Strategies to engage Indian SMEs in green hydrogen

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As the adoption of green hydrogen increases in the big corporates, it is also becoming essential to engage small and medium enterprises (SMEs) as part of the process, writes Dr JP Gupta, Chairman, Expert Appraisal Committee (Industry-II) for Environmental Impact Assessment & Clearance with the Ministry of Environment, Forests and Climate Change.

In the current times, some of India’s largest corporations such as Reliance Industries Ltd are announcing plans to invest Rs75,000 crore ($10.1 billion) in renewable energy projects, a portion of which will be used to construct an
electrolyser and fuel cell gigaplant, giving the country’s fledgling hydrogen sector a significant boost.

Similarly, the Indian Oil Corporation is working on developing hydrogen-spiked compressed natural gas (H-CNG) and big energy players like the natural gas transmission company GAIL, the corporation NTPC, Aditya Birla chemicals
and INOX Air are investing in green hydrogen technologies.

The need for building expensive electrolysers for green hydrogen generation has made the process unsustainably costly and logistically complex for small players to invest in these technologies, especially with respect to generation.

Moreover, in addition to existing regulations and market design, this high cost of production has been a significant barrier to the uptake of green hydrogen, as the green hydrogen is still two to three times more expensive than blue hydrogen (produced from fossil fuels with carbon capture and storage).

Further cost reductions to match up with the other energy sources becomes one of the critical issues to be addressed to increase the uptake of green hydrogen in small industries and SMEs. Although the economic complexity of the
infrastructure may act as an impediment for SMEs, this sector could become an important component of the hydrogen growth engine if it is supported by infrastructure in the domain of ancillaries around the green hydrogen ecosystem.

The SMEs can help develop improved cross-sectoral applications of green hydrogen by coupling sectors through local manufacturing and services of various hydrogen value chain elements; e.g. fuel cells, carbon fibre, vessels, equipment, power electronics, etc.

Considering the above, it will be crucial to simultaneously develop a sustainable energy policy ecosystem for green hydrogen for SMEs, by taking the following action steps:

• Subsiding the cost differential between green hydrogen production and fossil fuel cost.
• Duty-free import of plant machinery and technologies for renewable energies.
• Tax holidays for green hydrogen use for initial technology adoption.
• Improvement in the cost and performance of the hydrogen supply chain on a large scale.

These actions will not only help achieve economic stimulus around sustainable energy policies in green hydrogen but will also help engage SMEs in the green hydrogen ecosystem in an inclusive manner.

About the author

In addition to his current role at the Ministry, Dr Gupta is the Chairman of the Environment Committee, PHD Chamber of Commerce & Industry (PHDCCI). He is also on the board of Norwegian companies like GreenStat Hydrogen India and Fiberstrength India International.

To know more about the role of hydrogen in India’s energy landscape, visit https://ics-hydrogen.com/.