ISA PROGRAMME 09-

SOLAR FOR GREEN

HYDROGEN
Programme
Initiation Document
Authors: Dan Brian Millison, Kushagr Nagaich, Mridula D. Bharadwaj
Technical Reviewers: Dr Ajay Mathur, (DG, ISA), Dr Philippe Malbranche, (ADG, ISA), Mr Jiwan S. Acharya, (ADB)
Cover Image Source: https://www.smart-energy.com/renewable-energy/strategies-to-engage-indi-
an-smes-in-green-hydrogen/
 Table of Contents
Executive Summary........................................................................................................................... 1
Introduction...................................................................................................................................... 3
Hydrogen Market Today............................................................................................................................................. 3
Evolutionary Factors - Technology Cost Trends, Opportunity Costs................................................................ 3
Potential for Transformation from Fossil H2 to Green H2.................................................................................... 5
Current Green H2 Development................................................................................................................................ 5
Green Hydrogen Applications............................................................................................................. 9
Immediate Market Opportunities............................................................................................................................. 9
Market Evolution in the Next 5-10 Years................................................................................................................ 9
Facilitating Green Hydrogen Development, Scale-up and Replication................................................. 11
Business Models....................................................................................................................................................... 11
Creating an Enabling Ecosystem for a Global Green Hydrogen Market......................................................... 11
Mobilising Investors, Including ‘deep pocket’ Corporates.................................................................. 13
Role of ISA...................................................................................................................................... 14
 1

Executive Summary
Hydrogen has long been recognised as a pathway support, readiness assessment and capacity
to deep decarbonisation, particularly in hard-to- building, and establishing a global network of
abate sectors. Rapid scale-up of renewable energy partnerships and alliances to create synergies in the
systems, solar energy, in particular, resulting in solar hydrogen value chain. ISA is being supported
precipitous cost reduction, has made a ‘Green’ by the Asian Development Bank (ADB), under ADB’s
Hydrogen-based economy a real possibility in Knowledge and Support Technical Assistance, in
several geographies. There is a renewed global implementing the programme.
interest towards this versatile energy resource, with
This Programme Initiation Document for ‘Solar
several governments announcing Green Hydrogen
for Green Hydrogen’ analyses the current state of
policies/strategies/targets and global multilateral/
the Hydrogen sector, evolutionary trends in the
private sector organisations increasingly recognising
Green Hydrogen sector, business models for solar
Hydrogen in their near-to-midterm strategies.
hydrogen production, potential near-to-midterm end-
Against this backdrop, the International Solar use applications, and supporting ecosystem needed
Alliance (ISA) launched a thematic programme for the development of the green hydrogen sector.
– ‘Solar for Green Hydrogen’ – at the Fourth The document notes that the sensitivity of the price
Assembly of the ISA. The Programme is dedicated of grey and blue hydrogen to natural gas prices,
to promoting solar-based Green Hydrogen across prone to recurrent supply chain disruptions, makes a
ISA membership through analytics and advocacy sensible business case for converting existing grey

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2 ISA Programme 09 –
Solar for Green Hydrogen

Hydrogen end-uses into green in the near term. The Hydrogen as the next ‘innovation’ in climate mitigation
price of green hydrogen is strongly dependent on the efforts. ISA is at the forefront of identifying and
Levelized Cost of Electricity (LCOE) of solar energy scaling up innovative solar energy based solutions
utilisation factor and the capex of the electrolyzer. across its membership. The document aims to carve
The capex of the electrolyzer is expected to drop out a niche for ISA in the green hydrogen sector as
sharply with scale, owing to its inherently modular well as outline its role amongst its membership and
nature. The document highlights several initiatives peer organisations in assessing and supporting
that already are underway to achieve GW scale in the green hydrogen value chain development. This
near-to-midterm and that there is a need to ramp up document would serve to initiate and facilitate
demand through enabling policies and targets. Low discussions on ISA’s newest programme amongst
LCOE of solar energy across several geographies various stakeholders, including Member Countries
and potential for rapid reduction in electrolyzer and peer organisations. This document would
capex with a scale makes US$ 2/kg production cost serve as a base for stakeholder engagement on
a distinct possibility in the near-to-midterm. developing a blueprint for solar hydrogen production
and utilisation across ISA membership.
There is global momentum in favour of Green
 3

