Green hydrogen (GH2) is set to play a pivotal role in India’s path toward decarbonization. The country’s goal of producing 5 million tonnes of green hydrogen annually by 2030 is a key part of its strategy to reduce greenhouse gas emissions. This shift will require significant changes in India’s power system, particularly in the integration of renewable energy sources and grid flexibility. Below is a detailed analysis of the necessary adjustments to meet the rising electricity demand, the infrastructure upgrades needed, and the overall financial impact.
1. National Peak Electricity Demand to Increase by 67 GW
By 2030, India will need an additional 310 billion units (BU) of electricity to meet the green hydrogen production target. This increase will push the peak electricity demand from the current 342 GW under a business-as-usual (BAU) scenario to 409 GW. The western and southern states, including Gujarat, Maharashtra, Tamil Nadu, and Andhra Pradesh, will contribute most to this increase, as they are expected to house a significant share of the green hydrogen production capacity.
2. 135 GW of Additional Renewable Energy Capacity Required
To meet the electricity demand for green hydrogen production, an additional 135 GW of renewable energy will need to be integrated into India’s grid. This capacity will include 51 GW of solar and 84 GW of wind power. Gujarat and Tamil Nadu will be central to this expansion, hosting 43% and 24% of the total new capacity, respectively. Together, five states—Gujarat, Tamil Nadu, Andhra Pradesh, Maharashtra, and Rajasthan—will be responsible for 90% of this renewable energy capacity.
3. Electrolyser Capacity to Reach 74 GW
Electrolysers, which will be crucial for producing green hydrogen by splitting water into hydrogen and oxygen, will require a total installed capacity of 74 GW by 2030. The power system must adapt to accommodate this additional load, which is projected to vary between 45 GW and 74 GW daily, depending on the availability of renewable energy. Electrolysers are also beneficial for the grid due to their flexibility, which helps balance electricity supply and demand.
4. Battery Storage Needs to Decline by 6 GW
Although renewable energy capacity will increase, the reliance on battery energy storage systems (BESS) will decrease from 44 GW in the BAU scenario to 38 GW by 2030. This reduction is because the surplus renewable energy will be used for green hydrogen production rather than stored, which lowers the overall need for battery storage. By absorbing excess renewable energy, especially during peak production hours, the system reduces the risk of energy wastage and minimizes curtailment.
5. Grid Flexibility to Quadruple
The proportion of renewable energy in India’s overall power generation mix is expected to rise from 11% in 2022 to 40% by 2030. This increase in intermittent renewable energy will require a fourfold rise in grid flexibility to ensure stability. The net load, or the demand after accounting for renewable energy supply, will need to be adjusted quickly to match fluctuations in solar and wind power generation. The system’s flexibility requirement will increase from 250 MW per minute to 1,100 MW per minute by 2030. Electrolysers, with their fast response times and broad load range, will be instrumental in providing the necessary grid stability.
6. Cost of Power Generation to Fall by 2%
The rise in cheaper renewable energy sources will reduce the average cost of power generation. By 2030, the cost is expected to drop from INR 3.83 per kWh in the BAU scenario to INR 3.76 per kWh in the green hydrogen scenario. This decrease will result in savings of INR 18,800 crore (USD 2.3 billion). The reduced cost of generation is mainly attributed to the increased share of renewable energy in the total electricity mix.
7. Investments of INR 10.6 Lakh Crore (USD 129 Billion) Required
India will need to invest approximately INR 10.6 lakh crore (USD 129 billion) to achieve its green hydrogen goals. Of this, 71% (INR 7.6 lakh crore or USD 92 billion) will be allocated for developing renewable energy capacity, while the remaining 29% (INR 3.03 lakh crore or USD 37 billion) will be used to build the necessary electrolyser infrastructure.
8. Importance of Leveraging Inter-State Transmission System (ISTS)
To optimize costs and avoid inefficiencies, surplus renewable energy should be transmitted through the Inter-State Transmission System (ISTS). By doing so, India can save INR 20,500 crore (USD 2.5 billion) in green hydrogen production costs. Without ISTS support, states would need to generate their renewable energy locally, which would lead to an additional requirement of 10 GW of renewable energy capacity, higher battery storage needs, and increased hydrogen production costs.
9. Recommendations for Green Hydrogen Success
Several measures are recommended to ensure India meets its green hydrogen production targets:
- Identifying Production Hubs: Specific regions with strong renewable energy potential, water availability, and sufficient land must be designated as green hydrogen production hubs. This will help guide transmission and infrastructure planning.
- Utilizing Electrolysers for Grid Balancing: Electrolysers should be recognized as a flexible resource capable of providing grid-balancing services. Their fast ramping capabilities and ability to operate at varying loads make them essential for maintaining grid stability.
- Setting Connectivity Standards: Electrolysers must adhere to strict connectivity standards to ensure the safe and reliable operation of the grid as their capacity increases to 74 GW by 2030.
- Forming Industry-led Consortia: To accelerate the development of large-scale green hydrogen projects, an industry-led consortium should be established. This group can pool resources, share knowledge, and pilot demonstration projects to overcome the technological and financial risks associated with green hydrogen production.
Conclusion
India’s green hydrogen ambitions are achievable, but they require a strategic approach to renewable energy integration, grid flexibility, and infrastructure investment. By optimizing resources and leveraging existing grid systems, India can meet its green hydrogen production goals while reducing costs and ensuring a reliable power supply.
This article is based on the report Assessing the Impact of Green Hydrogen Production on India’s Power System by Rudhi Pradhan, Sanyogita Satpute, Disha Agarwal, and Karthik Ganesan, published by the Council on Energy, Environment, and Water (CEEW).