The biggest fear of companies that want to invest in production of green hydrogen is, ‘what if there is not enough demand’?

This was the perspective that emerged from the speeches of many experts who spoke at a session in green hydrogen, at the 14th Clean Energy Ministerial currently underway here. CEM 14 is a high-level conference of world energy ministers.

A survey conducted jointly by UNIDO, IRENA, and the German Institute of Development and Sustainability (IDOS) also revealed that green hydrogen companies see the lack of demand assurance as the biggest risk to their investments.

‘Offtaker risk’ got the highest score in the survey that asked respondents to list the risks they perceived. The question put to them was: ‘What type of risks contribute the most to bankability of projects?’

Also read: Government invites bids to set up green hydrogen production facilities

Jonas Moberg, CEO, Green Hydrogen Organisation, concurred saying, “More than anything, the difficulty in securing offtake that is the biggest risk”.

Moberg observed that green hydrogen companies typically have to invest $5 billion to $10 billion for green hydrogen production, but “customers are not there”. He pointed out that green hydrogen cannot compete in the market with fossil fuel-based hydrogen.

Prasant Choubey, President, Avaada, a renewable energy company that aspires to get into green hydrogen production, also called for the green hydrogen purchase obligation, pointing out that a similar ‘renewable energy purchase obligation’ (RPO) helped India build renewable energy capacities.

Also read: Green hydrogen bid: Indian consortiums enter Germany’s $985 m tender

Govt not keen

However, the government of India, which initially said that it would bring in a purchase obligation to stimulate demand, now does not want to do so.

businessline reported on February 11 that the government may not mandate green hydrogen purchase by companies.

At the CEM14 conference today, Ajay Yadav, Joint Secretary, Minister of New and Renewable Energy, did not give a direct answer to a pointed question as to whether or not would there be a green hydrogen purchase obligation. Instead, he gave a long-winding reply outlining various government policy measures and said these measures would make green hydrogen competitive.

Rahul Walawalkar, President, Indian Energy Storage Association, said that the government or the industry should not wait for the costs of green hydrogen to come down, but should start blending green hydrogen with grey. The additional cost of blended hydrogen would be negligible.

Also read: Green Hydrogen: Clean fuel alternative for New India?

Standards and certification

Speakers also stressed on the need for standards and definitions.

While the basic question is, what is ‘green hydrogen’, there also needs to be standards for production, handling, safety etc, experts said.

Apart from Moberg and Walawalkar, Abhay Bakre, Director General, Bureau of Energy Efficiency (BEE), also emphasised the need for standards and definitions for the use of carbon verifiers and carbon auditors.