Hydrogen market in India
Asia Clean Energy Forum, 2023
15-Jun-2023
Gurpreet Chugh, Managing Director,
ICF India
The map below shows some key developments related to hydrogen development in different countries.
Global demand for hydrogen, 1975–2020 (MMT/yr)
120
90
100 MMT/Yr
CANADA
80 20 MMTPA low carbon H2, 2050
5 million Fuel Cell EVs, 2050 RUSSIA
60 2 Mt H2 export, 2030
GERMANY
18 5 Gigawatts (~0.6
40 MMT/Yr MMTPA)
USA UK electrolyser capacity,
20 2030 CHINA
20 MMTPA H2, 2050 5 GW (~ 0.6
35 MMTPA
0 H2 at $2/kg, 2030 MMTPA) low-carbon
by 2030
H2 production, SOUTH KOREA
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 capacity, 2030 3.9 MMTPA by
Refining Ammonia Others 2030
INDIA
5 MMTPA Green
Sources of hydrogen production 2020 H2, 2030
Natural Gas
Dedicated hydrogen production By-product
w/o carbon
21%
72 Million Metric Tons capture,
utilization
(MMT)/yr Hydrogen (H2)
and storage
By-product hydrogen Coal CHILE
(CCUS) 59% 25 GW (~ 2.9 MMTPA) AUSTRALIA
18 MMT/yr H2 19%
electrolyser capacity, 2030 H2 at $2/kg, 2030
Hydrogen production through
H2 at $2/kg, 2030
water electrolysis
Natural Gas
30 kt/yr H2 (~0.03%). Oil with CCUS
0.60% 0.70%
Current global H2 demand is around 90 MMT/year, which grew at 2%
since 1975; demand will increase further as countries set targets.
Source:
1. IEA. (2019), The Future of Hydrogen, IEA, Paris https://www.iea.org/reports/the-future-of-hydrogen 2
2. IEA. (2021), Global Hydrogen Review 2021, IEA, Paris https://www.iea.org/reports/global-hydrogen-review-2021
Total Hydrogen demand (KTA) Demand breakdown by Demand breakdown by
7000
7000 industry(KTA) region (KTA)
Merchant CAGR
7,000
670
650
3.7% 6000
630
6000
600
570
Others 6,000
550
540
5000 5000 SC
5,000
TT
4000 4000 HFCV 4,000
FG
5880
3,000
5820
3000
5680
3000
5510
5290
5190
5050
OF
2,000
2000 Steel
2000
Captive CAGR 2.6% Chemicals 1,000
1000 Refinery
1000 -
Ammonia
0
2015 2016 2017 2018 2019 2020 2021 0
2020
2021
2015
2016
2017
2018
2019
Captive supply Merchant supply West South North East
• 90% of the demand is by captive consumers which
includes mainly fertilizers, refineries, and chemicals. • Fertilizer and refineries remained the key demand
• The West remains the key demand center given
• Growth has been witnessed in merchant sale. drivers.
the concentration of refineries and fertilizer
• Merchant sale in OF, FG, SC, and others, which has • Demand in chemical and steel is increasing
units.
insignificant footprint rapidly.
Current demand of hydrogen in India is ~6 MTPA; driven by
captive consumption of refineries and fertilizer units
Source: ICF Research 3
OF: Optic Fibre; FG: Float Glass; SC: Sintered Glass; TT: Telecom Towers; HFCV: Hydrogen Fuel Cell vehicles
Low case High case
25 25
20 20
15 15
MTPA
MTPA
10 10
5 5
0 0
Refinery Ammonia Iron & Steel Refinery Ammonia Iron & Steel
Chemicals Transport Blending Chemicals Transport Blending
Large Industries Large Industries
• Increased debcarbonisation initiatives coupled with reducing prices could lead to significant rise in in green H2 consumption by 2040
• We expect demand to be anywhere between 15–25 MTPA depending on market development and policy initiatives. Demand is likely to be
driven by mainly driven by refinery and fertilises sectors.