Introduction
The solar radiation received on the earth exceeds The cost of production of grey hydrogen, and of blue
total annual global energy consumption by a factor hydrogen (grey hydrogen plus CCS) is sensitive to
of more than 5000.1 Effectively harnessing and natural gas prices which are set in regional markets
utilising solar energy at the gigawatt (GW) and rather than global markets. Figure 1 illustrates
terawatt (TW) scale requires bulk energy storage, regional gas pricing from early 2020 to April 2022,
time-shifting, and location-shifting of solar output, clearly showing price volatility in the European
requiring GW-scale energy storage and long-term market from late 2020. As of late February – early
time-shifting. Other than pumped storage, which March 2022, the cost of grey hydrogen in Europe
is limited by the availability of environmentally was estimated to be about $10/kg due to natural
and socially acceptable sites, no other viable and gas price increases due to current geopolitical
scalable solutions exist today. Hydrogen is emerging disruptions. Increasingly greater volatility in the
as a scalable and more flexible alternative that is price of natural gas, with a clear upward trend
based on the ability to convert sunlight (photons) to expected in the near-to-midterm, coupled with
electricity (electrons) to hydrogen (protons), which rapidly reducing cost of solar energy with scaling up,
can be stored indefinitely. has the potential to make solar energy-based green
hydrogen commercially viable in some regions.
The hydrogen can be converted to other chemicals
(molecules), which can be transported in bulk, as Further, scaling up blue hydrogen requires significant
is the case for crude oil, natural gas, and refined upfront investments, with a long-term horizon,
petroleum products, making it a versatile energy for creating the necessary infrastructure for CO2
vector for decarbonisation of hard-to-abate sectors. transportation/storage as well as sufficient scale to
Like fossil fuels - which are formed by a combination justify investments in the Carbon Capture, Utilisation
of solar, biomass, geothermal energy, and geologic and Storage (CCUS) technology. Considering this, it
time-hydrogen is an energy carrier. Solar-to- may be expected that green hydrogen would have a
hydrogen mimics the natural processes that create significant advantage over blue hydrogen in regions
fossil fuels, and potential uses of solar hydrogen without readily available CCUS infrastructure.3
mimic the existing global hydrocarbons business.

Evolutionary Factors -
Hydrogen Market Today
The global hydrogen market today is about 100
Technology Cost Trends,
million tons per year2, more than 95% of which is Opportunity Costs
produced from fossil fuels, primarily natural gas
‘Green’ hydrogen production via electrolysis of
using the steam methane reforming (SMR) process.
water is possible with off-the-shelf technology. The
Almost all of this grey hydrogen is produced on-
critical technology is the electrolyzer which splits
site for fertiliser production and petroleum refining
water (H2O) into hydrogen (H2) and oxygen (O2).4
operations.

1
D. Abbott. 2010. Keeping the Energy Debate Clean: How Do We Supply the World’s Energy Needs? Proceedings of the IEEE.
2
A kilogram of hydrogen has the energy equivalent of a gallon (3.94 Liters) of gasoline (petrol); 100 million tons hydrogen per year is equivalent to 100
billion gallons of gasoline per year or 394 billion liters of gasoline per year.
3
Even if CCUS infrastructure is readily available, the development history in the last 15 years does not suggest that any manufacturing economies of
scale are possible with industrial CCUS.
4
It is critical to note that green hydrogen is not “a technology,” it is a system of components which are all available off-the-shelf. The commercial viability
depends on offtake prices, as was the case when solar PV exhibited cost of production higher than $0.15/kWh.
4 ISA Programme 09 –
Solar for Green Hydrogen

Figure 1: Natural gas prices in Europe, Asia, and the United States
January 2020 to February 2022 ($/million BTU)
Source: International Energy Agency

The benchmark or reference cost of production of agnostic scale-up of green hydrogen through
hydrogen from natural gas is around $2/kilogram wind/solar energy would enable a rapid scale up in
(kg), which is based on a natural gas price of $6/ electrolyzer production.
million British Thermal Units (MMBTU)5 and does
Using commercially available hardware, electrolysis
not consider greenhouse gas abatement cost or
of water requires about 50 kWh of electricity
carbon pricing.
to produce 1 kg of hydrogen (or 50 Megawatt-
The cost of green hydrogen depends primarily hours (MWh) per ton of hydrogen). Replacing the
on three factors: Levelised cost of Electricity (as current 100 million tons/year of fossil hydrogen
a corollary on the efficiency of the electrolyzer), with hydrogen via electrolysis would require 5000
Capital Expenditure, and Utilisation factor (refer to Terawatt-hours/year (TWh/y) of electricity which
Figure 2 below). Achieving $2/kg cost of hydrogen is almost 22% of global electricity production and
production from electrolysis requires an electricity just under 3% of total global energy production.6
input cost of much less than $0.02/kilowatt-hour More than 3 TW of solar photovoltaic (PV) capacity
(kWh) at existing capex levels. Electrolyzers are would be required to produce 100 million tons of
inherently modular, and as factory mass production hydrogen per year, with total investment (including
ramps up, unit costs will decline, resulting in a lower electrolyzers and balance of plant) at a maximum
cost of production of hydrogen. Thus, technology cost of $5 trillion7 at current prices, which is just over

5
The $6/MMBTU benchmark is also the landed cost of liquified natural gas in Asia, assuming the gas originates in the US at $3/MMBTU.
6
Total global energy production includes coal, oil, and natural gas (CONG), nuclear energy, and renewable energy.
7
Key cost assumptions: $3 Trillion for 3 TW solar PV including marine floating solar, $1 Trillion for 2 TW of electrolyzers, and $1 Trillion for project
development and balance of plant costs including land acquisition, desalination, temporary hydrogen storage, etc.
 5

5% of global GDP in 2021. The total land requirement opportunity cost in terms of investment needed,
(assuming 100% ground mounted capacity which would otherwise go to renewable energy for
deployment) would be about 5 million hectares (1 direct end-uses. A second critical constraint is the
MW solar requires about 1.6 hectares). Thus, the availability of sites for GW-scale renewable energy
deployment of green hydrogen presents a significant production (see further discussion below).

