Cost of green hydrogen hinders wider adoption in India

Decreasing electrolyser costs could address the issue.

Whilst green hydrogen may play a crucial role in reducing India's dependence on fossil fuels and reaching its decarbonisation target, its higher levelised cost remains a hurdle for its wider rollout.

According to CareEdge Ratings, the estimated levelised cost of green hydrogen —which includes both capital expenditure (capex) and operational expenditure per unit of production is currently around 1.75 times that of grey hydrogen and around 1.50 times that of brown hydrogen.

“This disparity persists despite the waiver of interstate transmission charges (ISTS) for renewable power,” it  said.

Furthermore, a capex outlay of INR 2.40 lakh crore is required to produce one million metric tonnes of green hydrogen. Capex for renewable energy generation and capex for electrolyser are the two major cost components with an estimated contribution of 48% and 34% respectively in the overall cost of the project.

CareEdge Ratings said a reduction in the capex cost of renewable energy is unlikely, but there is potential to reduce electrolyser costs.

“Economies of scale, advancement in manufacturing automation, the use of less expensive materials in the stack, and the scaling up of stack sizes shall be the key drivers for the reduction in the cost of electrolysers going forward,” it said.