Grey, Blue or Green. The World Focuses On A Hydrogen Powered Future

A report this week from Wood Mackenzie says green hydrogen costs will fall by up to 64% by 2040. Those numbers are broadly in line with what many other experts have been predicting, though many have predicted competitiveness as early as 2030 . However, seen another way, those numbers simply show just how far green hydrogen has to travel on the cost front, to be considered a serious option. For readers who may have missed the news buzz around this widely awaited wonder fuel, the ‘green’ in green hydrogen comes from the massive renewable energy that will power the process of creating green hydrogen from water itself, as compared to the ‘grey’ hydrogen in use today that comes from energy intensive processes powered by fossil fuels. ‘Blue’ Hydrogen is another variant that uses natural gas.

But there is absolutely no doubt about the need for ‘green hydrogen’. As an energy source, it has been considered one of the better bets to convert some of the most energy intensive bits of the economy, like metals, cement, and possibly even shipping in transportation, to a greener fuel, as compared to other options in hand. The stimulus plans post Covid in many countries, and the European Union in fact, has also created a special push for Green hydrogen development, firmly placing green hydrogen as one of the big green fuel hopes.  From Saudi Arabia, to the United States,  to Australia, countries are unwilling to risk being left behind. The world’s largest energy firms, from Shell to bp, Aramco  to now, Reliance energy have all shown a strong interest here.

Woodmac says that the announced project pipeline for green hydrogen has grown from 3.5GW to just over 15 GW within the last ten months,  volumes large enough and stable enough for the nascent market to scale.

“On average, green hydrogen production costs will equal fossil fuel-based hydrogen by 2040. In some countries, such as Germany, that arrives by 2030. Given the scale up we’ve seen so far, the 2020s is likely to be the decade of hydrogen.

“Rising fossil fuel prices will boost green competitiveness, further strengthening the case for this technology in the coming years,” said Ben Gallagher, Wood Mackenzie Senior Research Analyst and report author.

As noted in the research, sub $30/MWh  (Rs 2.20 /Kwh) renewable electricity prices and high utilisation rates will still be required for competitiveness. That doesn’t seem too far off, considering the trend we have seen in India itself, with its round the clock power bids with renewable energy.

Woodmac predicts that due to the forecasted increase in natural gas prices grey hydrogen will continue to retain its cost advantage over green hydrogen, possibly till 2040.

Blue hydrogen costs are also expected to rise, with an increase of 59% by 2040. The success of blue hydrogen is linked to the success of the much hyped  CCS (Carbon Capture and Storage) technology, which has been plagued by high costs and project cancellations.

However, give the sheer scale of investments pouring into hydrigen fuel research, it is clear that a hydrogen economy of some shape and size will emerge over the coming years.

For India, steps towards a greater focus on this new frontier of green energy have been slow at best, and the most promising announcement has probably come from the country’s largest private sector firm, Reliance Industries Limited. Chairman Mukesh Ambani announced the firm’s plan to become a net carbon zero firm by 2035. This will be done by getting into clean technology and energy in the next phase of growth, and it has widely been taken to mean a push into green hydrogen production. The capital required and the firm’s strong execution record makes it a serious contender by default of course.  At the firm’s Annual General shareholder meet, he had said that “We will develop next-gen carbon capture and storage technologies, we are evaluating novel catalytic and electrochemical transformations to use CO2 as a valuable feedstock. We will replace transportation fuels with clean electricity and hydrogen. We will combine our strengths in digital, power electronics, advanced materials and electrochemistry to build full-stack electrolyser and fuel cell solutions in India.”, he added.

Elsewhere, NTPC Limited has also taken early steps towards understanding the field, with a call for Hydrogen powered buses and more. Tata Motors is experimenting with Hydrogen powered buses too.

Even Indian Railways is working on the development of a Hydrogen-powered suburban train and has floated an EoI for industry participation.

For the solar+ wind sector in India, breakthroughs in this new hydrogen economy will matter, because one of the key assumptions behind green hydrogen is that the energy for conversion will itself be solar powered.