Figure 2: Relationship of Costs and Electrolyzer Load Factor on H2 Cost

Potential for remains a challenge due to lack of demand - and

more specifically, the willingness to pay - for green
Transformation from hydrogen.

Fossil H2 to Green H2
Conversion of existing end-uses, primarily in the
Current Green H2
petro-chemical sector, present an anchor demand, Development
particularly in geographies with higher natural gas
As noted above, green hydrogen is commercially
prices, for deployment of green hydrogen through
viable depending on the offtake price, which is a
cluster-based production in industrial corridors/ports
moving target. Many projects have been announced
& logistics clusters and/or blending with existing
but commercial operations today are rare. There
natural gas supply chain thereby, leveraging the
are a few boutique projects at kW scale which
existing transportation/distribution infrastructure.
have proven that the various renewable energy,
In addition, sectors such as residential heating
electrolyzer, and fuel cell technologies can be
applications through blending with natural gas and
assembled into systems which do work. At the MW
existing direct reduced iron production present
scale, HDF Energy has multiple projects in operation
additional anchor demand for green hydrogen.
and at different stages of development, including a
Such conversion would be instrumental in market
proposed utility-scale project in Indonesia8 which
creation as well as providing a long-term signal for
combines solar PV, batteries, electrolyzers for H2
investments in the green hydrogen sector.
production, and fuel cells to convert H2 back to
The solar resources are available, particularly in the electricity. This system provides reliable electricity
tropical belt, but monetising that energy in the form 24 hours per day and is competitive with diesel-fired
of tradable hydrogen, oxygen, and other molecules electricity generation.

8
https://www.hdf-energy.com/en/contact/
6 ISA Programme 09 –
Solar for Green Hydrogen

Most of the GW scale projects are being developed in hydrogen and green ammonia. The Neom Project
3 geographic areas: (i) Australia, (ii) Western Europe in Saudi Arabia is intended for green ammonia
and the North Sea, and (iii) the Middle East. Projects export.The Europe / North Sea projects will produce
in Australia and the Middle East will be powered by hydrogen for use in existing markets as a chemical
onshore solar and wind, as summarised in Table 1. feedstock and for blending with natural gas in
Projects in Western Europe and the North Sea will be existing pipeline networks. Of these 3 geographic
powered primarily by offshore wind,9 while projects areas, the Europe / North Sea projects appear to
in Southern Europe will use solar. The projects in be more advanced with respect to investment
Australia are intended primarily for the export of commitments and enabling regulatory frameworks.

Table 1: Gigawatt Scale Solar and Solar-Wind to Hydrogen Projects Under Development
Project / Developers Usage Capacity Development Stage
Investment
Asian Renewable InterContinental Green hydrogen and 14 GW of electrolyzers Environmental
Energy Hub Energy, CWP green ammonia for powered by 16 GW of permitting was in
Energy Asia, export to Asia onshore wind and 10 GW suspense as of mid-
Pilbara, Western
Vestas, of solar 2021 due to concerns
Australia
Macquarie over impacts on
1.75 million tons per year
$36 Billion nearby wetlands
of hydrogen to produce
https://asianrehub. 9.9 million tons per year Final investment
com/ of green ammonia decision expected in
2025, construction
to start in 2026,
completion in 2027-28
Murchison Hydrogen Demonstration phase to 5 GW electrolyzers Completion by 2028
Renewable Renewables provide H2 for transport
Hydrogen Project Australia and fuels
Copenhagen
Kalbarri,Western Expansion stage to
Infrastructure
Australia produce H2 to blend
Partners
into local natural-gas
$10-12 Billion
pipelines
Final expansion to
produce H2 for export
to Asia, with a focus on
Japan and South Korea
Base One Enegix Energy, Green hydrogen for 3.4 GW electrolyzers Project announced in
in conjunction ‘major international powered by combined March 2021
Pecém, Ceará
with Italian wind markets via ocean ‘baseload wind and solar’
state, northeast Enegix says it has
turbine maker freight’
Brazil 600,000 tons H2 per year “contracted” 3.4GW
Enerwind, EPC
of solar and wind
$5.4 billion provider Black
capacity through
& Veatch, and
its partnership with
the Ceará state
Enerwind
government
Completion by 2025
Beijing Jingneng Chinese utility Not known 5 GW electrolyzers Under construction
Inner Mongolia Beijing Jingneng powered by onshore
Planned completion
solar and wind
Eqianqi, Inner 2021
Mongolia, China 400,000-500,000 tons H2
per year
$3 Billion

9
The green hydrogen development in the North Sea region is due primarily to the maturity of the offshore wind industry and the willingness of
commercial consumers to buy green hydrogen (albeit with some government incentives).
 7

Project / Developers Usage Capacity Development Stage

Investment
Helios Green Fuels Air Products, Green ammonia, for 4 GW electrolyzers Initial production in
Project ACWA Power, export and converted powered by onshore 2025
Neom back into H2 for use as a wind and solar
Neom, Saudi Arabia
transport fuel.
About 240,000 tons per
$5 billion
year H2 to create 1.2
million tons per year of
green ammonia
Pacific Solar Austrom Export to Japan and 3.6 GW electrolyzers Announced in June
Hydrogen Hydrogen, a South Korea powered by solar 2020
start-up
Location: Callide, > 200,000 tons H2 per
Queensland, year
Australia
Investment not
known

