October 17, 2021

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PLI scheme for electrolyser manufacturing on the cards, says Union power minister RK Singh

a circuit board: The purchase obligation will be later increased to 20-25%. (Representative image)

© Provided by The Financial Express
The purchase obligation will be later increased to 20-25%. (Representative image)

To expedite the uptake of green hydrogen, the government will come up with a production linked incentive (PLI) scheme for investors in electrolyser manufacturing, Union power minister RK Singh said on Wednesday. Electrolysers are used to produce green hydrogen using electricity generated from renewable sources such as solar and wind plants.

While delivering the keynote address at a webinar on green hydrogen organised by the Council on Energy, Environment and Water (CEEW), Singh said that as much as 8,800 mega-watt (MW) of electrolyser capacity is required to meet the demand of the obligated industries, if they are mandated to source even 10% of their requirements through domestic green hydrogen. The purchase obligation will be later increased to 20-25%.

As FE reported earlier, the government intends to put green hydrogen consumption obligations on fertiliser producers and petroleum refiners to create a hydrogen value-chain in the country and bring down the costs of hydrogen production. Though there are sufficient capacities of installed and upcoming renewable energy generation sources in the country, the shortage of electrolysers can become a roadblock for meeting the estimated requirement on green hydrogen. The PLI scheme can begin with manufacturing capacity of around 10,000 MW. According to experts, such electrolyser manufacturing capacity may require investments between Rs 15,000-20,000 crore. “We are also proposing to come up with viability gap funding (VGF) for green hydrogen in heavy mobility,” Singh said, adding that the steel sector may also be roped in to use domestic green hydrogen.

Prime Minister Narendra Modi, on August 15, had announced the National Hydrogen Mission as the government explores ways to reduce dependence on imported products such as crude oil and natural gas. Though the current electrolyser capacity globally is around 2,000 MW, given the potential of green hydrogen becoming the emissions-free future fuel, many countries have charted out plans to set up large electrolyser capacities. The European Union plans to install 6,000 MW of electrolyser capacity by 2024 and 40,000 MW by 2030, by when it hopes to produce 10 million tonne of green hydrogen. The cost of electrolysers has the highest share in the total production cost of green hydrogen, which currently needs a sizeable sum of $3.6-5.8/kg to manufacture.

Reliance Industries chairman Mukesh Ambani recently said that the company “will aggressively pursue” the target of bringing down the cost of green hydrogen to under $2 per kg “well before the turn of this decade”, and “India can set an even more aggressive target of achieving under $1 per kg within a decade”. An electrolyser manufacturing plant will be a part of the Rs 60,000-crore Dhirubhai Ambani Green Energy Giga Complex which RIL is currently developing in Jamnagar.

State-run Indian Oil recently said it will build the nation’s first green hydrogen plant at its Mathura refinery, using electricity from its wind power project in Rajasthan. NTPC also plans to produce green hydrogen on a commercial scale from part of the electricity generated by the solar panels to be installed in its upcoming 4,750 megawatt renewable energy park at Rann of Kutch.

Currently, the power generator is running a pilot project in its Vindhyanchal unit, where the cost of hydrogen is estimated to be around $2.8-3/kg. JSW Energy said in July its subsidiary JSW Future Energy has entered into a framework agreement with Australian Fortescue Future Industries to collaborate on green hydrogen production. US-headquartered renewable energy start-up Ohmium International has also recently launched a green hydrogen electrolyser gigafactory in Bengaluru.

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