With demand for hydrogen expected to go up, the outlook for adoption of green hydrogen in India appears positive, according to Nuvama Research. It said given green hydrogen's various use cases, it will also have wider applications going forward.
The projections are in line with the country's target to produce 5 million metric tonnes of green hydrogen annually by 2030.
Factors likely to drive green hydrogen adoption in India:
Hydrogen Demand
As per Nuvama Research, demand for hydrogen in the refining and fertiliser industries is likely to double by 2030. The refining sector is likely to account for 4.5 million tonnes of hydrogen demand annually by 2030, which will help make a smoother transition to green hydrogen in India, stated the brokerage.
Nuvama Research added that demand for green hydrogen in the refining sector is estimated to be 1.1 million tonnes per annum, which is 24% of the total sectoral demand for hydrogen.
Sectoral Demand
Green hydrogen has wide application across sectors. As per the Council on Energy, Environment and Water, green hydrogen has the following use cases:
As feedstock for refinery, fertilizer, steel and methanol sectors
As fuel for trucks, buses, ships and airplanes
As energy carrier for green ammonia
For blending with natural gas
As energy storage for the power sector
According to Nuvama Research technological advancements are expected to further boost green hydrogen demand in the steel and transportation segment in the long term. However, these pathways may not come to the mainstream until FY50, the brokerage said.
Lower Costs
The Indian government is trying to make green hydrogen cheaper by reducing the overall costs of electricity and machinery used to make hydrogen. Lower costs will encourage adoption.
At present, the levelised cost of hydrogen — which is basically the price of producing one kg hydrogen — in India stands at $3.5−$5 in 2024, as per industry estimates. India aims to bring this cost down to $1.63 to $3.13 by 2030. As per Nuvama, the government plans to do so by:
Cheaper Electricity: By making electricity used to produce hydrogen cheaper via tax removals. This can save about $0.96 per kg hydrogen.
Cheaper Equipment: By making electrolysers, the machines that produce hydrogen, cheaper via tax breaks and other support, India can save about $0.29 per kg.
Market Support: Industry estimates also expect wider use of hydrogen, to drive prices down, saving about $0.62 per kg.
Key Beneficiaries
Stocks that mainly benefit from green hydrogen adoption are companies that have won the government's green hydrogen capacity allotment as part of the Green Hydrogen Transition (SIGHT) Programme, which provided incentives to companies for building production capacity. The programme provided a major financial outlay of Rs 17,490 crore
Key winners in the listed space include Reliance Industries, Welspun Enterprises, Torrent Power, CESC, UPL, JSW Energy and Bharat Petroleum.
RECOMMENDED FOR YOU
Jakson Green Successfully Synthesises Methanol From CO2 At NTPC Plant In MP
Nov 14, 2024
NTPC Green's Andhra Green Hydrogen Hub To Be Ready For Producers In Three Years
Nov 14, 2024
NTPC Green Energy IPO: Management Shares Roadmap On Capacity Addition, Move To Green Hydrogen Derivatives
Nov 13, 2024
GAIL Q2 Results Review: Brokerages Divided As Business Outlook Improves But Valuation Remains Concern
Nov 07, 2024
POPULAR