Green Hydrogen – Energy or Just Gas?
Don’t hold your breath, folks! Yes, we are going green, but not just now.
 
You have heard much talk. The finance minister (FM) announced battery-swapping for electric vehicles. Nitin Gadkari, the Union minister for road transport & highways will make farmers “urja-data, not just anna-data” by replacing fossil fuels with ethanol, thus saving Rs16 lakh crore annually.
 
The latest is the ‘national green hydrogen mission’. Since the prime minister (PM) himself has proclaimed it, we must take it seriously.
 
Hydrogen has been around. For decades, we have made hydrogen from coal or fossil fuels. Hydrogen is also made by electrolysis, i.e., passing electricity through water to produce oxygen (discarded) and hydrogen—H2. Use electricity from renewable sources (solar, wind, hydro, etc), voila - 'green' hydrogen (GH2).
 
Cheap GH2 would be great. It can generate energy, either in a fuel cell to produce electricity, or by burning as fuel. It can be used to make fertilisers, ammonia and even steel. Not to forget—transport.
 
Best of all—GH2 produces zero dirty emissions or toxic gases.
 
Currently, India already uses about 5-6MMT (million metric tonnes) of hydrogen annually, about 50/50 for petroleum refining and fertiliser production. This is 'dirty' hydrogen, made from coal/ oil, not GH2.  
 
Yes, demand exists for GH2.  Problems are in production at an affordable cost, distribution and storage.
 
Hydrogen is inherently problematic:
 
- H2 is the lightest element on earth; hence, it must be compressed to 700+ times atmospheric pressure to make it dense enough to store. This needs ultra-strong storage tanks—expensive.
 
- H2 is volatile, corrosive, odourless and explosive and, therefore, not amenable to being transported.
 
- There are major issues related to safety, infrastructure and environment.
 
So, GH2 is best consumed on-site, i.e., produced and used at the same location. Alternatively, the electricity produced in a solar plant can be transmitted to a far-off place to make GH2 for use right there. Examples: solar power plant + GH2 plant + refinery within one complex, or a roadside mini GH2 plant supplying passing trucks.  
 
So far, so good, but...
 
When I crunched some numbers, things didn’t quite stack up.
 
The ‘National GH2 mission’ document sets an initial target for GH2 production at 5MMT per annum (pa), to replace the hydrogen currently used by oil refineries and fertiliser plants. Production of GH2 will be progressively increased for making fertiliser, replacing imported urea and DAP, and also for exports to meet about 10% of the global demand for GH2, estimated to reach 100MMT by 2030.
 
So, let us start with figuring out what it takes to make 5MMT of GH2 annually.
 
GH2 production requires 50-55 kilo watt hour (KwH) of electricity per 1kg of GH2. Hence, 5MMT requires 250,000 GwH (giga watt hour). 
 
Solar power can be produced only during the day, and output is low in the early mornings and late evenings. Hence, a solar plant produces full-rated power for only about 6-8 hours a day. Assuming 300 days of full sunshine a year, about 125GW of installed solar power is needed to reach 250,000GwH a year.
 
India had only 63GW of installed solar power on 31 December 2022!
 
I am not going into other sources of renewable energy—wind or hydro1because their current installed capacities are lower than that of solar power, and solar is clearly the leader in renewables.
 
Apart from electricity, GH2 production requires an electrolyser. A 1GW electolyser, running 22 hours a day, produces 150,000MT of GH2 annually. Extrapolate to 5MMT of GH2, and you need electrolyser capacity of 33GW if the plants run around the clock.
 
But since solar power is available only for 6-8 hours a day, you will need nearly four times this capacity—about 125GW.  Alternatively, you can use (thermal) grid power at night (but then it is no longer 'green' H2) or store solar power in batteries for running the electrolyser at night—inefficient.
 
But, the global capacity of manufacturing electrolysers is only 4GW per year! So, we need to build electrolyser factories first!
 
Also, a 1MW electrolyser costs about US$2.2mn (million), i.e., Rs18 crore. Extrapolate to 33GW—about Rs6 lakh crore. For 120GW—Rs22 lakh crore! Whew!
 
Mind you, economies of scale in electrolyser production can bring these costs down, but right now we don’t know to what extent.
 
So much for capital cost for solar plants and electrolysers.
 
Now comes the production cost of GH2.
 
The cheapest solar power available in India today costs Rs2.30 per KwH. To produce 1kg of GH2 you need 50+KwH of electricity, costing Rs120. The cost of electricity is approximately half the cost of producing GH2, the other half being the costs of electrolyser, buildings, and labour. That means that GH2 will cost about Rs240 a kg, i.e. US$3 per kg.
 
Reliance is targeting GH2 production cost at $1/kg, less than a third of this!
 
Finally, the water—clean water suitable for electrolysis.
 
