India’s green hydrogen cost parity could be less than a decade away

By Tim Daiss

Fusion Fuel Green has signed an MoU with India’s BGR Energy to build a demonstration plant in Cuddalore in Tamil Nadu in southern India; it could be the start of something big

India’s latest clean hydrogen move came late last week when Dublin-based Fusion Fuel Green Plc. A green hydrogen tech company, signed a memorandum of understanding with Indian engineering, procurement and construction heavyweight BGR Energy Systems to develop projects in India.

The two companies’ first project will include a demonstrator plant for BGR Energy in Cuddalore in the Indian state of Tamil Nadu. Fusion Fuel will use a technology that includes a miniature PEM-based electrolyser with solar power. 

After its initial project slated to be completed by the end of the year, the two companies plan to develop larger-scale projects to produce hydrogen needed for green ammonia production and bio-ethanol, as well as feedstock for other heavy industrial uses.

Fusion Fuel says its electrolyser can produce green hydrogen at highly competitive costs. 

Green hydrogen is produced by splitting water into hydrogen and oxygen. It is using an electrolyser that may be fed by wind power, solar power, or hydro power and as such produces no emissions. Brown hydrogen uses fossil fuels in its production and has a high carbon footprint. Blue hydrogen also uses fossil fuels but also utilises carbon, capture and storage (CCS) technology for emissions.

Argument over cost, but Europe optimistic 

Green hydrogen development, however, has been slow to gain momentum in most Asia-Pacific. Because of its current high cost compared to production from fossil fuels. The region’s current liquified natural gas (LNG) pivot, in its first stages in most of Southeast and South Asia, away from dirtier burning coal needed for thermal power production could also create headwinds for hydrogen investment, at least in the mid-term.

Moreover, there are varying forecasts over when green hydrogen can reach cost parity with fossil fuels. Some claim that parity could be reached within the next year. Some others see a longer and bumpier road to achieve that objective. Other factors including geographical location and government incentive have to also be factored in.

Commodities data provider S&P Global Platts said recently that green hydrogen production costs need to drop at least another 50% to compete with fossil fuel production costs. The International Renewable Energy Agency (IREA), for its part, said in December that it could take another 10 years for green hydrogen to compete with the cost of fossil fuel alternatives. 

Much of Europe however appears more optimistic. In February, a consortium was formalised between 30 French, Spanish, Italian and German companies to produce green hydrogen from solar energy. At a cost they claim is similar to that of fossil fuels. However, the claim is not without nay-sayers since technical details haven’t materialized yet.

Hydrogen-fossil fuel cost parity for India

Hydrogen-fossil fuel cost parity for India has been placed less than a decade away. In lock-step with production costs dropping around 50% over that time period.

With the price reduction and the imperative to decarbonise the economy, Indian hydrogen demand could actually increase five-fold by mid-century. With about 80% green hydrogen, the report added.

Currently, India’s hydrogen demand is around 6Mt per annum for ammonia and methanol for industry sectors such as fertilizers and refineries. By 2050, TERI sees this increasing to around 28Mt. Primarily with the growing demand from industry but also with expansion into the transport and power-generation sectors.

Two companies are off to an early lead in India’s hydrogen push in the transport sector. Indian Oil is establishing hydrogen compressed natural gas (HCNG) stations. It is announcing a hydrogen fuel cell bus pilot. Mumbai-based Tata Motors is also developing hydrogen buses and spearheading other programs.

International Energy Agency sees India making strides

The International Energy Agency (IEA) also sees India making strides in its clean hydrogen build-out strategy.

The country has the potential to close the cost gap between hydrogen made from electrolysis and natural gas. And more quickly than many other countries because of its relatively high gas prices and low-cost solar PV potential.

However to achieve that “flexible electrolysis and cost-effective hydrogen storage will be essential to integrate hydrogen with variable renewables.”

Indian Finance Minister Nirmala Sitharaman announced in her budget in February that the country will launch a National Hydrogen Energy Mission (NHEM) in 2021-22.

