India's Green Hydrogen Costs to Halve by 2030: Reliance Set for Boom

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AuthorAnanya Iyer|Published at:
India's Green Hydrogen Costs to Halve by 2030: Reliance Set for Boom
Overview

India's green hydrogen costs are projected to drop by 50% to $1.6/kg by 2030, driven by cheaper renewables, falling electrolyser prices, and government policy. Reliance Industries and Waaree Energies are poised to lead this significant shift, benefiting from surging demand in sectors like fertilizers and refining.

Green Hydrogen Costs Poised for Dramatic Fall

India's ambitious clean energy goals are gaining traction, with a leading brokerage report forecasting a dramatic halving of green hydrogen production costs by 2030. Nuvama forecasts that expenses will drop to approximately $1.6 per kilogram, a stark contrast to current rates of $3.5-$4 per kilogram, which significantly exceeds the $2.2 per kilogram cost of grey hydrogen.

Drivers of Cost Reduction

The anticipated price decline stems from multiple converging factors. Renewable electricity, the largest cost component at 60-70%, is expected to become cheaper as solar and wind tariffs continue their downward trajectory and hybrid projects proliferate. Simultaneously, electrolyser costs, which constitute about 40% of production equipment expenses, are projected to fall by as much as 75%, from roughly $150 per kilowatt to nearly $38 per kilowatt. Technological upgrades, the use of alternative materials, and large-scale manufacturing are key enablers of this shift.

Policy Support and Demand Surge

Government policy is also playing a crucial role. Measures like waiving power banking and open-access charges could reduce green hydrogen costs by approximately 24%. The National Green Hydrogen Mission (NGHM), backed by a $2.5 billion outlay, aims to drive down costs further, particularly through viability gap funding. Demand is expected to double to 12 million tonnes per annum by 2030, with the fertilizer sector leading at 6.1 mtpa, followed by refining at 4.5 mtpa.

Key Players and Competitive Hurdles

Mukesh Ambani-led Reliance Industries and Waaree Energies are identified as key beneficiaries of this green hydrogen expansion. However, India faces competitive headwinds due to higher financing costs and lower Plant Load Factors (PLFs) compared to global peers. These factors increase the cost per unit of hydrogen produced and could impact India's international standing in the sector. Despite these challenges, favorable policy and falling energy costs are expected to improve project economics significantly.

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