IH2A – India Hydrogen Alliance submits US$ 5 bn national green hydrogen hub economic viability and development plan to government of India.
Industry body India Hydrogen Alliance (IH2A) submitted a National Green Hydrogen Hub Economic Viability and Development Plan to the Government of India, with potential to create five large National Green Hydrogen Corporations collectively worth USD 5 bn by 2030, through public-private partnerships.
The Plan seeks public finance support for green hydrogen production and offtake to create the necessary infrastructure in the initial 2024-2030 period, and publicly list the national hydrogen corporations created as a result to fund the next wave of investments to scale up the hydrogen economy.
The USD 5 bn National Green Hydrogen Hub Economic Viability and Development Plan was submitted by IH2A to the Prime Minister’s Office (PMO), Cabinet Secretariat and Ministry of New and Renewable Energy (MNRE) in the Government of India.
Jill Evanko, Chief Executive and President, Chart Industries (NYSE: GTLS), and founding member, IH2A, speaking on the National Green Hydrogen Hub Economic Viability and Development Plansaid:
This is a pathway for India to accelerate Green Hydrogen Hub development and create national infrastructure assets in a financially viable manner.
“India can leapfrog other economies on green hydrogen development, by sharing the risks and rewards of green hydrogen project development between public and private sectors. Sustained public finance support for national hubs is crucial for financial viability. India should announce at least one of these large-scale green hydrogen hubs during the G20 Summit this year.”
“The Indian government stands to gain significantly from this approach, which demonstrates how India can create a National Green Hydrogen Unicorn within next seven years.”
The National Green Hydrogen Hub Economic Viability and Development Plan was prepared by starting with a reference economic model of the Green Kochi Hydrogen Hub (GKH2), as a 50:50 public-private Special Purpose Vehicle (SPV) with a 150 MW Electrolyser Capacity, Storage and Evacuation Infrastructure, Renewable Energy inputs, Green Ammonia production plants, and offtake by industrial and mobility users, with a USD 468 mn CAPEX outlay over a 20-year project period.
The Plan recommends similar large-scale Green Hydrogen Hubs to be developed in Gujarat, Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh.
Singh Deo, Senior Managing Director, FTI Consulting, and IH2A Secretariat lead, speaking on preparation of the National Green Hydrogen Hub Economic Viability and Development Plan said:
The economic modelling is based on few assumptions regarding public finance incentives, renewable energy costs, end-use offtake and project structuring on a public-private partnership format.
“The model is replicable and demonstrates that a financially viable green hydrogen can be designed and built. The model can be supported with techno-commercial studies, and should accelerate project development.”
IH2A has submitted proposals for state-level green ammonia and hydrogen hubs to Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. The National Green Hydrogen Hub Economic Feasibility and Development Plan has been proactively prepared by India Hydrogen Alliance (IH2A) to accelerate hydrogen commercialisation. Full details of proposed plan are on link.
EDITOR NOTES:
- Please refer to attached presentation for details on National Green Hydrogen Hub Economic Feasibility and Development Plan, with aim of developing five National Green Hydrogen Hubs by 2030.
- The reference Green H2 Hub SPV is structured as a 50:50 venture between government (central and state government, govt.-owned enterprises) and private participants, with an initial capitalization of USD 200 mn, to build production, storage and evacuation infrastructure over a 20-year period, with a recapitalization of an additional USD 200 mn expected in 2030.
- The Green H2 Hub SPV is expected to be able to produce compressed gaseous hydrogen (for industrial use), green ammonia and liquid hydrogen (for transport use, with 16 hydrogen refuelling stations), with a 20-year CAPEX plan of USD 468 mn, to be funded with concessional credit rate of 6%, and estimated 21,000 MT of green hydrogen per annum.
- Two industrial offtakers (refinery and fertilizers) and one transport offtake (state transport corporation) are expected to be invited to participate in the equity of the SPV, to eliminate volume and price risk. The offtakers are expected to signed Take-or-Pay Hydrogen Purchase Obligation (HPO) agreements with the SPV. The captive RE supplier is also expected to be invited to participate in the equity of the SPV.
- The Green H2 Hub SPV is expected to be profitable by 2028, with the following assumptions:
- Public finance support for Hub CAPEX, with expected incentives of USD 210 mn over 2024-2030 period, and USD 100 mn in the post 2030 period
- Public finance support in the form of offtake incentives (by the three offtake organizations), amounting to USD 178 mn over 2024-2030 period, and USD 182 mn in the post 2030 period.
- Project CAPEX will be undertaken in three phases, with 50 MW electrolyser capacity built in each phase, to ensure complete offtake of the hydrogen produced at each phase.
- The Green H2 Hub SPV can turn profitable from Year 5 (2028) and could be potentially listed on the Indian bourses in 2030, for a potential USD 1 bn valuation to fund next phase of CAPEX spending.
- The Green Hydrogen offtake price is expected to include the cost of production, storage and evacuation infrastructure, for all three end-uses, starting with USD 6/kg in Year 1 (2024), reach USD 4/kg (in Year 8, 2031) and expected to go down to USD 1.5 in Year 20; without any govt support/ incentives.
- Public finance support, in form of CAPEX and offtake incentives, for National Green H2 Hubs, is crucial for creating financially viable green hydrogen infrastructure, especially in the initial 2024-2030 period.
ABOUT IH2A
The India Hydrogen Alliance is an industry-led coalition of global and Indian companies committed to creation of a hydrogen value-chain and economy. IH2A works with private sector partners, the government and public to help build the hydrogen economy in India through industry and public-private collaborations. Lead members include Chart Industries, Reliance Industries, JSW and others.
IH2A submits US$ 5 bn National Green Hydrogen Hub Economic Viability and Development Plan to Government of India,NEW DELHI/ MUMBAI, June 7, 2023
