Feasibility of using Solar Power for Green Hydrogen Production

Green Hydrogen has been creating significant interest and excitement within the clean energy industry for the past 2 to 3 years, and for good reason. To fully appreciate its potential, we first need to understand the concepts behind green hydrogen, its production processes, and its implications for a sustainable future. The transition to green hydrogen holds massive potential for multiple sectors, including ammonia(fertilizer), methanol, steel, transportation, and power generation, as it can serve as a clean energy source, a feedstock, a heating medium, and also act as a storage medium for excess renewable energy. By integrating green hydrogen into these sectors, we could significantly reduce our carbon footprint and move closer to achieving net-zero emissions.

India is the third largest consumer & producer of hydrogen today, after China & USA. Moreover, Hydrogen demand In India is expected to increase significantly (by 2.5 - 3.5 times) by 2040. Since, the cost of Hydrogen transportation is high therefore supply needs to come near demand centres & hydrogen hubs/valleys needs to be created. This presents a great opportunity for clean hydrogen suppliers to build a business around Green Hydrogen.

Let us breakdown this blog topic into small questions for simplification and ease of reading.

1. What is Green Hydrogen? How is it different from Conventional/Grey Hydrogen?

Green Hydrogen is produced via the process of Electrolysis by splitting water i.e., H₂O to produce Hydrogen. An Electrolyser is used for the electrolysis process. This process is powered by renewable energy and does not have any direct carbon emissions making it a clean alternative fuel.

Whereas the traditional way of producing hydrogen by steam reformation from natural gas results in carbon emissions adding to global warming. Natural Gas as well know largely constitutes Methane i.e. CH₄. When CH₄ is broken down, it releases Hydrogen molecules but also results into Carbon molecules that in turn react with oxygen to form CO or CO₂ which are greenhouse gases causing global warming.

2. What are the Renewable energy sources that can be used to power an electrolyser in a green hydrogen plant?

Renewable energy sources can power an electrolyser, including solar and wind energy. Given the significant potential for solar power in India, solar power plants are often the preferred choice for green hydrogen production.

3. What are the other reasons to adopt Green Hydrogen?

Traditionally, hydrogen is produced from natural gas. Although India has some natural gas reserves, they are insufficient to meet the country's overall demand. As a result, India is the world’s fourth largest importer of liquefied natural gas (LNG). This reliance on imports is primarily driven by increasing demand from the industrial sector, especially in fertilizer production and oil refineries. Furthermore, since natural gas is a commodity, various factors can influence its prices, which consequently affects the cost of hydrogen.

4. What are the use cases of Green Hydrogen?

• Ammonia (fertilizer production)
• Oil refining  
• Methanol Production
• Steel Industries
• Treatment and Production of metals

Future use cases could also include:

• Fuel for cars and Buses
• Shipping Fuel
• Aviation fuel

5. How can Solar Power be used for Green Hydrogen Production?

Electrolyser is the major component for Green Hydrogen production that splits water into Hydrogen and oxygen molecules. But the electrolyser needs to be powered, and the power has to be renewable energy. And solar energy becomes the top contender considering the widespread availability, feasibility, penetration and cost effectiveness to decarbonize the hydrogen industry. Around the world, Solar assets are now being either utilized or new assets being built to supply the electricity for production of Green Hydrogen

‍How much electricity is needed to produce hydrogen?

At 100% efficiency, 33.3 kWh of electricity would be required per kg of hydrogen. However, today’s practical efficiencies are closer to 60%. Even projecting an improved efficiency of 71% in 2030, results in a requirement of 47 kWh/kg-H2.

What is the cost of producing Green Hydrogen?

Like every other production, Green Hydrogen production also involves its CAPEX and OPEX costs But, 60-70% of the cost of production of green hydrogen comes just from electricity. For instance, with electricity priced at 3 ₹/kWh, the cost of producing hydrogen would rise over 140 ₹ per kg. Having said that practically as of today, the cost of producing Hydrogen is still between 250-450kg-H2 a figure that is quite higher than ambitious target of 1 $/kg (~Rs.84-85/kg) frequently discussed in the industry.

