Hydrogen produced from renewable energy sources is beginning to sell for less than hydrogen made from natural gas in India, as noted by a local producer.
India relies heavily on imports to meet its natural gas needs, which contributes to the higher prices of gray hydrogen. This situation is shifting the advantage toward green hydrogen, which has historically been more expensive to produce.
According to the news report by Bloomberg, Anshul Gupta, co-founder of Hygenco Green Energies Pvt Ltd., mentioned in an interview that they have been able to price green hydrogen below gray hydrogen for some 20-year contracts while still maintaining profitability. Currently, gray hydrogen prices range from $2.70 to $4 per kilogram, making renewable options increasingly appealing.
Green hydrogen is recognized as a means to reduce carbon emissions in sectors like steelmaking, chemicals, and transportation. However, its global price ranges from about $3 to $7 per kilogram, and recent estimates indicate that costs may be higher when factoring in storage and distribution.
India has set a goal to reduce green hydrogen prices to $1.50 per kilogram and to increase annual production to 5 million tons by 2030, up from negligible levels today. To support this, the government has introduced various incentives and is considering lowering import duties on necessary machinery.
Indian companies have committed around $187 billion to produce 15 million tons annually, far exceeding government targets. However, a lack of binding sales agreements may limit actual production to approximately 500,000 tons per year, according to BloombergNEF.
Hygenco currently operates two projects and expects to launch a third by the end of the year, aiming for an annual output of around 150 million kilograms by 2030. While this is a small amount compared to India’s overall targets, Gupta points out that there is a misconception that green hydrogen is prohibitively expensive. He emphasizes that it’s misleading to focus solely on input costs when assessing pricing. Hygenco has managed to control expenses by enhancing efficiency in its manufacturing processes.
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