Abstract
Indian Industry is gearing up to leverage hydrogen's potential as an alternative to fossil fuels. This paper answers three related questions that would help scale green hydrogen in Indian industry vital for sustainable development. First, is there an economic case for green hydrogen production in terms of cost-competitiveness compared to other hydrogen production sources i.e., coal and natural gas? Second, what is the cheapest way to subsidize green hydrogen? Third, how policies and frameworks can be designed to produce and procure green hydrogen at scale? Key findings include. First, at present, the levelized cost of green hydrogen is USD 4.45/Kg, which reduces to USD 3.26/Kg by 2025 and USD 2.45/Kg by 2030. The present cost of green hydrogen is nearly twice that of hydrogen produced from coal and about four times that of hydrogen produced from natural gas. In the absence of policy support, green hydrogen may become competitive in India only after 2030. Second, upfront Capital expenditure subsidy is the most suited cost-effective policy option with partial viability gap coverage, and its combination with Generation based incentive for 100 % coverage. Third, subsidies need to be complemented with deployment-based policies such as hydrogen portfolio standard (HPS) for scale adoption of green hydrogen in Indian industry.
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