In March, Haryana-based Hygenco commissioned India’s first green hydrogen plant for steel production and plans to commission three more by the end of FY25. In a detailed conversation with Aggam Walia, Anshul Gupta, Co-founder and VP (Strategy & Partnerships) of Hygenco, which was set up in 2020 as a pure play green hydrogen and derivatives company, talked about the commercial viability of green hydrogen projects, boosting domestic electrolyser manufacturing capacity, exploring overseas projects, and more. What considerations go behind deciding the renewable energy source for a green hydrogen project? Our specialty is to produce green hydrogen at the lowest cost and in the greenest and most efficient way. The applications can be multiple– it could be steel, refineries, glass, and so on. One of the plants we have operationalised in Hisar for Jindal Stainless Limited was inaugurated around a month ago and is feeding green hydrogen into the steel furnace. The Hisar plant is based on floating solar and some rooftop. The one we are constructing in Maharashtra for supplying green hydrogen to Sterlite Technologies Limited to make glass preforms for optical fibre uses both wind and solar. The considerations are related to how you want to operate the electrolyser. If you want to operate the electrolyser only during the day time when the sun shines, then it’s solar. But if you want to operate it also during evening or night hours, then it could be wind power. If you want to operate it at certain other conditions, then you might add some other kind of renewable energy source into the mix. Of course, operating with wind and solar gives a higher utilisation because now you are also able to operate during evening and night hours. What is the feasibility of using energy storage technologies for 24x7 supply? Theoretically, there could be a possibility but practically speaking any kind of technology that we have today in the country, whether it is battery storage or pumped hydro, is not there yet from a cost point of view. It will not be there in the next seven or eight years to come where it can actually be used in the most economical way to produce hydrogen. The commercial viability of producing green hydrogen hasn’t entirely been worked out, even in the United States. How would you assess the viability in India? The US has large reserves of shale gas, which they also export to countries around the world. Because of the local production of natural gas, its cost is significantly lower in the US, which means that the cost of grey hydrogen is also significantly lower. There is a significant delta gap between green hydrogen and grey hydrogen in the US. In India, this is not true– it’s actually the complete opposite. Our cost of grey hydrogen is very high because we depend on liquified natural gas (LNG) to produce it. We don’t have that much local natural gas and whatever we have is allocated in priority to urea production or kitchen consumption. Our cost of grey hydrogen is much higher than anywhere else in the US, which is why the delta gap between grey and green hydrogen is either negative, sometimes zero, or even if it’s there it’s very small. In India, the cost competitiveness to a significant extent is already there and is continuously increasing. Our assumption is that within one and a half years or so, most of the market will be cost competitive in India. We have already done projects where we have been able to beat the cost of grey hydrogen. How have you made your projects commercially viable? We have been able to do it not with one large innovation but a series of multiple small innovations over time. The innovations deal with how you operate and integrate the electrolysers with renewable energy, how you design and engineer the plants, how the gas flows, etc. We started getting confidence after we set up our own pilot plant in Ujjain that gave us a gold mine of data. We have been able to secure project equity and financing from commercial banks a number of times by now, so the commercial viability is fully proven. Those who are saying that commercial viability is a challenge haven’t yet produced green hydrogen themselves. To what extent is viability dependent on government support? Something very fundamental to Hygenco as a belief system is that if your green hydrogen project primarily stands on government subsidies and support of various kinds, it is doubtful whether it’s actually a business. For the time being, government support can be there because it wants to strategically bring down the cost curve. We are here to do business, so that is why we try to do projects that are not inherently dependent on government support. Our projects can stand in terms of economics on their own because they are investable in nature. Our Hisar project is a commercial project with commercial private equity investment, with commercial debt in it, and it is making commercial returns. Companies operating in the green hydrogen space have asked for exemption from the government’s shortlist of solar panel manufacturers, which excludes foreign manufacturers that produce significantly cheaper panels. What is your take on this request? The Approved List of Models and Manufacturers (ALMM) has seen a lot of ups and downs till date. Many times introduced, then relaxed, and now reintroduced. There might be some cost advantage to import solar PV modules from China or from anywhere else but this is more to do with renewable energy projects and not so much to do with the viability of green hydrogen. Yes, the solar price will eventually add up in the hydrogen price also, but to a limited extent compared to renewable energy projects, which are primarily selling solar power. The rationale for why ALMM should be relaxed for green hydrogen specifically and not for others is not a very clear logic in my opinion. If the government wants to support the local industry, the local industry has to be supported and then everybody has to live with it. It’s kind of an unfair ask to the government. And again, if the business stands on the ALMM exemption only, then it’s not a business. It has to stand on its own fundamentally. How does Hygenco define green hydrogen? At Hygenco, we follow a very strict definition of green hydrogen even though different countries and regions define green hydrogen very differently. The principles that the European Union (EU) has published are absolutely correct in terms of the additionality criteria and the geographic and temporal correlation. We follow standards that are stricter than the EU standards. The EU standards have certain requirements on additionality that your renewable energy plant for green hydrogen production should be new and should not be taking energy away from the grid. Temporal correlation means that you are able to match in a certain time block the renewable energy you are injecting and taking out, so that you are not time shifting power to the extent that you’re actually using thermal power. We’ve been doing temporal correlations in our plants that are far superior to what’s being debated in the US. The Bureau of Indian Standards (BIS) is also working on standardising certain green hydrogen processes. Why is standardisation important? Standardisation definitely helps the industry grow because with standardisation the pace of deployment becomes faster. It also helps in decreasing safety risks. I am aware that the government is very actively working on standardisation which looks at how electrolysers should be made, installed, and operated. It will take time to develop as it requires industry feedback. Till today there are very few plants that are actually operating in the country, so our feedback is very critical to the process. India largely imports electrolysers from other countries. How can they be produced in India and be cost effective at the same time? Electrolysers can be produced at a pretty good rate in India. The government has also taken the right steps with two tranches under the Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme. The tender for the first one was oversubscribed and the second tender is up on the SECI portal. There could be a third tranche too. The government is clearly very cognizant of the need to set up local electrolyser manufacturing, which can be cost effective. I don’t know whether it will be cost effective versus some neighbouring countries but it will be fairly cost effective in India to produce electrolysers. Beyond the PLI scheme, what is fundamentally required is to set up vibrant electrolyser manufacturing hubs, which is like a close-knit industrial area where the government provides land or electricity at special rates. This essentially incentivises the entire value chain to sit next to each other, like some of the automotive hubs that have evolved in India. If you have suppliers of components close to each other, the inventory times go low, the trust factor builds in, the cost of capital becomes lower, and everybody benefits. What is more important than a green hydrogen hub is an electrolyser manufacturing hub. Can you share Hygenco’s plans of producing green hydrogen in other countries in addition to its domestic operations? Our core expertise is in effectively producing hydrogen in the greenest and cheapest way. As a result of this capability and with our strict definition of green hydrogen, we are getting interest from South America, the Middle East, the US, and even Australia to partner with them or to enter into joint ventures where they do the local permitting and acquisition of land and we do the engineering bit and operate the plant. Because of so much inbound interest, we have done some strategy work to pinpoint a few selected countries where we would like to come in as a partner. A couple of opportunities in the Middle East are of significant interest to us. We are particularly excited about Saudi Arabia as an opportunity.
