Energy Transition #1. A supplier of energy?

Over the last two months, I have been trying to better understand the looming energy transition — and the prospects it holds for India.

You know the backstory. In the run-up to COP26, chatter about Net Zero has peaked. So has talk about decarbonisation. We know the energy transition will reshape the world. Some countries and companies will fashion fresh competitive advantages for themselves. Some will emerge as the new suppliers of energy — or the technologies that produce it. Some will transition faster to the new energy systems. They too will gain.

How is India placed within this larger flux? Where are we headed?

Out today, the first part of our report. It looks at our capacity to become a supplier. We look at a realm where companies /countries are still grappling for dominance. Hydrogen.

Clean energy hawks were thrilled by Narendra Modi’s speech this Independence Day. Speaking from the Red Fort, India’s Prime Minister said, “We have to make India a global hub for green hydrogen production and export.”

The statement was the latest in a series of government and private-sector announcements about hydrogen. In February 2021, finance minister Nirmala Sitharaman announced the National Hydrogen Mission in her budget speech. In the months that followed, a clutch of state-owned energy companies and private firms declared plans to blend hydrogen into existing fuels, to shift from fossil fuels to hydrogen, and to produce electrolysers and green hydrogen.

Then, shortly before Modi’s speech, came news about another central government plan to push green hydrogen. “[A] draft policy wants green hydrogen to account for 10% of the overall hydrogen needs of refiners from 2023/24, rising to 25% in five years,” wrote Reuters. “The respective requirements for the fertiliser sector are 5% and 20%,” an official told the newswire.

How transformative are these announcements? Hydrogen doesn’t just break the old corollary between growth and pollution—as fuel cell, it can replace liquid fuels used for transport; as raw fuel,it can decarbonise sectors like steel; as storage, it can make round-the-clock renewable power possible—it gives countries (and companies) a chance to build fresh competitive advantages.

And so, countries are vying with each other to dominate the hydrogen market. Be it to develop the best technology for producing hydrogen, to build the cheapest electrolysers, or to produce the cheapest hydrogen.

Like China did with solar manufacturing, can India capture hydrogen?

By the end of this report, it was clear to me that we are laggards in terms of developing hydrogen tech, and that our rising solar costs will make it harder for us to produce cheap hydrogen. We have, however, a chance in the race for making cheap electrolysers.

Do read.

This report has been cross-posted by The Wire.

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