Green Hydrogen price starting to come down in India, says Hygenco

Green hydrogen has been touted as a tool to cut carbon emissions in industries such as steelmaking and chemicals, as well as transportation.

Hydrogen produced using renewable power is starting to sell for less than that made with natural gas in India, according to a producer there.

The country is reliant on imports to meet its demand for natural gas, and that expense is reflected in the price of so-called gray hydrogen. That may be tilting the balance in favour of the green version, which has typically been far costlier to produce.

“For some 20-year contracts, we have priced green hydrogen below gray hydrogen, and we are still making money on that,” Anshul Gupta, co-founder of Hygenco Green Energies Pvt Ltd., said in an interview. Gray hydrogen fluctuates between $2.70 and $4 a kilogram, making renewables an attractive alternative, he said.

Green hydrogen has been touted as a tool to cut carbon emissions in industries such as steelmaking and chemicals, as well as transportation. But it sells for about $3 to $7 a kilogram globally, with recent estimates suggesting costs could be even higher when taking storage and distribution into account.

India aims to lower prices to $1.50 and raise annual output to 5 million tons by 2030, from negligible volumes today. To achieve that, it has announced a slew of incentives and is considering cutting import duties on the machinery needed.

Indian businesses have pledged about $187 billion to produce 15 million tons a year, vastly exceeding the government’s target, but a lack of binding sales agreements may curtail production to more like 500,000 tons a year, according to researcher BloombergNEF.

Hygenco has two projects in operation and a third expected online by year’s end — targeting annual output of about 150 million kilograms by 2030 — but that’s still a tiny volume when compared with India’s targets.

“One of the misnomers in the market is that green hydrogen is very expensive,” according to Gupta, who said it’s wrong to focus exclusively on the cost of inputs when calculating prices. Hygenco has kept a lid on costs by focusing on efficiency in the manufacturing process, he said.