According to Morgan Stanley, the total addressable market for hydrogen could be worth $19 billion by 2030. This, of course, is the clean part of hydrogen. Let's split it up further.

Share Market Live

NSE

This $19 billion market comprises both blue and green hydrogen.

Blue hydrogen is manufactured using methane and steam, which then convert to gray hydrogen — this is the polluting variety hydrogen. So the technique used to make blue and gray hydrogen is the same, but the management of carbon dioxide (CO2) in this case differs. Carbon capture and storage technology is used to capture the CO2 from gray hydrogen, from which blue hydrogen is produced. Many companies are investing in the carbon capture technology in India as well, but it is still in its nascency.

Coming to the buzzword, green hydrogen, it is cleaner because water is broken into hydrogen using renewable sources like solar, wind energy. This is then processed in an electrolsyer, again a space where many Indian companies are investing.

So how will this $19 billion dollar market be split?

According to Morgan Stanley's estimates, around $200 million will come from the telecom space, while heavy trucks and buses will account for $1 million — this looks small compared to other sectors, but the usage of hydrogen in commercial vehicles (CVs) could take some time to become a bigger opportunity in a short period of time as against city gas distribution companies that will have to blend in green hydrogen, which will be a $1.6 billion market by 2030. The refining sector will see a 25 percent mandatory use, as will fertilizer. This will be between a $6.9 billion to $7.3bn market; steel is a $2.6 billion market for green hydrogen, followed by cement and shipping at $1 million.

Also read: India's hydrogen market to surge: Morgan Stanley projects $19 billion opportunity by 2030

Now why is this important to stock markets? Because big players have invested in the space.

Reliance Industries Limited will be manufacturing low-cost electrolysers for manufacture of green hydrogen for domestic and global use. The Indian Oil Corporation (IOC) will be venturing into green hydrogen projects and is targeting 5 percent hydrogen produced as green hydrogen by by 2027-28, and 10 percent by 2029-2030.

ONGC has inked a pact with Greenko to spend $6.2 billion on renewables and green hydrogen. BPCL will be setting up a 5MW electrolyser system for green hydrogen manufacturing. GAIL will also set up an electrolyser to produce 4.3MT of hydrogen per day.

NTPC has a target of 5GW capacity in green hydrogen and ammonia business out of its 60 GW green portfolio target by 2032. JSW Energy has contracted India's largest commercial-scale Green H2 of 3,800 TPA and antique says green Hydrogen manufacturing to act as a sweetener. IGL has signed an MoU with ACME to jointly supply green hydrogen, set up infrastructure. The company says the production of green ammonia from green hydrogen has the potential to be another business vertical for IGL.

Also read: Green Hydrogen Projects: MNRE projects need for 5.5 lakh crore debt-based funding over next 7 years

MGL says it is exploring the green hydrogen space as it could be blended Into CNG as well. L&T has commissioned a green hydrogen plant at Hazira that produces 45kg of green hydrogen daily and is used for captive consumption. HPCL aims for a green hydrogen capacity of 24,000 tonnes a year and increase it gradually.

So, definitely, there a lot of interest in the green hydrogen space, and the market is huge. The current pricing of green hydrogen is $10 per kg and the expectation is that it could go down to $2 per kg by 2030.

In fact, when we talk about the market size, a recent IEA report suggested that a transition to clean energy is a huge economic opportunity, and renewable batteries, green hydrogen, and other clean technologies could create a market worth up to $80 billion in India by 2030. So if Morgan Stanley says $19 billion could come from hydrogen, ut means there could be 23-24 percent contribution coming in from hydrogen itself!

An interesting space with a lot to track here, and definitely worth putting the spotlight on.

Also read: Government extends transmission fee waiver for green hydrogen plants

First Published:Jun 30, 2023 2:17 PM IST