Vertical integration at scale key to reducing green hydrogen cost


“Reducing the costs of green hydrogen [production] will require a relentless focus on vertical integration at scale. [And] the most significant near-term reductions will come from large-scale, vertically integrated projects encompassing the entire supply chain,” Gautam Adani, chairman of Adani Group, wrote in his blog for the 54th Annual Meeting of the World Economic Forum (WEF).

“This approach is highly capital-intensive, and vertical integration carries its own risks, such as changes in technology. However, it also promises the greatest acceleration towards the $1/kg mark,” wrote Adani in the blog titled “Reducing costs: The key to leveraging green hydrogen on the road to net zero”.

Adani, in his blog, says green hydrogen holds the key to realize the dream of carbon neutrality across the world. The blog reflects on the viability and potential of green hydrogen as a key alternative to fossil fuel as the world seeks to transition towards a clean and renewable future.

Hydrogen has been known as a potential energy storage medium and can produce electricity in fuel cells with water as the only waste product. To fully realise its potential, Adani emphasises on the importance of its broader adoption to decrease the cost of production, various policy support measures, and adopting the approach of vertical integration by encompassing the entire supply chain to make green hydrogen affordable.

“Companies with backward integration are the only ones who will be able to provide the world with affordable green molecules. The cost of production of green hydrogen must decline from the current $3-5 per kilogram (kg) towards $ 1/kg for widespread adoption,” said Adani.

Adani New Industries Ltd (ANIL) from Adani Enterprises Ltd (AEL) is developing end-to-end solutions to produce globally competitive green hydrogen and its associated sustainable derivatives. Its first project of 1 million metric tonnes per annum (MMTPA) green hydrogen is being implemented in phases in Gujarat. The initial phase is expected to start production by FY2027. Depending on the market conditions, ANIL aims to increase capacity to up to 3 MMTPA of green hydrogen in the next ten years, with an investment of about $50 billion.

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