How Will India Produce Green Hydrogen Economically?

6 min read

Green hydrogen has emerged as one of the most promising clean energy solutions to help India achieve its net zero emission targets and energy independence goals. Hydrogen produced through renewable energy sources like solar and wind is known as "green hydrogen," and it is viewed as key to decarbonizing hard-to-abate sectors in India like steel, cement, refineries, etc. However, high production costs currently pose a major challenge for green hydrogen's widespread adoption in India. In this blog, we will explore how India aims to produce green hydrogen economically through policies, technological advancements, partnerships and other initiatives.

Green Hydrogen and India's Emission Reduction Goals

India has set ambitious climate change targets, such as installing of non-fossil fuel capacity and achieving net zero emissions by 2050. A critical requirement to achieve these is transitioning to clean sources of energy that can replace fossil fuels in key industries. Green hydrogen produced using renewable energy can fulfil this requirement, as it is a zero-carbon fuel that can be used for various applications. The Indian government recognizes the huge potential of green hydrogen and has launched the National Green Hydrogen Mission with a target to produce green hydrogen annually by 2030.

How Will India Produce Green Hydrogen Economically?  

Current Status and Challenges of Green Hydrogen Production

Currently, global hydrogen production is powered by renewable energy. Most hydrogen is "grey hydrogen," produced through methane reforming, which relies on fossil fuels. The cost of producing green hydrogen through electrolysis is 2-5 times higher compared to grey hydrogen. High capital costs of electrolyzers and renewable energy plants, along with the intermittent nature of solar-wind power pose some challenges. Intermittency issues can be addressed using energy storage solutions, however, their large-scale deployment also involves high costs currently.

Technological Advancements and Partnerships

Significant technological advancements will be required, along with policy support, to make the cost of green hydrogen competitive. Advances in electrolyzer and battery storage technologies are crucial to improving efficiency and reducing costs. Indigenous manufacturing of key equipment is growing through partnerships between Indian firms and global leaders. Several MOUs for green hydrogen and green ammonia projects have also been signed with Indian companies like Hartek Group. Integrating renewable energy plants with green hydrogen production facilities using a cluster-based approach can further optimize costs through economies of scale.

Lowering Capital Costs and Ensuring Demand

To attract large-scale investments in capital intensive green hydrogen projects, India must find ways to lower the perceived cost of capital for investors. Measures like accelerated depreciation, discounted land and tax rebates can help achieve this. Long-term planning with 25-30 year project lifecycles also provides certainty to investors. The government can set purchasing targets and mandates over the long-term to guarantee demand for green hydrogen. This will promote the development of full hydrogen value chains in India.

Exploring Export Opportunities

India's advantages of cheap renewable energy, large land availability and skilled workforce give it an edge in green hydrogen export. By exporting green hydrogen derivatives like ammonia and methanol, India can earn valuable foreign exchange while stimulating domestic infrastructure build-out. Developing bunkering facilities and signing bilateral trade agreements will help facilitate these exports. Global standards and certification will need to be put in place to ensure the quality and traceability of exported green hydrogen commodities.

Role of Energy Storage and Grid Integration

Interlinking large-scale renewable energy plants that produce green hydrogen with energy storage and an integrated national grid network can help address variability in supply. Though batteries are essential, technologies may be more suitable at the scale needed for green hydrogen. These grid and pipeline networks powered by renewable energy can offer multiple revenue streams enhancing viability of green hydrogen projects.

How Will India Produce Green Hydrogen Economically?  

Pathway to Cost-Competitive Green Hydrogen Production

Achieving grid parity with fossil fuel derived hydrogen requires bringing down the production costs of green hydrogen significantly. With a focused approach targeting cost reduction at each stage - from land acquisition to equipment manufacture to project financing, this target could be within reach in the coming years. Technological advancements in electrolysis, renewables and storage also hold the potential to drive down costs. International collaborations can accelerate the transfer of advanced know-how to Indian firms as well. With sustained policy support and targeted investments, India is well poised to become a cost-competitive green hydrogen leader by 2030.

Road Ahead

Steel, fertilizer and oil refining are initial sectors where green hydrogen adoption seems most feasible due to demand concentrations. Green hydrogen projects in these segments can catalyze infrastructure development while proving bankability.  India's green hydrogen journey has begun with policies, R&D initiatives and planned investments in the right direction. Continuing focus on facilitating large-scale pilot projects, supporting industrial off-takers and equipment suppliers will be essential for green hydrogen to fulfill its potential as an economically viable clean energy solution for India in the years ahead.


By leveraging low-cost renewable energy sources, an investor-friendly policy regime and technology transfer partnerships, India has a promising opportunity to emerge as a leading green hydrogen producer. The Green Hydrogen Mission provides a well-defined roadmap with clear targets across government, industry and research institutions. If substantial progress is made towards scaling up production and lowering costs over the next 5-7 years through strategic implementation of the above outlined measures, India could well achieve its goal of cost-competitive green hydrogen production by 2030. This will mark a major step in India's transition to a sustainable energy future with reduced dependence on fossil fuel imports.

Origianl Source: Published at: on June 4, 2024.

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