HyEx Engie and Enaex Green ammonia, half 1.6 GW electrolyzers Announced in October
of which will be used 2020
Location: Solar conversion to
at Enaex’s ammonium
Antofagasta, Chile 124,000 tons hydrogen 26 MW pilot by 2024
nitrate plant; the
per year which will be powered by existing
remainder will be
converted to 700,000 coal-fired power plant.
targeted for fuel, green
tons per year of green
fertiliser and export Scale up with 2 GW
ammonia
markets. solar

Geraldton BP / BP Production of green 1.5 GW electrolyzers Feasibility study under

Lightsource ammonia for domestic way as of December
Western Australia Onshore wind and solar
and export markets 2020
for 1 million tons/year
Investment
green ammonia
unknown
HyDeal Espana Arcelor Fertiberia Production of green 9.5 GW PV + 7.4 GW Designing and
Enagas steel and fertilizers electrolyzers engineering phase
ongoing, production
in 2025

These GW scale projects are driven in part by and limitations. Australia and the Middle East have
government commitments to international abundant available land for onshore solar and wind.
climate change objectives as well as commercial However, the North Sea developments are not large
interests in the solar and wind industries and fossil enough to make a difference in the global equation
fuel companies which see green hydrogen as a because there is not sufficient area available due to
foundation of their future businesses (in effect, competing uses of the maritime space. There are
hydrogen will replace oil and gas). These GW scale opportunities for ISA Member Countries with large
projects are effectively ‘kick-starting’ the global exclusive economic zones (EEZs) to host GW-scale
green hydrogen industry by creating demand for solar energy-to-hydrogen development. Figure 3
electrolyzers. As global electrolyzer manufacturing shows that using only 1% of the EEZs in the Asia-
production increases, the cost of production will Pacific region for marine solar to hydrogen would
decline, and the levelized cost of green hydrogen be sufficient to produce about 500 million tons/year
production will decline, which will spur further of green hydrogen worth $1 trillion/year at a target
development and the creation of a virtuous cycle. price of $2/kg. Of course, many countries in Africa
and Latin America can also host a large share of
These 3 centres of development highlight the issue of
ground-mounted solar plants close to some energy-
land availability and long-term growth opportunities
intensive industrial users.
8 ISA Programme 09 –
Solar for Green Hydrogen

Figure 3: Marine Solar to Hydrogen Potential in Developing Asia and the Pacific

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 9

Green Hydrogen
Applications
Immediate Market attractive RE resources for green hydrogen on
account of rapidly falling capex due to scale and,
Opportunities consequent lower cost of electricity. Further, wider
geographical availability of solar energy resource, as
There are 5 market segments where green hydrogen compared to other resources such as geothermal
can be used immediately: (with high CUF), enables scaling up.
(i) Displacement of existing grey hydrogen, as
There may be immediate opportunities at older solar
discussed above.
power plants which have been fully amortized and
(ii) Feedstock for other higher-value products such depreciated, where the effective cost of electricity
as ammonia, methanol, and other chemical production is close to zero (e.g., at some of the early
manufacturing. solar parks in India), and CUF does not matter. This
(iii)
Decarbonation of some current industrial is a relatively small market niche (maybe a few GW
processes such as steel manufacturing (direct at present), but some of these plants may be good
reduction with H2), refineries, and the cement candidates for rehabilitation and upgrade including
industry. green H2 production, which could be done at a
(iv)
Blending in existing natural gas systems, much lower capital cost than a new greenfield solar-
including pipeline networks and gas-fired power hydrogen project. A larger potential market exists
plants; blending at 5-10% by volume is possible for floating solar in existing hydropower reservoirs,
with no or minimal modification of existing gas where the solar output might be primarily for green
infrastructure. hydrogen production, and the hydropower output
(v) Long-term energy time-shifting in grid-connected supplies the grid as per the initial project design.
renewable energy systems, analogous to At older hydropower plants which have been fully
pumped hydro storage. amortized and depreciated, combined hydropower
plus solar output could be dedicated to hydrogen
(vi) Back-to-Base transportation (buses/taxi fleets),
production with better electrolyzer utilisation factors.
heavy-duty trucking/commercial transportation.
The financial viability of green hydrogen depends
on several variables, including electricity input cost,
Market Evolution in the
electrolyzer cost, capacity utilisation factors (CUF) Next 5-10 Years
of renewable energy and electrolyzers, cost of
Hydrogen production from solar and other
financing, etc. Different electrolyzer technologies
renewable energy will be constrained by willingness-
have different sensitivities to the variability of
to-pay until sufficient scale drives the cost down
electricity inputs. Although solar CUF is a rate-
to the $2/kg tipping point (or if carbon finance can
limiting factor for solar-based hydrogen production
be mobilised and/or carbon taxes implemented).10
pathway, solar energy remains one of the most
Governments can facilitate market evolution through

