DOMESTIC MANUFACTURING OF ELECTROLYSERS

Source: DownToEarth

Disclaimer: Copyright infringement not intended.

Context

• Investing in a homegrown electrolyser manufacturing infrastructure is anticipated to drive down the price of green hydrogen and enhance the nation’s competitive edge.

Details

Current Emission Landscape

• Major Contributors: Power, steel, cement, and fertilizers collectively account for over half of India's emissions.
• National Goals: India aims to reduce emission intensity by 45% by 2030 from 2005 levels and achieve Net Zero emissions by 2070.
• Renewable Energy Targets: In the power sector, India plans to increase renewable energy-based installed capacity to 50% by 2030, which would significantly reduce emissions.

Challenges in Hard-to-Abate Sectors

• Steel and Fertilizer Sectors: These sectors face challenges in reducing emissions while increasing production due to reliance on conventional fossil fuel-based hydrogen production methods.
• Need for Alternative Solutions: Exploring alternative avenues to curb emissions in these sectors is imperative to meet emission reduction targets.

Role of Green Hydrogen

• Traditional Hydrogen Production: Historically, hydrogen production has relied on fossil fuels like natural gas or coal through methods such as steam methane reforming and coal gasification.
• Green Hydrogen as a Solution: Green hydrogen, sourced from renewable energy like solar, wind, or hydro, offers a transformative alternative to conventional hydrogen production methods.
• Electrolysis Process: Green hydrogen is produced through electrolysis, where direct current passed through water splits molecules into individual elements, generating hydrogen at the cathode.

Significance of Green Hydrogen

• Emission Reduction: Green hydrogen production does not involve fossil fuels, resulting in zero carbon emissions.
• Transformative Potential: Adoption of green hydrogen can revolutionize emission-intensive sectors by providing a clean and sustainable energy source.
• Contribution to Climate Goals: Utilizing green hydrogen in sectors like steel and fertilizers can significantly reduce emissions, aligning with India's emission reduction targets. 

Current Electrolyser Landscape

• China's Dominance: China leads in both installed electrolyser capacity and manufacturing, with nearly 220 megawatts as of 2022.
• Expansion Plans: China has an additional 750 MW under construction, slated for integration by 2023.
• Global Contribution: China contributes 40% of the global electrolyser manufacturing capacity.

European Union's Growth

• Surge in Installations: The European Union experienced a surge in installations, with approximately 80 MW added in 2022.
• Doubling Capacity: This addition doubled the capacity installed in the preceding year, indicating rapid growth in the region.

National Green Hydrogen Mission (NGHM) in India

• Government Initiative: The Government of India unveiled the NGHM to promote green hydrogen adoption.
• Substantial Budget: NGHM is backed by a substantial budget of Rs 19,744 crore spanning from 2023-24 to 2029-30.
• Allocation Breakdown:
  • Rs 17,490 crore for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme.
  • Rs 1,466 crore for pilot projects.
  • Rs 400 crore for research and development endeavors.
  • Rs 388 crore for other essential components of the mission.

Significance of NGHM

• Accelerating Adoption: NGHM aims to accelerate the adoption of green hydrogen in India.
• Financial Support: The substantial budget allocation provides financial support for various initiatives under the mission.
• Strategic Interventions: SIGHT program focuses on strategic interventions to facilitate the transition to green hydrogen.
• Promoting Research and Development: Allocation for research and development endeavors will drive innovation in green hydrogen technology.

Impact of Homegrown Electrolyser Manufacturing

• Price Reduction: Investment in domestic electrolyser manufacturing infrastructure is expected to lower the price of green hydrogen.
• Competitive Edge: Enhancing the nation's competitive edge in green hydrogen production and fostering self-reliance.
• Remarkable Response to SECI Tender:
  • In July 2023, SECI issued a tender for a 1.5 GW electrolyser manufacturing capacity, witnessing significant interest.
  • 21 firms submitted bids, vying for incentives to establish a cumulative annual capacity of 3.4 GW, surpassing the initial offering.
  • 14 companies expressed interest in developing production facilities for green hydrogen, exceeding the offered capacity.

Challenges and Adaptability of SIGHT Initiative

• Asia Society Policy Institute's Observations:
  • SIGHT initiative's effectiveness depends on adaptability to diverse needs of startups and established players.
  • Long-term viability requires fine-tuning for sustained investment appeal and project resilience.
• Consideration for Startups in Tranche-II: Ministry guidelines for Tranche-II bids include provisions for smaller units, encouraging indigenous electrolyser design and manufacturing.

Financial Implications and Solutions

• Expected Capital Inflow by 2030: Programs are expected to leverage public capital to attract private investment totaling Rs 8 lakh crore by 2030.
• Strategies for Achieving 5 MMTPA Target:
  • Establishing clear, measurable, and globally accepted standards for green hydrogen production.
  • Creating demand visibility to ensure offtake of planned green hydrogen production.
  • Balancing imports and domestic content requirements for electrolyser and other green hydrogen equipment.

Role of MNRE Guidelines

• Guidelines for Green Hydrogen-based Steel Production: MNRE guidelines and allocation funds for green hydrogen-based steel production will significantly reduce emissions in the sector.
• Need for Similar Initiatives: Similar initiatives are required for other hard-to-abate sectors with proven green hydrogen technologies to accelerate emission reduction efforts.

Must Read Articles:

Electrolyzer

Green Hydrogen

Sources:

DownToEarth

PRACTICE QUESTION Q.  Investment in homegrown electrolyser manufacturing infrastructure, coupled with initiatives like SECI's tender and the SIGHT program, is poised to propel India towards its green hydrogen production targets. Comment. (250 words)