Speakers at the Green Hydrogen Summit this week pointed out that if Nepal starts planning now, it will be possible to have a urea plant operational within 4-6 years. But they said it may take another 10 years for Nepal to be able to export hydrogen fuel, or use hydrogen fuel cells for cars.
Energy Minister Pampha Bhusal and Kulman Ghising of the Nepal Electricity Authority (NEA) also attended the summit, and pledged to make 50MW of subsidised power available for future green hydrogen startups.
Investment Board Nepal (IBN) had earlier done a feasibility for a chemical fertiliser plant in Nepal powered by either natural gas or electricity. It showed that if hydroelectricity is available at Rs3 per unit, urea can be manufactured for $436 per tonne. The current international price for urea has gone up to $750/tonne.
But besides subsidised hydroelectricity, a urea factory would also need carbon capture technology and a tie-up with an existing or future cement plant in Nepal.
“We are willing to provide electricity at a cheap and competitive rate to any future green hydrogen industry, and would encourage such investment to consume Nepal’s surplus electricity,” NEA’s Kulman Ghising told the summit.
A spurt in the number of new hydroelectric plants on Nepal’s rivers has increased installed capacity to 2,200MW, while peak national demand is 1,800MW. Lack of distribution lines, and India’s refusal to buy power from plants that were built by Chinese contractors has meant that Nepal can only export 364MW.
NEA was negotiating with India to sell another 200MW, but without success. As a result, up to 800MW of electricity went waste over Dasain because late monsoon rains meant hydropower plants were running at full capacity while demand during the holidays plummeted to only 700MW.
As a result, Ghising said NEA lost Rs20 million in revenue from ‘spilled’ electricity over the Dasain week. This is the kind of excess electricity that Nepal could use to produce green hydrogen to manufacture urea in the country.
Nepal earned nearly Rs8 billion by selling 1 billion units of electricity to the day-ahead market of the Indian Energy Exchange Ltd from 2 May to 11 October this year, but this amount could have been much more if more of the surplus could have been exported to reduce Nepal’s trade deficit with India. Also, Nepal will need to import some electricity from India this winter when generation capacity goes down and demand rises.
At present industrialised countries are producing hydrogen fuel cells for cars and using hydrogen to produce fertiliser, but using fossil fuel as energy. This is called ‘grey’ or ‘black’ hydrogen because the process is carbon-intensive.
‘Blue’ hydrogen technology is also being used in Japan and elsewhere, in which up to 80% of the carbon produced in the process is captured. But high gas prices have affected this pathway.
“Electrolysis for green hydrogen production is capital intensive, and needs to significantly scale-up and reduce its cost by at least three times over the next decade or two,” Emanuele Taibi of the Abu Dhabi-based International Renewable Energy Agency (IRENA) told the World Economic Forum. “But green hydrogen might witness a similar story to that of solar photovoltaics … with decreasing cost.”
More than technology, cost and who will bear it will be the main factors for Nepal’s green hydrogen future. Speakers at the summit suggested private-public partnership with grants and a strategic national decarbonisation policy.
Jamuna Gurung of MIT Group Foundation, another summit co-sponsor, stressed that green hydrogen technology may not be immediately feasible for Nepal. However, she added: “For climate mitigation and to reduce import dependence, we have to go for green hydrogen production from renewable energy. For this, Nepal will need blended financing, with grants and concessionary loans, and private-public partnership investment.”
Windpower Nepal’s Kushal Gurung agreed that green hydrogen will not be feasible at present through the private sector alone. But, he added: “If the government makes this a priority sector for investment and concessional financing, green hydrogen can be a game changer for Nepal.”