Learn why hydrogen offers an attractive, efficient option to decarbonize India’s long-haul vehicular segment compared to electric vehicles.
Green hydrogen is a sustainable fuel made by splitting water (H2O) via renewable energy through established technology options known as water electrolysis. Green hydrogen supports national sustainable energy objectives and deep-decarbonization strategies.
Given India’s record-low renewable power tariff, India has been classified as a net exporter of green hydrogen from 2030. Producing Indian green hydrogen at 1.5 per kg can disrupt the global energy and chemical industry by 2030. It can also address more than 20% of India’s total emissions.
India’s position in the hydrogen-fuel cell-based economy
In the 2021-2022 budget speech, India’s finance minister proposed launching a National Hydrogen Energy Mission (NHEM) to generate hydrogen from green power sources. As reported by NITI Aayog, this new initiative will reduce Indian energy imports by more than $160 billion by 2030 and will help accelerate renewable capacity growth to five times current levels, also by 2030.
The NHEM’s ultimate goal is to transform India into a global hub for hydrogen and fuel-cell technology manufacturing across the value chain and align it with the Make in India and Atmanirbhar Bharat initiatives. In order to make that goal a reality, India must first develop volumes and facilities to support the burgeoning hydrogen market, as well as demonstrate niche applications for hydrogen (such as transportation and industry) and facilitate policy support for hydrogen fuel cell manufacturing.
While India may have recently announced NHEM, a National Hydrogen Energy Roadmap had already been in place since 2006 for bridging the technological gaps in different areas of hydrogen energy. Even after 14 years, hydrogen-based vehicles remain stuck in the prototype phase. So, what does India need in order to make hydrogen-fueled long-distance vehicles a widespread reality?
Cost as the biggest hurdle
While considering low-carbon transition, total cost of ownership poses the biggest challenge in the long run. Hydrogen-fueled buses or trucks are on the higher side of the price range if we compare them to the other options. This highlights the importance of lowering vehicle and O&M costs to achieve decarbonization goals. Below we represent the total cost of ownership per km for a 250 km range, factoring in capital cost of vehicle, mileage, fuel and maintenance cost, battery replacement cost, yearly financing, and repayment of loan amount. Note that the debt repayment schedule is listed as five years in case of CNG, LNG, and diesel buses, whereas it is considered eight years in both electric and hydrogen categories owing to the higher capex of the buses. For electric buses, we consider a seven-year period before battery replacement for a 320-kWh battery size and as per the Global EV Outlook, the cost of batteries will decrease to 190 USD per kWh in the seven-year time period.
Development of fuel-cell trucks in India
India’s low commercial vehicle segment is growing at a rate of 15% per year; today, more than 65% of the nation’s cargo is shipped on trucks, demonstrating a significant shift of its load from the rail to the trucking segment. The Indian trucking sector thus has the growth opportunity to transition towards hydrogen fuel cell trucks that would create zero harmful pollutants, emit only water vapor, and generate zero engine noise. Before introducing hydrogen-fueled trucks into the Indian market, however, we need to understand the cost dynamics, since the total cost of ownership matters for making such a decision.
As soon as 2030, fuel cell medium-duty trucks (MDT) and heavy-duty trucks (HDT) could become lower-cost alternatives to battery-powered EVs. The need for long-range capabilities mainly drives this assertion, which for the MDT and HDT segments likely translates to very large 600 to 900 kWh batteries. Batteries of this size are expensive, heavy, and reduce the payload of the vehicle, which may also require long charging times, even with high-capacity fast-chargers (200 to 250 kW today, possibly more in the future). For fuell cell trucks (FCT) to cost the same as competitors, they must primarily focus on two main cost components: the price of hydrogen fuel at the pump and the cost of the vehicles in terms of powertrain and on-board hydrogen tanks.
The Hydrogen Council has estimated that a cost reduction for hydrogen of $4.00 to $5.00 per kg in 2030 will be the key to cost competitiveness. Additional support will come from the lower cost of hydrogen production and lowered distribution costs in India. We can see a decline in distribution costs through lower cost retail hydrogen, driven by an increase in station size and its utilization.
Additionally, the high cost of hydrogen fuel cells and hydrogen tanks drives the cost of powertrain, which in turn makes the cost of FCTs about three times the cost of comparable diesel trucks. The role of mass manufacturing would help narrow this gap, and manufacturers could capture a significant powertrain cost reduction (approximately 60%) with an annual production volume of just 10,000 trucks per year.
Fuel cell buses in India
In 2018, Tata Motors launched India’s first fuel cell bus (FCB), backed by the Indian Oil Corporation (IOC). Fast forward to December 2020, IOC has launched a procurement of 15 FCBs to operate in the Delhi-NCR region. Along similar lines, NTPC Ltd. will provide 10 hydrogen buses in Leh and Delhi. The key decision criteria for Indian bus operators are the upfront cost of the buses, the operational cost of running them, and a range of other important parameters such as refueling time and fuel availability. Cost is ultimately the determining factor in how bus operators behave.
The above graph shows the breakdown of the total cost of ownership, and here as well, cost competitiveness will require a scale-up in both manufacturing of FCB components, and the hydrogen value chain. This will require hydrogen fueling stations at bus depots capable of providing thousands of kilograms of hydrogen per day. As shown above, the major cost contributor is the “others” category, that is non-powertrain, assembly of the vehicle, and maintenance. To develop the FCB market in India, manufacturers need to focus more on reducing the cost of the “others” category through research and development.
An intermediate solution is to blend hydrogen-CNG (compressed natural gas) for buses. Estimates suggest that you would need four plants producing 100 tons per day to fuel 5,500 buses, which works out to an upfront cost of Rs 330 crore. The costs are not prohibitive, and if we can reduce nitrogen oxide emissions further, then this approach can scale across Delhi’s entire bus fleet within two to three years. In the next 8-10 years, Indian companies will ostensibly build an additional 8,181 CNG station connections after the ninth and tenth rounds of bidding for CGD networks. Further, the Petroleum and Natural Gas Regulatory Board has proposed 44 new geographical areas for the upcoming 11th round of bidding. Tapping into this opportunity the infrastructure that is currently in place for dispensing CNG can easily provide hybrid H-CNG fuel to new vehicles, indeed to do so would be quite cost effective.
The need to act now
There is an urgent need to act now to support hydrogen-fueled long-haul transportation in India. Subsidies and financing schemes are available for electric cars, scooters, and rickshaws. We understand that the total cost of ownership is a concern from truck and bus operators, but it is equally important to understand the cost breakdown so we can leverage the right understanding and start taking actions at the major cost contributor side. Besides developing a hydrogen-friendly environment in India for the adoption and upscaling of FCTs and FCBs, regulators should encourage operators by providing incentives, such as the public procurement of FCBs and FCTs, and the implementation of fleet regulations for trucks and buses. This calls for a hydrogen-based sectoral roadmap with clear ambitions, standards, and infrastructure build-up to reduce climate impacts that will overcome market failures and encourage first movers in decarbonizing the long-haul transportation segment in India.