News
08/07/25
Q&A: Arup urges joined-up approach to H2 deployment
Mumbai, 8 July (Argus) — UK-headquartered engineering firm Arup has supported
governments around the world with policy, regulatory and infrastructure advisory
services across the renewable hydrogen value chain. The firm has also carried
out front-end engineering design for projects geared towards producing renewable
hydrogen or derivatives. Argus spoke with Arup's India hydrogen lead and
vice-president of the Hydrogen Association of India, Sachin Chugh, about the
evolving global hydrogen market and the critical gaps that must be addressed to
accelerate deployment. Edited highlights follow: How do you assess green
hydrogen's development globally? The hydrogen space is fragmented. I would not
say it is slow. Production capacities are increasing, scale is getting enhanced
and we are seeing larger-sized electrolysers coming on line. The bottlenecks I
see are production costs, technology maturity and uncertainty around hydrogen
trade protocols, such as the standardisation of products. The recent definitions
are not helping a uniform development of the ecosystem globally. Offtake and
technology risks are talked about a lot and investors are already pricing them
in. But I would like to highlight another risk — co-ordination. We must
understand that hydrogen is a secondary molecule. And it has a multi-nodal chain
— renewables, electrolyser, transportation, conversion, shipping terminals and
final use. There are lot of independent elements influencing the value chain. If
we are not linking these individual elements together for optimisation, this
brings a lot of risk. At Arup, we have been trying to integrate this value chain
and minimise these risks. What is your view on India's plan to export 70pc of
the 5mn t/yr of renewable hydrogen that it aims to be producing by 2030? The
70pc figure is coming from the fact that there is a cost differential and
limited appetite from local industry to absorb that additional cost in their
processes. We're talking about sectors like fertilisers, which are highly
subsidised. Even the refining sector is under a lot of pressure because of
geopolitical developments. That said, focusing only on exports can be
catastrophic for India. If we look at the west, the EU is driving demand for
green hydrogen. But when we look at the Middle East, we see more emphasis on
low-carbon hydrogen. Competing with them on cost is going to be challenging.
Putting all our eggs in one basket can be risky. Exports should act as a
catalyst to trigger demand, but the foundation must be domestic demand. We need
to identify markets within India that have the appetite to absorb that cost
differential. It's about addressing the right pain point in sectors such as oil
and gas. The pain point isn't merely the inclusion of hydrogen in the ecosystem,
but how to mitigate CO2 emissions. When you marry these two — growing a green
hydrogen market and using that hydrogen to mitigate emissions, not just through
direct substitution, but by combining CO2 into e-fuels — that's where the
opportunity lies. Even blending just 0.1pc of e-fuels — which will naturally be
costlier than conventional fuels — can still bring considerable volumes into the
ecosystem. Are there challenges for the hydrogen sector that are specific to
Asian countries and that differ from the EU or US? The nature of business is
completely different in Asia. Here, we have a cost-sensitive market where
affordability for the masses is one of the paramount decisions when it comes to
energy. A lot of calibration is required when pushing green hydrogen in Asian
markets. The real challenge is Asia's aspiration to adopt hydrogen without
localisation... I'm not considering China here. If the technology comes from
Europe or China, one of the biggest challenges is the lack of real-environment
performance. These technologies have been developed in regions with very
different grid intermittency, and environmental conditions. We don't know how
these technologies will perform here and that introduces risk. On the policy
side, Asia lacks inter-regional hydrogen diplomacy. In the EU region, you see
common platforms to push the hydrogen economy. In Asia, there is no
representation of hydrogen on platforms like the South Asian Association for
Regional Co-operation or the Association of Southeast Asian Nations. What kind
of innovations could improve project economics? One area is trying to reduce
electrolysers' requirement for 24-7 electricity. The idea here is to develop
direct DC-coupled hydrogen microgrids, so that energy storage systems are not
required in between. If we can develop something like this, it can reduce costs.
Secondly, using artificial intelligence for two key purposes — predictive
maintenance of machines and dynamic load shaping. At Arup, we are doing a lot of
work in this space. This, along with energy optimisation, could impact up to
15-20pc of the lifecycle costs of hydrogen. We are also trying to address the
fact that the engineering world lacks hydrogen-specific references. The current
engineering models used are retrofits from the hydrocarbon sector. We're
assuming many things based on that experience — using those factors and scaling
parameters to design hydrogen plants, which will introduce a lot of engineering
risks in the future. Particularly for the Indian ecosystem, there is a need to
devise the stage-gate approach in these new energy domains. The mechanism that
can move from concept to feasibility in a phased manner is currently missing due
to an assumption that the hydrogen and green molecule industry is mature and can
be scaled up with the traditional approach. What is your view on the Indian
production-linked incentive (PLI) schemes for green hydrogen production and
electrolyser manufacturing? We need to understand the fundamental deficiencies
of the PLI scheme. It is focused on triggering production, but doesn't cover
system-level integration, and it ignores the ecosystem interdependence — things
like land, utilities, renewable energy and offtake. This can lead to stranded
assets. This is a concern for companies, which is why they are reshaping their
strategies and the pace at which they are moving forward. And the scheme doesn't
de-risk demand. Lastly, the scheme favours incumbents over innovators. There's a
need for traditional energy incumbents to align with innovators, start-ups and
incubators to find novel solutions. What else can the government do to support
the sector? More than subsidies, what's really needed are predictive sovereign
guarantees from the government, meaning price floors that are linked to macro
variables in the hydrogen ecosystem — like renewable energy tariffs, ammonia
demand, etc. This will make the system self-correcting. The guarantor won't need
to overpay, and sovereign guarantees would kick in when there's stress in the
market. This would depend on how commodity prices behave in international
markets, for products like methanol and ammonia, where we see a lot of price
volatility. It's very similar to how crop insurance works in agriculture. There,
adjustments are made based on changing weather conditions. In this case, the
weather conditions can be replaced by the ecosystem — such as changing renewable
energy prices or fluctuations in ammonia and methanol prices. Send comments and
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