Gautam Adani recently stressed the need for vertically integrated green hydrogen projects in the World Economic Forum. As the head of the Adani Group, Adani advocated for a change from merely replacing one fossil fuel with another. He urged India, the third largest energy consumer globally, to fully embrace renewables and green hydrogen.
Adani put emphasis on the limitations of renewable energy, dependent on specific weather conditions. He proposed green hydrogen as a promising alternative to fossil fuels. Despite its environmental benefits, the current production cost of green hydrogen remains high at USD 4-5 per kg in India. This is double that of grey hydrogen produced using fossil fuels.
According to Adani, the key to reducing green hydrogen production costs lies in vertical integration. This approach involves a company handling all activities related to its primary offering. Adani argued that such integration could significantly decrease production costs and make green hydrogen more economically viable.
Acknowledging the high cost, Adani believes in reducing production costs to around USD 1 per kg for widespread acceptance. Drawing a parallel with the decline in solar costs over the years, he expressed confidence in replicating a similar cost reduction trend in green hydrogen.
Adani Group had previously announced a USD 50 billion capex plan for clean energy projects, including green hydrogen manufacturing facilities. Adani revealed plans to establish 2.5 million tonnes per annum of green hydrogen manufacturing capacity over the next decade, with the first phase expected before 2030.
Moreover, Adani hailed green hydrogen as a solution for decarbonizing industry, transportation, and chemicals. He stressed the need for cost reduction to USD 1 per kg for green hydrogen to play a transformative role in India’s energy landscape.
Adani suggested that large-scale, vertically integrated projects surrounding the entire supply chain would be crucial for significant cost reductions. These projects, involving manufacturing solar modules, wind turbines, electrolyzers, and green hydrogen production, could accelerate the shift towards affordable green hydrogen.
While Adani acknowledged the capital-intensive nature and associated risks of vertical integration, he put a focus on its potential for speeding up the journey towards the USD 1 per kg cost target. He also mentioned that such a shift would not only contribute to energy security. It would also improve air and food security in India.
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