India’s hydrogen demand could reach anywhere between 15
(conservative) – 25 (optimistic) MTPA by 2040
Source: ICF Analysis Low Case : When the additional demand of hydrogen on a year over year (YOY) basis is decided based purely on the market dynamics (considering cost of green hydrogen
production and supporting infrastructure) 4
High Case : When the additional demand of hydrogen on YOY basis is fulfilled based on obligation/government push/ supporting policies
H2 demand In India is expected to increase by 2.5-3.5 times by
2040 but is still not expected to meet more than 5% of total
primary energy consumption of India by 2040.
5
Green Hydrogen Market Size*
50.00
45.00
40.00
35.00
30.00
$ Bn
25.00
20.00
15.00
10.00
5.00
0.00
2025 2030 2035 2040
Expected Hydrogen Market Size ($ Bn) Expected Green Hydrogen Market Size ($ Bn) Possible Profit From Green H2 ($ Bn)
• The green hydrogen market (sales) is likely to reach ~$10 billion by 2030 & ~$35 billion by 2040 in India (per annum figures).
• The green hydrogen developers can generate significant annual profits by 2040 (considering 10% margin on the business).
Green hydrogen market is likely to be at $30–35 billion by 2035-
2040 in India (under the optimistic demand case).
Source: ICF Research & Analysis; based on Case 3 of demand estimation 6
Hydrogen demand is
likely to be
concentrated in regions
with refineries and
fertilizer plants
Green hydrogen supply
hubs near the demand
centers will provide
cost effective solution
to meet the demand
Source: ICF Analysis
The hydrogen demand in each state is
excluding refinery and fertilizer hub
demand and is shown separately in legend.
Gaseous and liquid H2 are the primary methods of storage across the globe.
• Hydrogen is mainly being stored in gaseous tanks or cryogenic tanks across the world. Based on geographical
availability, some countries (UK and US) have utilized salt caverns
Higher storage costs for liquid hydrogen make it unviable at small distances.
• Due to high liquefaction costs and cryogenic storage required for liquid hydrogen, on-site storage cost of liquid
hydrogen is approximately 5 times that of gaseous H2, making it unviable at extremely small distances.
Larger transport capacity of liquid hydrogen makes it cost effective for medium
distances.
• One single liquid H2 trailer can deliver 10–15 times more hydrogen than a single gaseous H2 trailer, so, at medium-range
distances, liquid H2 becomes more viable than gaseous H2 due to fewer trucks/trips required.
For large capacities, pipeline transport is cheapest.
• With increasing capacities, pipeline costs reduce drastically at smaller capacities. The cost of H2 transportation by
pipelines is 8.8% the cost of gas tank trailers and 20% of liquid trailers for a 20-inch pipeline for 120 km.
Ammonia is used for extremely long-range transport—intercontinental distances.
• Ammonia with a volumetric hydrogen density about 45% higher than that of liquid hydrogen, so it becomes an excellent
choice for transport at intercontinental distances.
Green hydrogen production hubs near demand centres make
more commercial sense
Natural Gas @ $9/MMBTU Natural Gas @ $12/MMBTU
4.50 4.50
4.00 4.00
3.50 3.50
3.00 3.00
$/kg
$/kg
2.50 2.50
2.00 2.00
1.50 1.50
1.00 1.00
2023 2025 2030 2035 2040 2023 2025 2030 2035 2040
SMR SMR + CCUS (52%) SMR + CCUS (85%) SMR SMR + CCUS (52%) SMR + CCUS (85%)
Large Alkaline 1 GW Large PEM 1 GW Turquoise 200 KTPA Large Alkaline 1 GW Large PEM 1 GW Turquoise 200 KTPA
• Solarl module costs may not reduce much further, but electrolyser costs are • Higher natural gas costs or carbon prices on fossil fuels can further accelerate
likely to drop rapidly over next few years. the cost parity of green hydrogen with grey hydrogen.
