India and Egypt sign $8 billion green hydrogen deal

It could be the biggest news on the green hydrogen story in India. ReNew Power, the company headed by the redoubtable Sumanth Sinha, has just inked a preliminary agreement with the Egyptian government under which ReNew Power will invest a sum of $8 billion (or approximately Rs63,500 crore) to produce green hydrogen in the strategic North African country. This will be the first such large scale green hydrogen project in Egypt and it will also mark one of the biggest international forays in green hydrogen space by an Indian name.

Incidentally, ReNew Power backed by marquee investors which include formidable long term investors like the Goldman Sachs Group and the Abu Dhabi Investment Authority (ADIA), which is one of the sovereign funds of the United Arab Emirates. The joint venture will be looking to produce around 220,000 tonnes of the clean fuel annually in Egypt over the next few years. The current chairman of ReNew Power, Sumanth Sinha, was formerly the chief of Suzlon in India and is one of the industry veterans in the renewable energy space. 

Let us understand green hydrogen in greater detail. Green hydrogen is all about the generation of hydrogen, which is a universal, light and highly reactive fuel. Hydrogen is normally released from water through a chemical process called electrolysis. This method uses an electrical current to separate the hydrogen from the oxygen present in water. However, if this electricity used in the process of electrolysis is obtained from renewable sources, then that hydrogen is known as green hydrogen and has low carbon footprint.

According to the International Energy Agency, green hydrogen can save nearly 830 million tonnes of carbon dioxide emitted annually when hydrogen is produced using fossil fuels like coal based power. By replacing all the grey hydrogen in the world will require nearly 3,000 TWH per year from new renewables. However, green hydrogen can have a high production cost and that raises questions about its viability. However, as we have seen in the past, such costs do come down over time and that should happen in green hydrogen also.

Green hydrogen holds the key to de-carbonizing the planet in a big way by 2050 and reducing the CO2 emissions. It is in this light that the project has been conceived jointly by ReNew Power and the Egyptian government. The project will be built and developed in the Suez Canal Economic Zone, which offers special incentives to such products to help them reduce their cost and make the project more viable and feasible from an economic stand point. The execution will happen over the next few years.

ReNew Power joins the long list of companies and business group that are tapping the green hydrogen opportunity in an aggressive way. In India, the Adani group and Reliance group already have aggressive plans to decarbonizing most of the heavy industries through the use of green hydrogen. The Adani and Ambani groups have committed tens of billions of dollars to green hydrogen and green hydrogen has been one of the major green anti-CO2 commitments that has come to mark the regime of Shri Narendra Modi.

Green Hydrogen is critical for decarbonising industries in the fight against climate change and for ReNew this is the opportunity to become a leader in that business. A presence in Egypt gives them easy access to the lucrative European markets. Commitments are flowing in fast and thick. Reliance has already committed $75 billion to green energy, which includes the green hydrogen projects. Adani Group had announced $70 billion investment in renewables by 2030 and this would also include renewable infrastructure and green hydrogen.