Adani plans $9 bn capex to kickstart green hydrogen biz

Once production gets under way, Adani group will hire specialized ships to export what will be the world’s cheapest green hydrogen and its derivatives to Europe and some Asian countries, three people directly aware of the conglomerate’s plans said on condition of anonymity.

"This is the most decisive entry into green hydrogen being planned by any group in the country," one of the three people said. In the first phase, Adani plans to achieve a capacity of 1 million tonnes per annum (mtpa) of green hydrogen, which is produced by breaking down water in an electrolyzer using renewable power.

Adani Group, through Adani New Industries Ltd., is working on one of the most ambitious green hydrogen projects in India from the Rann of Kutch in Gujarat.

“The group is in the first stage. Around $4 billion will be invested for setting up the manufacturing components and equipment needed to operate the plants, stacks and balance of plant (BoP) in the production cycle. This is the most critical part of the cycle. Once it is ready, it can support the next two phases too with some degree of expansion," the person added.

Adani's potential rivals in green hydrogen include Larsen and Toubro Ltd, Indian Oil Corp. Ltd, Acme group and Oil India Ltd.

Green hydrogen has become the chosen route for many countries' climate roadmaps and net-zero pledges, as they look to eventually stop burning fossil fuels to generate energy or produce other chemicals.

A “stack" is an assembly of electrolyser-based fuel cells, which acts as a unit that produces electricity. It is the core working element in an electrolyzer-based power plant. A single stack consists of hundreds of fuel cells. The company aims to minimize the cost of green hydrogen equipment by making them in-house as much as possible, the three people said.

The $9 billion green hydrogen plan includes a $5 billion investment in manufacturing and operating electrolyzers.

“There will be 4-5 different stages. The plan is to quickly develop ½ mtpa in the next 2-3 years and take it up from there to 1 mtpa. During this phase, the full chain for a 5GW electrolyzer manufacturing capacity planned may need an investment of $4.5-5 billion," the second person said.

An email sent to Adani group remained unanswered till press time.

The first phase will be based on alkaline electrolyzers, composed of electrodes with a porous separator and an alkaline electrolyte. Alkaline electrolysrers typically have a maximum power input of 30 kW. To produce one kg of hydrogen, at least nine kg of water is required with a total of 50-55 kWH of electrical unit.

At a later stage, Adani plans to manufacture electrolyzers based on anion exchange membrane as well, which has higher operational flexibility and better efficiency as compared to alkaline.

Eventually, Adani group aims to manufacture over 17.5GW of electrolysers, according to the three persons.

Adani New Industries, which contributed 9% of the group’s total income in FY24, has established 4GW capacity of solar cell and module manufacturing, 2GW of ingot-wafer manufacturing and 1.5GW capacity of wind manufacturing.

The capex also include building a Balance of Plant (BoP), an auxiliary set-up of machinery and components within a power plant, which is required to keep energy generation stable and safe. This becomes critical since hydrogen is far more explosive than other fuels.

The Adani group, plans to use its own ports on the west coast of India to transport green hydrogen and its derivatives and off-takes to other countries in Europe and Asia by ships that will be specially designed, said the third person. Adani operates the country’s largest private port in Gujarat.

“Transportation of green hydrogen is an elaborate task that needs a separate focus," said the third person, adding the special ships which are being designed may cost $300-400 million each.

He said green hydrogen needs to be liquefied and cooled below -240 degree Celsius to transport it in bulk. “Adani won’t build or operate those ships at this stage," said the third person.

“There are specialized ship-makers for this, which will be used by Adani as well. The number of ships will depend specifically on the amount of orders for green hydrogen or its off-takes or derivatives that Adani receives from offshore markets post production. Currently, very few companies are designing such ships. Such type of cargo is currently not readily available in the market," said the third person.

In September, Adani formed a joint venture with Japan’s Kowa Group to sell its green hydrogen and other derivatives in Japan, Taiwan and Hawaii. “The group is in discussions with several other key players in Japan, Korea, Singapore and Europe for selling products that comes as off-takes from green hydrogen," said the second person.

“The end users of green hydrogen will mostly be government and municipal entities. It can be used for operating city buses, trains, metro and so on," added the third person.

Adani’s green hydrogen business is expected to create 7,500-10,00 new jobs, according to the first two persons. “Alongside, it may create further employment externally, especially in the logistics sector," said the first person.