10
As of Q1 2022, there is ongoing disruption and uncertainty in natural gas markets, specifically in Europe as well as in the global LNG trade. As of April
2022, green hydrogen appears to be cost-competitive with grey hydrogen in Europe due to natural gas price spikes in the European market. There is no
global market price for natural gas (as is the case with crude oil prices), however, LNG prices have also increased in response to market disruption in
Europe. It is not possible to predict whether a step-change in gas prices will result from an extended boycott of Russian gas.
10 ISA Programme 09 –
Solar for Green Hydrogen

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regulatory requirements such as advanced market tradeable commodity may be expected. However,
commitments (AMCs) wherein specific industries, such phase-wise scale-up is strongly contingent
e.g., steel and fertilizer production, would be required upon the availability of local RE resources as well
to buy green hydrogen at market prices. Regulated as demand/supply dynamics. Geographies such
industries can be expected to demand price support as Europe and Asia-Pacific (India, Japan, and
for an interim period until price parity is achieved China) are expected to be major consumers of
($2/kg). Experience from other renewable energy green hydrogen, with some of the countries in the
programmes such as solar and biofuels can inform latter Region expected to be major producers as
policymaking and roadmaps for hydrogen markets. well (India, China, Australia, Africa).Consequently,
The market scale-up for hydrogen, including green international trade in green hydrogen and its
hydrogen, is expected to be achieved in a phase- derivatives (Ammonia, Methanol) could be expected
wise manner with an initial focus on large-scale to keep pace with domestic production for self-
capacity addition to feed large anchor consumers, consumption across specific trade routes. Major
leveraging local grids as well as ensuring long-term international supply chains are expected to emerge,
offtake arrangements to provide strong/stable price in the near-to-midterm, from Australia - Japan/
signals. Following scale-induced fall in electrolyzer South Korea/China (eastern seaboard), Southeast
capex, as well as the creation of robust supply Asia-East Asia/Europe, Middle East and North Africa
chains, decentralised production and distribution (MENA)-East Asia/Europe, Africa-Europe, and Chile-
are expected to scale up. Finally, scaling up inter- North America/Europe/East Asia.
continental trade of hydrogen as a well-established

11
For example, the US renewable fuel standards of 2005 and 2007 mandated the blending of bio-ethanol into gasoline. A tax incentive was provided for
wholesale fuel suppliers to blend the bioethanol into gasoline for sale in retail markets. This incentive was not a direct financial subsidy, but rather a
tax ‘expenditure’ which was about $5 billion per year in foregone tax revenue to the federal government. The incentive was linked to reaching a national
blending target of 10% by volume (E10), after which it was phased out.
 11

Facilitating Green
Hydrogen Development,
Scale-up and Replication

Business Models movements and (ii) alignment of buyers, project

developers, and investors on predetermined price
India’s solar parks programme has been very formulae to enable financing.
successful in mobilising GW-scale investment in a
matter of a few years. The foundation of the solar
parks programme is that government takes the
Creating an Enabling
lead in the project development process to take out Ecosystem for a Global
risks to commercial/private investors. For a given
location, the solar resource can be defined with high Green Hydrogen Market
certainty in advance, so the energy resource risk A global market for green hydrogen ultimately
is very low. There are several other development
depends on the removal of regulatory barriers vis-
risks which need to be addressed; two of the most
à-vis blending (lack of harmonisation of standards
critical risks for green hydrogen are land acquisition
across end-use applications/geographies) for
and water supply. The solar parks programme has
market creation; harmonisation of global standards
been very successful at crowding in commercial/
(carbon accounting, origin, classification of hydrogen
private investment in India and other countries, and
as an energy carrier, end-use equipment standards);
the experience can be adapted to solar hydrogen
enabling policy frameworks to incentivise
development. When properly structured, public-
investment; and internationally agreed monitoring
private partnerships can result in better outcomes
and reporting framework for GHG accounting. A
than pure public or pure private endeavours.
robust carbon pricing mechanism could provide a
Traditional LNG export projects are anchored by stronger foundation for global market development
long-term offtake agreements with a price formula but does not appear to be forthcoming.
linked to crude oil prices. This is significantly different
from a traditional solar power purchase agreement Foremost, GW and TW scale deployment of
which has a fixed price per kilowatt-hour. Like LNG hydrogen across various end-uses and geographies,
export projects, solar-H2 projects can be anchored requires a concerted and collaborative global
with offtake agreements with a price formula, e.g., effort, considering disparate production cost-
the initial $/ton H2 price benchmarked to a green H2 competitiveness and demand as well as electrolyzer
cost of $3/kg to $5/kg with a target below $2/kg over manufacturing capacity. Further, clear national/
time. Based on the India solar parks programme’s regional level roadmaps are needed to provide clear
success in driving down system costs and off-take demand certainty for potential investors in the sector.
prices, the cost of hydrogen production can be Financial support mechanisms such as guarantees,
expected to decline as more and more production concessional finance, and grants may be needed to
capacity is built. The main challenges today are overcome the first-mover disadvantage for some
(i) lack of sufficient data to forecast future price projects where a financial viability gap is present.
12 ISA Programme 09 –
Solar for Green Hydrogen

