• Wed. Feb 28th, 2024

‘Green hydrogen gradual proposals not enough’

‘Green hydrogen gradual proposals not enough’

New Delhi : India’s desire to accelerate its green hydrogen mission faces challenges, and adopting a gradual mandate for the use of green hydrogen may not help the country meet its target of 5 million tonnes (MT) by 2030, founder and chief executive officer Sumant Sinha said.

New Delhi : India’s desire to accelerate its green hydrogen mission faces challenges, and adopting a gradual mandate for the use of green hydrogen may not help the country meet its target of 5 million tonnes (MT) by 2030, founder and chief executive officer Sumant Sinha said.

“The size of the opportunity in green hydrogen is almost limitless based on what governments have stated as their plans. But a lot of that needs to be translated from government targets to actual demand, which hasn’t happened yet,” Sinha said in an interview at the Energy Transition Working Group meeting under India’s G20 presidency and the Clean Energy Ministerial in Goa.

“The size of the opportunity in green hydrogen is almost limitless based on what governments have stated as their plans. But a lot of that needs to be translated from government targets to actual demand, which hasn’t happened yet,” Sinha said in an interview at the Energy Transition Working Group meeting under India’s G20 presidency and the Clean Energy Ministerial in Goa.

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ReNew is one of India’s largest renewable energy companies with 8 gigawatts (GW) of operational capacity and 6GW of commissioned capacity in wind and solar.

“It will be slow. For demand to manifest, we need governments’ mandates on the use of green hydrogen, because without it, it will always be more expensive. No one changes voluntarily. Therefore, there must be either subsidies or mandates or both. In the European Union (EU), it is partly subsidized and partly mandatory; In the US it is subsidized. In India, we still don’t know what that will be,” he added.

However, he said the Indian government is likely to take a gradual mandate path to shift from fossil fuels to green hydrogen.

“The government doesn’t have the money to subsidize, certainly not in India. Hence, demand needs to be created through mandates, but as it imposes a burden on the buyer, it will have to be done gradually. That incremental mandate may not equate to 5mt of green hydrogen capacity by 2030, which is the government’s current target. Now, of course, a part of it is meant to be exported and it depends on how competitive India is in the export markets and what happens in other parts of the world in terms of demand generation,” Sinha said.

Last year, Renew signed MoUs with Indian Oil Corporation Limited (IOCL) and Larsen & Toubro (L&T) Limited to form a joint venture to develop industrial-scale green hydrogen projects in India. It outlines the capital cost of 35,000 crore over the next 12 months, which will be raised primarily through debt funding.

“A lot of this (funding) we already have sitting on our balance sheet and the rest comes from internal savings. “Our projects are financed 75% through debt and 25% through equity and that ratio will remain the same,” Sinha said.

The Independent Power Producer MoUs were signed at the Clean Energy Ministerial in Goa last week. 64,000 crore or $7.9 billion with central power financiers REC and PFC to finance its long-term renewable energy projects.

Sinha said demand from electricity distribution companies (discoms) is still not strong and is delaying India’s transition to renewable energy.

“The kind of issues around demand from utilities or discoms that cause delays are still not strong. It needs to be strengthened. If the government has taken the position of auctioning 50GW of renewable energy every year, someone has to buy that power. So, the utilities have to buy that power, or we’re going to have a problem with the government bidding and the states not buying. It has been a two-part problem for some time—the payment problem has been solved through the LPS system, we can now use capital to fund capital projects instead of funding discoms, but the other problem of demand needs to be solved, he said.

“The central government’s position so far has been that it wants new power generation to come from renewables, but states have to go ahead voluntarily with the same assurances. “The Center has found a way to solve the payment problem and now the states have to ensure that central RPS and RPO pathways are put in place, which they have to follow to meet the demand,” Sinha added.

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