“At Adani, the port infrastructure for loading and discharging terminals meant for green hydrogen and its off-takes are being made ready. These are like Petronet’s LNG terminals. We have to use cryogenic liquid carrier tanks for transporting green hydrogen. The off-takes can be carried by conventional ships. This space itself will create many new jobs externally," said the third person.

Adani is expecting to do significant business making and selling green hydrogen and its derivatives and off-takes including ammonia and urea. The group wants to attain a 5.6 mtpa target in producing green ammonia and other such derivatives by 2030, which could be further used to produce fertilizers and methanol.

The group’s Mundra port will export the off-take products to Europe, Singapore, Japan and Korea.

The green hydrogen plan being critical to their future plans, according to the two persons, in the next two years the group looks to increase its ingot, wafer, solar modules and cells manufacturing capacities to 10 GW each, which will be crucial in the production of green hydrogen.

The two persons said the group will manufacture electrolyzers based on both alkaline and anion exchange membrane technologies.

As per International Energy Agency, by 2030, the total hydrogen demand globally is estimated to increase by 1.5 times to reach more than 150 mtpa, with nearly 30% of it from new applications.

Currently, the country depends on grey hydrogen, with over 6.5 mtpa in annual consumption. Most of this is used by the country’s fertilizer and refining companies.

By planning to invest $5 billion in electrolyzer manufacturing, Adani group aims to capture this market by 2030, by when the country’s hydrogen demand may nearly double to around 11 mtpa due to rising demand from existing firms and across emerging sectors.

To be sure, to boost its electrolyzer production capacity based on alkaline technology, Adani has forged multiple tie-ups with technology providers such as Australia’s Cavendish Renewable Technology and Italy’s HyDep (Hydrogen for Development of Environmental Projects s.r.l.) Adani has completed its design for prototype for alkaline electrolyzers.

In its latest presentation a fortnight ago, Adani group said it plans to commission the first complete electrolyzer manufacturing facility by 2025.

Besides, the group is developing a supply chain for achieving 90% indigenization of electrolyzers, which will be key to the group’s commitment to keep green hydrogen cost less than $1 per kg as compared to $4-5 per kg globally now.

Emphasizing on his $50 billion green hydrogen investment plan, Gautam Adani, in his address to the shareholders in the latest annual report said the group has identified the components of its six types of capital, within which the financial capital component included a strong balance sheet, funds allocation and capital management approach.

While saying this, Adani mentioned this financial capital as the main driver of the group’s incubation strategy, green hydrogen journey, and efficient project execution.

Adani group has earmarked $100 billion in investments to transition to green energy-related capabilities by 2030. This includes building an integrated green hydrogen ecosystem, encompassing three giga factories to develop 10 GW solar panels, 5 GW wind turbines and 5 GW hydrogen electrolysers and expanding the overall portfolio of Adani renewables to 50 GW.

At present, the total electrolyser manufacturing capacity is estimated to be barely 2GW-4GW per annum globally, while India alone will require over 30GW electrolyser installation capacity and over 100 GW renewable capacity by 2030 for production of its planned 5MTPA of green hydrogen, according to the two persons.

The government has earlier said that by 2030, at least 40% of hydrogen consumption in the country should be met by green hydrogen, while India becomes the global hub for production, usage and export of green hydrogen and its derivatives.

Adani is also competing with other industrial powerhouses to capitalize on this domestic demand. Rival Larsen and Toubro Ltd in August 2022 commissioned a 380kW alkaline electrolyser-based (45kg/day) green hydrogen plant at its engineering complex in Hazira.

State-run GAIL is in the process of implementing a 4.3 tonnes per day green hydrogen plant in Madhya Pradesh, which is expected to be commissioned shortly.

Indian Oil Corp. Ltd is about to implement a 5KTPA and 2KTPA green hydrogen plants at its Mathura and Panipat refineries, respectively.

ACME Group has already set up an integrated pilot project for green hydrogen and green ammonia plant at Bikaner in Rajasthan, which can save about 4,400 tonnes per annum of carbon dioxide emissions.

State-owned crude oil and natural gas production firm Oil India Ltd has commissioned a 99.999% pure green hydrogen pilot plant with an installed capacity of 10kg per day at its Jorhat Pump Station in Assam in April 2022.