India must leapfrog to renewables and hydrogen, avoid fossil fuels: Adani

India must leapfrog to renewable power and renewable hydrogen as an equitable solution and not replace one fossil fuel with another, Gautam Adani, chairman of Adani Group said in a World Economic Forum blog Jan. 16.

Adani has a 3 million mt/year renewable hydrogen project near the Mundra Port in the state of Gujarat for domestic industrial use and exports, and has earmarked $70 billion in investment for clean fuels by 2030.

The decrease in solar power generation costs can be "replicated" by renewable hydrogen, Adani said. "This shift will help India achieve energy security and improve air quality in its cities."

Adopting renewable hydrogen-based decarbonization solutions would require early experimentation, investment in infrastructure and continued improvement in learning curves for technologies such as fuel cells and hydrogen turbines, he said.

Looking ahead, as the $1/kg production cost milestone($3-$5/kg currently) for renewable hydrogen becomes attainable, new business models will emerge and mechanisms such as carbon pricing will become more effective in accelerating its adoption, he added.

The lowest renewable tariff in India is at Indian Rupee 1.99/kWh (2 cents/kWh) with a 23% solar panel efficiency compared with Rupee 15/kWh in 2011 with solar panel efficiency of 14%-15%, Adani said.

However renewables' "...intermittent nature requires energy storage solutions [while] decarbonization of industry, heavy-duty transportation and chemicals require a green molecule to replace fossil fuels," he said.

"Green hydrogen, derived from water electrolysis using renewable energy, is the answer to both."

Challenges

Adani said reducing costs of renewable hydrogen will bank on vertical integration at scale encompassing the entire supply chain.

"These projects will include giga-scale manufacturing of solar modules and their ancillaries, wind turbines, electrolyzers, in-house engineering, procurement and construction capabilities and the production of green hydrogen and its derivatives – all in a single location," he said.

However, "this approach is highly capital-intensive, and vertical integration carries its own risks, such as changes in technology."

Early challenges can be mitigated for the projects with the help of a suitable location with supportive infrastructure that can help in storage, transportation and export while proximity to an industrial precinct can help in reaching customers, he said.

Adani's hydrogen project in Gujarat will target users in the special economic zone of Mundra, focused on ammonia and urea plants, and be transported via a pipeline, the company had said earlier.

"For India, green hydrogen presents a home-grown opportunity as it holds the promise, along with renewables, to lift the yoke of expensive energy imports from its economy – more than $230 billion/year," Adani said.

Platts, part of S&P Global Commodity Insights, assessed Saudi Arabia hydrogen produced via alkaline electrolysis at $2.40/kg Jan. 16, same as a month earlier. Japan hydrogen produced via alkaline electrolysis was assessed at $3.79/kg Jan. 17, down 23% from a month earlier, showed S&P Global data.