End users in the plan reportedly include the steel, chemical and transportation industries. These sectors contribute to one third of India’s GHG emissions. Since these key sectors burn fossil fuels, they can be replaced by clean hydrogen. 

There are also ongoing talks to mandate the usage of 10% domestic hydrogen in fertilizer, steel and oil refineries. 

Tsingshan plans nickel smelter in Indonesia powered by renewables

World’s top nickel and stainless steel maker plans to build solar and wind facilities to power a 2,000MW smelter in eastern Indonesia within the next three to five years

by Tim Daiss

Chinese steel and nickel producer Tsingshan Holding Group, the world’s top nickel and stainless steel maker, plans to build a 2,000-megawatt ‘clean-energy’ facility in Indonesia within the next three to five years, while laying the groundwork for further green development, the Wenzhou-based company said last week.

It will build solar and wind power stations needed for the plant. As well as supporting facilities at its Tsingshan and Weda Bay industrial parks in Indonesia.

The plant will supply power for the company’s production of raw materials used in batteries for electric vehicles (EVs). Tsingshan wants its battery-materials operations to have net-zero carbon emissions. It already holds investments in Indonesia for battery-grade nickel chemicals production. It has been trying to expand its footprint in the new energy sector.

Earlier this year, the firm unveiled plans to make battery-grade nickel from material reserved for stainless steel. However, that process usually uses smelters that consume large amounts of coal for power generation. It is making Tuesday’s announcement even more important.

Tsingshan also announced plans to supply nickel matte. It is a main feedstock to produce nickel sulphate, to domestic cobalt smelter Huayou Cobalt and new energy materials producer CNGR. Last July, the group started trial nickel matte production with more than 75% content of the metal to meet increasing EV battery demand.

Chinese firms like Tsingshan have been stepping up their focus on EVs in China, the world’s largest car market, as Beijing promotes greener vehicles to help reduce high air pollution levels, particularly in its major urban centres.

EV MANUFACTURERS’ CATCH-22

EV car manufacturers, however, have been caught in a seemingly Catch-22 situation over its need for nickel. On the one hand, they need more nickel production for EV batteries. They also need to address the carbon footprint coming from production of the metal. 

Tesla Motors founder Elon Musk last July pressed miners to produce more nickel. The cost of batteries remained a large hurdle for the company’s growth. However, he is also pushing for cleaner nickel production at the same time. A call that some in the industry say may still be hard to come by.

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said on a post-earnings call at the time. Tesla needs more nickel supply to support not only its increased auto manufacturing numbers. They also need it for larger vehicles and trucks.

While some analysts say that nickel is still in abundant supply, others claim supply could be stretched by the end of the decade. Nickel demand is expected to increase from 2.2 million metric tons to somewhere in the range of 3.5 million to 4 million metric tons by 2030.

“The current challenge is to nearly double supply while meeting environmental, social, and corporate governance (ESG) requirements.”

Nickel is crucial for EV battery efficiency. It makes batteries energy dense so cars can run further on just a single charge. It’s now widely viewed to be the second most expensive component of EV batteries. EVs, for their part, will comprise 58% of global passenger car sales in 2040. Compared with 10% by 2025, according to a Bloomberg NEF report.

SE ASIA TOPS NICKEL PRODUCTION

Indonesia passed the Philippines in 2018 to become the world’s largest nickel producer and could soon pass Canada and Australia combined. 

Indonesia had 13 operating nickel smelters with an input capacity of 24.52Mt by the start of 2020. And another 22 nickel mines are under development, government data shows, while Jakarta is trying to boost the sector. Indonesia holds about a quarter of all global nickel reserves. 

Meanwhile, several junior miners, such as Vancouver-based Giga Metals Corp and Canada Nickel Co are also planning to produce more environmentally friendly nickel. However, that may still not be enough ‘clean’ producers of nickel for EV makers in the long-term.