Cost parity with grey hydrogen depends primarily growth may be created through instruments such as
on natural gas prices, which are set in regional Contracts for Difference with a strike price pegged
markets rather than global markets, so financial against a ‘benchmark’ grey H2 cost and Carbon
viability for most of end-use applications is sensitive Contract for Difference, respectively. Other financial
to gas pricing at specific project sites. In areas instruments may be utilised to ‘level the playing field’
where hydrogen is not being used at scale, both for investment projects. Applying a cost of carbon
supply-side and demand-side interventions are of $50/ton of CO2 adds $80/1000 m3 of natural
needed to effect cost parity. Interventions such as gas, which implies cost parity at $2.75/kg of green
strong and progressive carbon taxation framework hydrogen. On an energy equivalent basis, 1 kg of
- preventing carbon leakage - coupled with sector- green hydrogen displaces about 3.5 m3 of natural
specific mandates/quotas/public procurement gas. If a carbon credit transaction could be made at
for hydrogen use are needed for market creation. $100/ton CO2, the carbon revenue would add about
Supply and demand-side ‘push-pull’ for market $0.56/kg to the price of green hydrogen.

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 13

Mobilising Investors,
including ‘deep pocket’
Corporates
Early experience in the Europe / North Sea area customers are in proximity to the production centres
indicates that GW-scale development is possible (minimising the need for long-range transport of
without piloting at kW and MW scales if the hydrogen). The North Sea hydrogen development
following conditions are present: (i) a transparent
also suggests that the traditional petroleum industry
and predictable regulatory framework is in place to
sees a pathway to corporate transformation and
enable programme development and investments;
(ii) governments facilitate GW-scale site availability reinvention in the hydrogen business but only if GW-
based on prior experience in the offshore petroleum scale development opportunities are available for
and offshore wind industries; and (iii) hydrogen investment.12

12
The traditional upstream petroleum exploration and production industry is a high risk / high reward business based on molecules, while the traditional
renewable energy industry is a moderate risk/low reward business based on electrons. Large corporates such as BP, Shell, et al, simply have not seen
the electrons business as a good bet for preserving and expanding shareholder value. The green hydrogen business is based on molecules, with
reasonable risks and reasonable rewards, and scalability that will preserve and expand shareholder value. Green hydrogen should eliminate the price
volatility observed in crude oil and natural gas markets, given that solar energy inputs have predictable and stable costs.
14 ISA Programme 09 –
Solar for Green Hydrogen

Role of ISA
ISA has identified four key pillars of support for national roadmaps for transitioning towards a
its membership: Analytics & Advocacy support, green hydrogen economy;
Capacity Building & Ecosystem Readiness support,
5. Undertaking capacity building across ISA
Programmatic Support, and Risk Mitigation membership, in accordance with assessed
Instruments to support investment mobilisation. readiness level, and providing policy/regulatory
ISA’s support for its membership under the ‘Solar advisory support; and
for Green Hydrogen’ programme, launched at the
Fourth Assembly of the ISA, is envisaged to intersect 6. Identify opportunities for and facilitate the setting
each of the above four pillars, as per the readiness up of pro-active strategies and market creation
(demonstration projects, enabling policies/
level of a Member Country.
regulations/growth) across ISA membership as
ISA’s role will be to assess and facilitate the solar per respective investment readiness.
H2 readiness level of the ISA Member Countries,
ISA’s programmes on Utility-scale solar PV
which includes framing supporting policies and
(including floating solar PV), Scaling Energy storage
regulations and creating an investment environment
and E-mobility applications have substantial
so that the members are ready to identify investment
synergies with the ‘Solar for Green Hydrogen.’ISA
opportunities in commercially viable solar-hydrogen
aims to leverage these synergies through joint
systems. The Programme would focus on:
implementation of these programmes wherever
1. Consolidating global analytics in the sector, feasible.
including best practices/case studies as
ISA will support its membership in enhancing
knowledge exchange and capacity-building
investment readiness in the solar hydrogen sector
toolkits;
by identifying, assessing, and mitigating investment
2. Facilitate country-level analytics to track current barriers through the identification of country/region-
status/potential for hydrogen production, specific risk mitigation instruments as well as
transport/trade, and end-uses across its facilitating mobilisation of concessional finance in
membership, including continual tracking of the Member Countries at high readiness level.
economics of Solar PV based green hydrogen Key planned activities of the Programme are:
vis-à-vis blue/grey hydrogen;
1. Knowledge products, working groups and reports
3. Thread together a ‘Global Alliance’ of stakeholders to accelerate capacity building among Member
encompassing, inter alia, frontrunner member Countries: a series of stakeholder workshops
& non-member countries, peer organisations, and seminars are being scheduled, including
private sector stakeholders including OEM participation at the Global Hydrogen Convention
manufacturers, and other stakeholders to in Barcelona, Spain from 17-18 May 2022, and
develop common harmonised standards, the Asia Clean Energy Forum 2022 in June 2022
identify and assess policy & regulatory gaps in hosted by the Asian Development Bank.
the green hydrogen sector, and further political
2. Capacity building: ISA will develop solar hydrogen
and business momentum in favour of green
case studies and guidelines and host them on
hydrogen as a mid-to-long term energy vector for
the ISA solar hydrogen webpage. This will be
net-zero emissions;
a dynamic online hosted knowledge sharing
4.
Support national priorities/ambitions of exercise with information about technologies
its Member Countries through readiness related to hydrogen production, utilisation sectors/
assessment and facilitate the development of application scenarios, standards and guidelines,
 15

