce green hydrogen at the lowest cost and in the greenest and most efficient way. The applications can be multiple– it could be steel, refineries, glass, and so on. One of the plants we have operationalised in Hisar for Jindal Stainless Limited was inaugurated around a month ago and is feeding green hydrogen into the steel furnace. The Hisar plant is based on floating solar and some rooftop. The one we are constructing in Maharashtra for supplying green hydrogen to Sterlite Technologies Limited to make glass preforms for optical fibre uses both wind and solar. The considerations are related to how you want to operate the electrolyser. If you want to operate the electrolyser only during the day time when the sun shines, then it’s solar. But if you want to operate it also during evening or night hours, then it could be wind power. If you want to operate it at certain other conditions, then you might add some other kind of renewable energy source into the mix. Of course, operating with wind and solar gives a higher utilisation because now you are also able to operate during evening and night hours.

What is the feasibility of using energy storage technologies for 24x7 supply?

Theoretically, there could be a possibility but practically speaking any kind of technology that we have today in the country, whether it is battery storage or pumped hydro, is not there yet from a cost point of view. It will not be there in the next seven or eight years to come where it can actually be used in the most economical way to produce hydrogen.

The commercial viability of producing green hydrogen hasn’t entirely been worked out, even in the United

States. How would you assess the viability in India?

The US has large reserves of shale gas, which they also export to countries around the world. Because of the local production of natural gas, its cost is significantly lower in the US, which means that the cost of grey hydrogen is also significantly lower. There is a significant delta gap between green hydrogen and grey hydrogen in the US. In India, this is not true– it’s actually the complete opposite. Our cost of grey hydrogen is very high because we depend on liquified natural gas (LNG) to produce it. We don’t have that much local natural gas and whatever we have is allocated in priority to urea production or kitchen consumption. Our cost of grey hydrogen is much higher than anywhere else in the US, which is why the delta gap between grey and green hydrogen is either negative, sometimes zero, or even if it’s there it’s very small. In India, the cost competitiveness to a significant extent is already there and is continuously increasing. Our assumption is that within one and a half years or so, most of the market will be cost competitive in India. We have already done projects where we have been able to beat the cost of grey hydrogen.

How have you made your projects commercially viable?

We have been able to do it not with one large innovation but a series of multiple small innovations over time. The innovations deal with how you operate and integrate the electrolysers with renewable energy, how you design and engineer the plants, how the gas flows, etc. We started getting confidence after we set up our own pilot plant in Ujjain that gave us a gold mine of data. We have been able to secure project equity and financing from commercial banks a number of times by now, so the commercial viability is fully proven. Those who are saying that commercial viability is a challenge haven’t yet produced green hydrogen themselves.

To what extent is viability dependent on government support?

Something very fundamental to Hygenco as a belief system is that if your green hydrogen project primarily stands on government subsidies and support of various kinds, it is doubtful whether it’s actually a business. For the time being, government support can be there because it wants to strategically bring down the cost curve. We are here to do business, so that is why we try to do projects that are not inherently dependent on government support. Our projects can stand in terms of economics on their own because they are investable in nature. Our Hisar project is a commercial project with commercial private equity investment, with commercial debt in it, and it is making commercial returns.

Companies operating in the green hydrogen space have asked for exemption from the government’s shortlist of solar panel manufacturers, which excludes foreign manufacturers that produce significantly cheaper panels. What is your take on this request?

The Approved List of Models and Manufacturers (ALMM) has seen a lot of ups and downs till date. Many times introduced, then relaxed, and now reintroduced. There might be some cost advantage to import solar PV modules from China or from anywhere else but this is more to do with renewable energy projects and not so much to do with the viability of green hydrogen. Yes, the solar price will eventually add up in the hydrogen price also, but to a limited extent compared to renewable energy projects, which are primarily selling solar power.

The rationale for why ALMM should be relaxed for green hydrogen specifically and not for others is not a very clear logic in my opinion. If the government wants to support the local industry, the local industry has to be supported and then everybody has to live with it. It’s kind of an unfair ask to the government. And again, if the business stands on the ALMM exemption only, then it’s not a business. It has to stand on its own fundamentally.

FULL INTERVIEW ON www.indianexpress.com