Each kg of GH2 requires 20kg of water. Hence, 5MMT of GH2 per year will require 100MMT of clean water, i.e., about 100mn kilolitres. I leave it to you to work out how much water that is.
 
Sorry, I am tired of number crunching! Big numbers all around, really big ones. 
 
The fundamental issue is—where is the renewable energy?
 
Disappointingly, the ‘National GH2 mission’ document is silent about the availability of clean electricity, clean water, land for solar plants, electrolysers, and all of that. It does mention, in passing, that 125GW of additional renewable energy will be needed for meeting the initial target of 5MMT of GH2, but it doesn’t go into how this capacity will be built.
 
Obvious question—so much investment in solar power, and electrolysers just to make 5MMTPA to replace dirty hydrogen! What about making many more MMTs of GH2 for fertiliser, ammonia, steel, transport, exports, et al?
 
Yes, GH2 is one route towards meeting carbon emission targets, but is it the best one? Is there significant economic value in GH2?
 
Let’s hope there are good answers—otherwise, the middle two words will have to disappear from the title of this piece.
 
(Grateful thanks to my classmates Sudhin Datta and Dinesh Kumar Jain for their review and guidance regarding this article.)
 
(Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post-retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world, playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.)
 
Comments
vimalfp
1 year ago
You are bang on with the math. Who are the 2 biggest beneficiaries from the Green Hydeogen Mission in India. They were Lteady geared up and ready to go on the announcement of this policy.
One of then had a multi billion dollar pact with an Indian run Australia based electrolyser makers. They run an inefficient redundant tech with no great background.
NIRMALGURUNG
1 year ago
So lucidly written…Will the govt” experts “ respond to the facts/ data given in this analysis?
Amitabha Banerjee
Replied to NIRMALGURUNG comment 1 year ago
I am afraid not. Mine is a voice in the wilderness. However, Mr Gadkari has said recently that green hydrogen is a "sapna".
dog2on
Replied to Amitabha Banerjee comment 1 year ago
That's too glib an answer.
Sapna's are of two kinds. Sweet ones (in this case for him and the greens) and nightmares (for people who try to evaluate things without bias).
dog2on
1 year ago
Most welcome Amitabha.
If you knew me, you would know that I am quite parsimonious with my praise, so yours was only well deserved.
You are quite correct about flex-fuel (if you are referring to the petrol-ethanol mix) experiment. Besides filling the pockets of the largest ethanol manufacturer, who also happens to be the Minister in charge, technically the mixture plays havoc with the rubber/plastic components feeding the fuel to the engine.
If you wish to contact me personally, you may do so on [email protected] and we may discuss many topics there.
Good wishes and look forward to your subsequent analysis on this 'Green' con game.
Amitabha Banerjee
1 year ago
Thank you, Mr dog2on. I agree that EVs today are not quite good enough to be called a worthy replacement for IC-engined cars. I will try to do an analysis. Then there is "flex-fuel", too, another myth?
dog2on
1 year ago
My highest accolades to Amitabha Banerjee for such a thorough take-down of this 'green' initiative.
May I request he does a similar exercise for the move towards EVs as personal vehicles. Neither their initial cost, charging/running cost (when one considers that more than 70% of electricity generated in India is from coal-fired plants), the replacement cost (most likely half the initial cost of the vehicle, coupled with the disposal cost) of an environmentally harmfully produced battery, makes any sense.
Worse is that the auto magazines too are hell bent on pushing EVs, not that they find technical or economic merit in them but rather to shore-up their advertising revenues from EV manufacturers, who to kowtow the ill-thought-out 'woke' policy of governments the world over are phasing out ICE engines.

The least harmful source to go 'green' remains nuclear power and coupled with the high safety record it has (barring the Chernobyl screw-up, directly related to human failings), is not a power source to be cavalierly dismissed.
Of course, when and if fusion works out, it can only be an icing on the cake.

Congratulations and thanks again to Mr. Banerjee. Wish all Moneylife readers should disseminate this information as widely as possible, especially amongst the 'greens' they know and the politicians. The latter are mostly on the bandwagon to fill their pockets, barring some idealists who have not crunched the numbers.
shantanu.ambedkar
1 year ago
Globally GH2 is being attempted to be made either where there is a surplus of renewable power or by using a fossil fuel such as gas and then using carbon capture to store the CO2. In India, where replacement of thermal (coal) generated power itself is an issue, to use renewable energy for GH2 is not only inefficient but inexplicable. Considering that it’s Ambani and Adani who are propagating this fiction, there seems to be some other motive behind this.
aruna.ranganath
1 year ago
good analysis
Kamal Garg
1 year ago
Too much "gas" and a global scam. Ha ha ha.....
kpushkar
1 year ago
It could turn out another scam !! Global scam may be !!
pgodbole
1 year ago
Good analysis.
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