case studies, business models, partners / projects, and preliminary identification of projects
investors and collaboration opportunities.The which may be candidates for financing by ADB,
objective is to support ISA Member Countries World Bank, and other partner MDBs of the ISA
in keeping track of this developing sector and (see Appendix 1).
identify go-to partner companies/countries and 6. The Programme will prioritise identification of
investors. preliminary identification, development, and
3. Training workshops: Conduct training /capacity- potential financing by ISA partners such as
building workshops for ISA Member Countries; the Asian Development Bank, the World Bank
selected experts will be invited to give talks on Group,13 and others such as the African Union.
various aspects related to the H2 sector. ADB’s focus is on the identification of investment-
ready projects in the South Asian region under
4. ISA will develop a ‘H2 Readiness Framework’ to ADB’s regional technical assistance to ISA (see
assess the GH2-readiness status of Member Appendix 1).
Countries through a wide range of screening
Based on the above activities, an ISA GH2 Blueprint
parameters. This will help provide support in
Document will be developed for the Member
identifying bottlenecks, assessing pilot/prototype
Countries for the ‘Production and Utilisation of
projects and infrastructure building opportunities,
Solar Hydrogen’. This will be presented in the ISA
investments/policy support required for building
Assembly scheduled for October 2022 and COP
green hydrogen capacity and R&D/innovation etc.
27 in November 2022. Subsequently, ISA will
5. Mapping of existing hydrogen production and initiate Member Country-specific dialogue with
utilisation in ISA Member Countries, a compilation the countries shortlisted through the Readiness
of information on announced green hydrogen Framework screening.

13
The World Bank is providing support to ISA on the global risk mitigation mechanism.
16 ISA Programme 09 –
Solar for Green Hydrogen

APPENDIX 1: Solar to
Hydrogen Possibilities
for ADB Support
The Asian Development Bank (ADB) is a multilateral equity investments, guarantees, and technical
development bank (MDB) established in 1966 (www. assistance, of which $16.1 billion was for COVID-19
adb.org). ADB is primarily a lending organisation, the response. Of this, non-sovereign investments totaled
bulk of which is directed toward transport, energy, $4.5 billion, including $2.9 billion for COVID-19
and urban development in the form of project loans response. Investment operations in 2020 included a
with sovereign repayment guarantees. Figure A1-1 record high project co-financing of $16.4 billion, of
shows ADB’s overall organization. In 2020, ADB which $10.8 billion was pandemic related.
committed a total of $31.6 billion in loans, grants,

Figure A1-1: ADB Operations Overview

ADB has provided technical and financial assistance have supported large-scale solar development
for solar energy development in Asia and the Pacific across Asia and the Pacific. Blended finance has
for well over a decade, although financing for been provided selectively for ‘pioneer’ projects. In
utility-scale solar power projects commenced only selected lower-income countries, ADB is provided
in 2010. ADB has provided a variety of financing grant financing, e.g., for floating solar development
modalities and instruments including loans, grants, in Kiribati and Tuvalu.
equity, and guarantees. The bulk of ADB investment ADB is supporting ISA via a regional technical
operations are in the form of project loans, which assistance (TA) which covers the 6 developing
 17

Member Countries (DMCs) in South Asia: Bangladesh, In the 6 South Asia DMCs, India is by far the largest
Bhutan, India, the Maldives, Nepal, and Sri Lanka. user of hydrogen today (6.6 million tons/year)
ADB has provided TA for solar energy assessments and represents the biggest initial market for green
in all 6 of these countries and has provided financial hydrogen development. India is arguably one of the
support for large-scale programmes and projects in best countries in the world, if not the best, for solar
India, the Maldives, Nepal, and Sri Lanka. Financial hydrogen given the track record of MW and GW scale
intermediation (FI) loans are being provided for
solar development with almost all investment from
rooftop solar programmes in India and Sri Lanka. In
the private sector. India’s National Solar Mission,
Nepal, a special viability gap financing instrument
specifically the solar parks programme, provides a
was developed to crowd in private sector investment
template for rapid deployment and scale-up of solar
in on-grid utility-scale solar; this is a unique case
hydrogen production. The ongoing National Rooftop
using grant funds to jump-start the private sector
solar business. Solar Programme in India (and Sri Lanka) supported
by FI loan from ADB is a replicable model for a single
In the Maldives, ADB has supported a national
investment operation to support multiple individual
programme to integrate solar energy into existing diesel
projects. The ADB FI modality has built-in leverage
mini-grids on the outer islands with blended finance.
in that ADB provides a ‘wholesale’ loan to a financial
The next phase of solar expansion in the Maldives is
intermediary (e.g., a state-owned bank or non-bank
to tender floating solar sites to independent power
financial institution) which then makes ‘retail’ loans
producers (IPPs). FENAKA, the state-owned utility
serving the outer islands, will manage the tendering to specific projects for the debt financing portion;
process and will sign power purchase agreements the retail borrowers are expected to provide equity.
with IPPs. In parallel, FENAKA will procure, own, and Other co-financing can be channelled through the
operate energy storage, which could be batteries or financial intermediary and/or secured by individual
a combination of batteries plus hydrogen to enable retail borrowers. This investment scenario is
‘24/7/365’ renewable electricity services. illustrated in Figure A1-2.

