New Delhi: Indian Oil Corporation (IOC), India's largest fuel retailer, is planning to set up green hydrogen units at its Mathura and Panipat refineries by 2024 to replace grey hydrogen with green because it sees the recently unveiled green hydrogen policy as a great policy initiative that will drastically cut the cost of production. IOC's Director (Research and Development) SSV Ramakumar said that the new policy will help cut the cost of manufacturing green hydrogen by 40-50 percent.
While terming the policy a "watershed moment in India's energy transition," Ramakumar said, "This policy is the single biggest enabler by the state for production of green hydrogen." Oil refineries use hydrogen to remove excess sulphur from petrol and diesel. Currently, refineries in India use 'grey hydrogen' produced from natural gas or naphtha, which results in carbon emissions.
"The headline cost of renewable electricity at Rs 2 per kWh (or per unit) is actually the price at the generation site (say solar farm in Rajasthan or Ladakh). This becomes Rs 4 to 7 per unit after adding different levies during its transit through transmission lines in different states," said Ramakumar. At a factory-gate cost of Rs 4 to 7 per unit, green hydrogen production costs come to Rs 500 per kg. In comparison, the current cost of production for grey hydrogen is Rs 150 per kg.
Under the green hydrogen policy unveiled on February 17, the government has allowed open access for renewable energy used for green hydrogen production without central surcharge and has also waived off inter-state transmission charges for 25 years for projects commissioned before June 30, 2025. "This will essentially bring the cost of green hydrogen production down by 40 to 50 per cent," said the IOC Director (R&D).
He added that the cost will go down further if electrolysers, which are used to split water into two hydrogen atoms and one oxygen atom, are manufactured indigenously instead of importing them.
Ramakumar said that the current cost estimates are based on alkaline water electrolysis, which consumes some 55 units to produce 1 kg of hydrogen. And the use of polymer electrolyte membrane (PEM) electrolysis would bring down the requirement of electricity by 10 units, thus further reducing cost.
Ramakumar said that Indian Oil plans to set up a 40 MW electrolyser at Mathura refinery and a 15 MW unit at Panipat refinery in Haryana. India's largest oil retailer is targeting to produce 70,000 tonnes of green hydrogen a year by 2030, accounting for 10 percent of its overall consumption by that time.
The current hydrogen demand across all refineries is about 1.4 Million Tonnes (MT), which is projected to rise to 2.6 MT by 2030. Ramakumar said that IOC is also exploring manufacturing of electrolysers or outsourcing the production of green hydrogen. India is targeting 15 GW of electrolyser-making capacity and is considering production-linked incentives to encourage domestic manufacturing.