Green vs. grey hydrogen economics will depend on fossil fuel prices,
carbon prices, cost reduction and efficiency improvements in
electrolysers and Government support for green hydrogen.
Source: ICF Research & Analysis 9
SMR: Steam Methane Reforming: PEM: Polymer Electrolyte Membrane
National Hydrogen Mission
Green Hydrogen Policy 2022
Launched in 2021 with specific strategy in the short term (4
years), and broad principles for long term (10 years and beyond) • Green Hydrogen Policy 2022 defines green H2/ammonia to also include H2
and ammonia produced from the banked renewable energy (RE) and that
National Green Hydrogen Mission updated in January 2023 produced from biomass.
Mission Outlay ~ $ 2.41 bn; of which: $ 2.13 bn is for SIGHT, $0.18 bn
Waiver of interstate transmission charges for 25 years to the producer
is for pilot projects, $0.05 bn for R&D and $ 0.05 bn is for other
mission components
1 of green hydrogen/green ammonia from projects commissioned before
June 30, 2025
Key expected outcomes:
Development of green hydrogen production 2 Banking of RE for period of 30 days permitted for making green H2/
01 capacity of at least 5 MMTPA and renewable
energy capacity addition of about 125 GW
green ammonia—banking charges to be fixed by state commission.
Land in RE parks and manufacturing zones can be allotted for
Close to $ 100 bn expected investment and 3
02 creation of over 600,000 jobs
manufacture of green H2
RPO: RE consumed in manufacture of green H2/ammonia; excess
Cumulative reduction in fossil fuel imports over Rs. 4 consumption beyond RPO of producer will be accounted for as RPO by
03 $ 12 bn DISCOM
Abatement of nearly 50 MMT of annual 5 Priority in providing connectivity to green H2/ammonia producing plants
04 greenhouse gas emissions and the energy supplying generators
Measures taken in India to date
RE: Renewable Energy, RPO: Renewable Power Obligation, DISCOM: Distribution Company, GOI: Government of India
10
Low Case: Import Bill Savings High Case: Import Bill Savings
25.00 25.00
20.00 20.00
15.00 15.00
$ billion
$ billion
10.00 10.00
5.00 5.00
0.00 0.00
2023
2024
2025
2026
2027
2028
2029
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2040
LNG Import Saved ($bn) Scenario LNG Import Saved ($bn) Scenario
Crude Oil Import Saved ($bn) Crude Oil Import Saved ($bn)
Total Import Bill Savings ($bn) Total Import Bill Savings ($bn)
• At present, India spends more than $160 billion every year on energy imports.
• India can replace fossil fuels by hydrogen in transport, iron and steel, CGD, and large industries.
India can achieve savings of $15–20 billion in fossil fuel imports by
replacing them with locally-produced green hydrogen.
Source: ICF Analysis
11
Conclusions
H2 demand In India is expected to increase by 2.5-3.5 times by 2040; it is still not expected to
meet more than 5% of total primary energy consumption of India by 2040.
The H2 market in India is likely to reach ~$30n-35 bn/yr by 2035 - 2040.
RE power requirement for green hydrogen will be significant at 400 GW.
Cost parity between green hydrogen and grey hydrogen will depend on factors such as fossil fuel
prices, carbon market prices, cost reduction and efficiency improvements in in electrolysers,
and, importantly, government support/ incentives for green hydrogen.
India can achieve savings of $15-20 billion per year in fossil fuel imports by replacing fossil fuels
with locally produced hydrogen in end use sectors.
Summing up
13
Get in touch with us:
Gurpreet Chugh
Managing Director—India
Email: Gurpeet.Chugh@icf.com
Mobile: +91 9910483574
About ICF
ICF (NASDAQ:ICFI) is a global consulting and digital services company with approximately 9,000 full- and part-time employees, but we are not your
typical consultants. At ICF, business analysts and policy specialists work together with digital strategists, data scientists and creatives. We combine
unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve their most complex challenges. Since 1969, public
and private sector clients have worked with ICF to navigate change and shape the future.
