Can Green Hydrogen be India's EV Battery Solution?

As I write this, my city Mumbai, is witnessing the biggest heat wave in a decade.

Recently, scary of electric pictures of two-wheelers going up in flames were in the media. This sparked concern over the safety of these vehicles.

First, an Ola Electric scooter caught fire and caused a social media uproar. It led to criticism of the growth-at-all-costs nature at these unicorn companies.

Soon, two-wheelers of two more electric vehicle (EV) start-ups, Okinawa and Pure EVs, suffered the same fate.

Experts have pointed fingers at lithium ion (Li-ion) batteries.

From EVs to smartphones to laptops, Li-ion batteries are the most popular battery type today. These batteries power millions of consumer electronics.

What makes them popular is their high energy density. A Li-ion battery can typically store 150 watt-hour per kg. A lead-acid battery stores only around 25 watt-hour per kg.

But this has also been the battery's undoing. The cells become unstable in extreme heat. This hampers its functionality.

Green Hydrogen to the Rescue

Green hydrogen is not a fuel everyone talks about. But we should. For the first time in history, this fuel powered the Olympic flame at the Tokyo last year.

Green hydrogen is the infinitely sustainable result of the sun's radiation. So, the shift to hydrogen for fuel is simply a shift away from depleting finite sources of fossil fuels. It's produced by splitting water into hydrogen and oxygen using an electrolyser.

Electricity from renewables, like wind and solar, power the electrolyser. This can be a game changer for India, which imports 85% of its oil and 53% of gas demand.

Governments worldwide are backing green hydrogen projects to reduce greenhouse gas emissions. This is especially, in heavy industries like freight, steel, and energy storage.

Recently, the government launched the country's first Green Hydrogen Policy.

The objective is to reduce fossil fuel usage and increase penetration of green fuels.

Now, India has the advantage of low cost. The cost of green hydrogen in the country will fall to about one-fourth of global levels. At about US$1 per kg, India could become the lowest-cost producer in the world.

Renewables have been torchbearers of India's green initiative for few decades now. Adding renewable energy to our grid diversifies of our electricity sources. It also helps India in achieve its Paris agreement targets.

India has pledged to achieve 40% installed capacity from renewable energy sources by 2030. This will reduce emissions by 33-35% below 2005 levels. This is as per its national commitment to the 2015 Paris agreement.

The government's National Hydrogen Mission has proposed building giga factories to produce green hydrogen.

However, it's premature to speculate if green hydrogen will be the next fuel to power India's infrastructure. The success of these initiatives depends a lot on the right policies. Our decisions today will have a long-lasting impact on the country's energy story.

Meanwhile, green hydrogen can help India in geopolitics too. India is behind the curve as far as securing key raw materials such as lithium and cobalt is concerned. China has a massive head start there.

So, there is a concern India may end up being dependent on others for lithium in the same way it is for crude oil right now.

But green hydrogen is still at a nascent stage. No country has a definitive edge. It offers a much-better chance for India to nudge ahead.

A concern is the higher energy content of hydrogen poses risks as well. Auto fuels are highly flammable. A vehicle laden with hydrogen will be more vulnerable in case of a major accident.

Hydrogen stations will need to adapt to more stringent safety measures. In other words, the technology for hydrogen fuel cell vehicles needs to be far superior in terms of safety.

All this is a chance for India to innovate and cash in on the latent demand for new age fuels.

Indian companies have missed many technology-led innovations in the past. Green hydrogen presents India with an opportunity to lead the change.

Investors who can spot the inflection point in innovative companies, have a huge runway of profits ahead of them.

The EV story can deliver huge profits to astute investors.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

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