The Top 5 Challenges For Green Hydrogen To Overcome

Hydrogen as a source of energy isn’t a new concept and is dubbed as a potential alternate energy source for over a century now. However, most hydrogen produced today is generated using fossil fuel energy, a source to about a billion tons of CO2 emissions equivalent per year. The concept of green hydrogen, promising considerable reduction in net emissions, has come to the rescue and is now being counted on for net zero emission goals across the globe. Notably, even adoption of green hydrogen isn’t free from challenges which need overcoming before we can rely on it for our net zero goals.

Challenges such as safe storage and transportation, scarce resources for production, demand uncertainty, and production costs make the future of green hydrogen as an alternative fuel challenging for many. Here are the top 5 challenges impeding the green hydrogen penetration.

#1 Cost of Production

One of the primary challenges facing the widespread adoption of green hydrogen is the high cost of production compared to traditional, carbon-intensive hydrogen. The capital-intensive nature of the electrolysis process and the need for specialized infrastructure contribute to the elevated costs.

Further, manufacturing green hydrogen (GH2) using renewable energy is a major barrier, accounting for about 65 per cent of the entire cost of production. Renewable electricity from solar, wind, hydropower, and geothermal sources are utilised as a fuel in an electrolyzer. Many other factors are at play which also need consideration when gauging the production costs. For instance, cost of solar at around Rs 2.6 per unit, transmission losses, banking cost, storage cost, etc. increase the cost of production.

India is targeting to bring down the total cost of production of Green Hydrogen from $4-5 per kilogram (KG) currently to about $1 per KG. Low-cost renewable energy plants, local electrolyser manufacturing, and technological advances in electrolysers can all help to reduce the cost of GH2.

#2 Demand for Green Hydrogen

Green hydrogen currently is not competitive to any other source of energy, neither in terms of supply nor in demand. In fact, both go hand in hand. Naturally, demand will generate growth and not the other way round. Businesses will be inclined to establish electrolyser factories once enough demand is clear.

Consequently, a lot of investment will be required to prepare the industry for supply. Firms have doubts about green hydrogen and thus are hesitant to invest in this space without strong government incentives. The commercial banks will be wary of lending loans if the clear demand is not visible. Government has taken some measures in the past to no avail. For instance, GOI the drafted National Hydrogen Energy mission document mentioned about Green Hydrogen Consumption Obligations for fertilizer production and petroleum refining sectors with a deadline for 100% by FY34-35. It was intended that the increased adoption would gradually decrease the production costs. However, the version of NGHM in January 2023 did not specify GHCO.

A way out may be obligation imposed on green hydrogen purchase, which India has not yet adhered to. Notably, a provision is made with the amendment to the Energy Conservation Act that indicates possibilities of imposing the non-fossil fuel energy specific obligations on the designated consumers like fertilizer plants, refineries, etc. Obligations in carbon market may also help promote green hydrogen adoptions to spur the demand.

#3 Water – a Limited Resource

Green hydrogen is indeed a promising solution for decarbonizing heavy industries, but its production does come with water-related challenges. Producing hydrogen from renewable sources involves electrolysis of water. Just the final stage of the stoichiometric process requires about 9-10 liters of water to create 1 kg of hydrogen. The overall requirement is several times more, ranging 60-95 L/kg, just to reach that point. That’s deionized pure and fresh water.

Water is a scarce resource, even for reaching basic human needs. As per World Wildlife Fund, some 1.1 billion people worldwide lack access to water, and a total of 2.7 billion find water scarce for at least one month of the year. Naturally, it has concerned many whether the use of hydrogen for energy storage and transportation fuel will lead to competition for water resources among industries, such as the energy sector and agriculture. Water scarcity is a critical global issue already that affects both human populations and ecosystems. The stress is bound to further exacerbate the water problem with the advent of green hydrogen industry. This issue needs to be addressed first.

#4 Viable Transportation

Transporting green hydrogen presents a significant challenge influenced by factors such as volume delivered and distance covered, directly impacting transportation costs. These expenses encompass infrastructure investments in trucks, ships, or pipelines. Presently, trucks dominate hydrogen transportation due to their flexibility, but their limited capacity makes compressed hydrogen transport costly.

Liquefied hydrogen offers a more economical solution, enabling larger quantities per vehicle. While pipelines represent a viable option, their establishment requires substantial initial investments, potentially exceeding natural gas pipeline costs by 110% to 150%.

Nonetheless, repurposing natural gas pipelines for hydrogen transport offers a more cost-efficient approach, with conversion costs ranging from 10% to 25%. Ships emerge as the most economically viable method for transporting significant volumes of hydrogen, closely followed by pipelines.

#5 Storage Risks

Challenges in efficiently storing Hydrogen stem from its low energy density. Conventional methods like compressed or liquefied hydrogen have efficiency and safety constraints.

The challenges in storing green hydrogen at scale are multifaceted. For instance, Compressed hydrogen, whether in bullets or racks of containers, offers high-density storage but is plagued by leakage concerns and potential safety hazards, particularly in the event of mechanical failures. Storing hydrogen in pipelines faces regulatory hurdles and leakage risks. Underground cavity storage, while theoretically feasible, is hindered by leakage risks, geological limitations, and substantial upfront costs, making it an impractical option for immediate development. Liquefied hydrogen, while offering lower-pressure storage and reduced leakage risks, requires intricate temperature control measures to prevent heat loss, adding complexity to its implementation.

Overall, each storage method presents its own challenges, necessitating careful consideration of safety, feasibility, and technological maturity in pursuing effective large-scale hydrogen storage solutions.

India’s green hydrogen story kickstarted with the announcement of the National Green Hydrogen Mission (NGHM) in January 2023 with the grand objective of making India the global hub for producing, consuming and exporting green hydrogen and its derivatives. To achieve this objective, the NGHM aims to produce 5 million metric tonnes per annum (mmtpa) of green hydrogen by 2030, with a further ambition to produce 10mmtpa based on the development of export markets. The dream is distant but achievable if the policy makers and stakeholders successfully address the challenges to the swift adoption of green hydrogen as an alternate energy option.