Figure A1-2: ADB Financial Intermediation for Gigawatt Scale Investments

An initial summary of prospective investments map out the prospective market development
opportunities for ADB support is presented in the and specific projects which are amenable to ADB
table below. ADB will work closely with ISA to further investment support.
18 ISA Programme 09 –
Solar for Green Hydrogen

Table A1-1: Prospective Investment Opportunities in South Asia for ADB Support
Country Use Cases / Possible Projects / Development Issues
Grey H2 Replacement Green H2, Ammonia, etc. Blending with RE Time-shifting /
Natural Gas “Power to X” /Other
Bangladesh Current H2 use in Production opportunities Green hydrogen RE penetration (including
refining / chemical are dependent on could be blended in solar) is still too low
manufacturing to be creating a surplus of existing gas pipeline to require utility-scale
identified. renewable energy which network and gas investment in energy
does not yet exist. fired power plants. storage for long-term
time-shifting.
Bhutan There is no existing Theoretically possible to Theoretically Need for time-shifting
refining / chemical use surplus RE (hydro + possible to use is not obvious given
manufacturing in Bhutan solar) for green H2 based surplus RE (hydro existing generation base
using brown or grey chemicals for domestic + solar) and inject and grid architecture.
hydrogen. use and possible export. into gas pipelines in Potential for modular
northeastern India. solar-H2 for heavy
transport applications is
to be explored.
India India currently produces Alkaline electrolyzer Need to map the Upgrade and retrofit
and uses about 6.6 manufacturing: 2 plants prospective sites of existing solar plants
million tons/year of each with 1 GW per year where surplus to produce green
grey hydrogen, to be capacity solar generation H2, targeting early-
replaced with green is adjacent to gas stage solar parks with
green hydrogen: Greenko,
hydrogen by 2030-35 pipeline nodes or generation assets more
John Cockerill to set up 2
gas-fired power than 10 years old.
ADB proposed TA for electrolyser giga factories
plants.
National Hydrogen for green hydrogen -
Energy Mission The Economic Times
Potential for modular
(indiatimes.com)
https://www.adb.org/ solar-H2 for heavy
projects/55173-001/main Note: this appears to be transport applications is
close to “shovel ready”; to be explored.
Feasibility study on
Greenko is backed by
Turquoise Hydrogen
companies which have
in the petrochemical
partnered with ADB on
sector study in North
other activities.
East of India (still at initial
discussions).
Country Use Cases / Possible Projects / Development Issues
Grey H2 Replacement Green H2, Ammonia, etc. Blending with RE Time-shifting /
Natural Gas “Power to X” /Other
Maldives There is no existing Limited industrial No natural gas ADB POISED programme:
refining / chemical activity at present. infrastructure in pending procurement for
manufacturing in the Future production of place and none is bulk energy storage from
Maldives using brown or H2 is dependent on proposed. marine floating solar
grey hydrogen. next-generation marine (initial focus on BESS, but
floating solar to create H2 may be viable).
sufficient surplus energy
HDF Energy
for green H2 production.
solar+batteries+H2 for
private sector resorts.
Possible non-sovereign
financing.
Nepal Current H2 use in H2 production from No natural gas Potential collaboration
refining / chemical seasonal hydropower infrastructure in with AEPC for
manufacturing to be surplus. place and none solar+batteries+H2 for
identified. proposed. 24/7 electricity in remote
mini-grids.
Sri Lanka Current H2 use in H2 to ammonia for Theoretically
refining / chemical domestic fertilizer market. possible for
manufacturing to be displacement of
identified. or complement to
imported LNG.

https://www.constructionweekonline.in/cloud/2022/01/31/3-green-hydrogen.png
The International Solar Alliance (ISA)
is an action-oriented, member-driven,
collaborative platform for increased
deployment of solar energy technologies
as a means for bringing energy access,
ensuring energy security, and driving
energy transition in its member countries.
The ISA was conceived as a joint effort
by India and France to mobilise efforts
against climate change through the
deployment of solar energy solutions. It was
conceptualised on the sidelines of the 21st
Conference of Parties (COP21) to the United
Nations Framework Convention on Climate
Change (UNFCCC) held in Paris in 2015.
The ISA strives to develop and deploy
cost-effective and transformational energy
solutions powered by the sun to help
member countries develop low-carbon
growth trajectories, with particular focus on
delivering impact in countries categorized
as Least Developed Countries (LDCs) and
the Small Island Developing States (SIDS).
Being a global platform, ISA’s partnerships
with multilateral development banks (MDBs),
development financial institutions (DFIs),
private and public sector organisations, civil
society, and other international institutions
is key to delivering the change it seeks to
see in the world going ahead.

CONTACT US
International Solar Alliance Secretariat
Surya Bhawan, National Institute of Solar Energy
Campus Gwal Pahari,
Faridabad-Gurugram Road, Gurugram,
Haryana – 122003, India
Email: [email protected]