Incentives, such as a waiver of inter-state RE transmission charges and capital subsidies of up to 0.55 $/kg for green hydrogen production, under the National Green Hydrogen Mission of the Government of India, could potentially help bring the total costs under 2 $/kg. 

Is Grey Hydrogen cheaper than Green Hydrogen?

Today, the cost of producing grey hydrogen (through Steam Reforming) in India is between Rs. 160-200/kg ($1.92/kg - $2.43/kg) assuming delivered natural gas prices of Rs. 760-1000/MMBtu ($9/MMBtu and $12/MMBtu), respectively. The cost differential between green and grey hydrogen today is anywhere between $1.5/kg to $2/kg, depending on the natural gas prices considered.

6. Who will be the early adopters of Green Hydrogen?

It is clear that the early adopters of green hydrogen will likely be those industries that have already been using hydrogen in their processes. However, the costs and technologies required for this transition will vary significantly, and adopting green hydrogen may necessitate substantial capital investment and technological advances. One thing is certain: moving to green hydrogen will completely eliminate reliance on natural gas. This shift will protect industries from the price fluctuations associated with natural gas, which is a commodity subject to market volatility. Fertilizer, Methanol, Oil refining and Steel Industries will be the major off takers of Green Hydrogen and certain companies have started adopting as well.

7. What are the MSMEs that will potentially adopt Green Hydrogen?

Along with the above use cases, Applications in fleet operations, logistics, recycling, and IoT can also be realized through Green Hydrogen. A few other potential applications include:

Local Hydrogen Hubs:

MSMEs can collaborate with local hydrogen hubs or clusters, where hydrogen is produced centrally and distributed to smaller businesses.

On-Site Generation:

MSMEs in industries like food processing, chemical production, or transportation can use on-site hydrogen generation to meet their energy needs without relying on large-scale infrastructure.

Renewable Energy Integration:

MSMEs developing solar, wind, or biogas systems can use excess energy to produce green hydrogen, enhancing storage and grid stability.

It is important to understand that the cost of green hydrogen today relies on economies of scale and requires a certain level of investment to get started. However, electrolyzer units are available in modular sizes suitable for small-scale hydrogen production.

If your business is viable for green hydrogen production and you are combining it with your solar plant, Aerem can provide financing options. These options can help you decarbonize your processes without the burden of upfront costs, enabling you to lead your decarbonization journey effectively.

8. Challenges in Green Hydrogen Adoption

As discussed in the earlier section, cost of producing of Green Hydrogen definitely has an impact on its adoption.

• ‍Storage and transportation of hydrogen have traditionally been difficult due to the unique characteristics of the gas—flammability, low density, ease of dispersion, and embrittlement. Yet technical development and commercial momentum are increasingly enabling more economic modes of storage and transportation. Hence Hydrogen has to date been produced close to where it is used, with limited dedicated transport infrastructure.

• Infrastructure There are only about 5000 kilometres of hydrogen transmission pipelines around the world compared with more than 3 million kilometres for natural gas. There are 470 hydrogen refuelling stations around the world.

• Energy Losses Green hydrogen incurs significant energy losses at each stage of the value chain. About 30-35% of the energy used to produce hydrogen through electrolysis is lost.

• Regulatory Policies Traditionally, hydrogen has seen minimal policy support from governments across the globe so far. But lately has seen a major momentum to boost Green Hydrogen production

Lastly, Standards around hydrogen use either don’t exist or haven’t been updated.

9. What is India’s plan for green hydrogen?

Following the footsteps of the US, Germany, and other European countries, in 2023, the Government of India on announced and approved a whooping amount of $2.38 billion for the National Green Hydrogen Mission. This mission aims to make India a Global Hub for Green Hydrogen Production, and utilization and a major exporter of Green Hydrogen and its derivatives, The Mission will facilitate demand creation, production, utilization, and export of Green Hydrogen. This mission and incentives are believed to make indigenous manufacturing of electrolysers feasible making India self-reliant in terms of technology. 

10. Way Forward

With massive solar potential, India is positioning itself as a leader in renewable energy by aiming to become a global hydrogen hub, which is vital for its decarbonization efforts. Various government initiatives are being implemented to promote innovation and create a supportive regulatory environment. This strategic approach not only enhances India's energy security but also contributes to global climate goals.