MHI Study Results Indicate Potential Cost Reductions in the Decarbonization Value Chain Using Green Hydrogen and Ammonia Produced in India

Economic Viability Evaluated Under METI's "FY2023 Supplementary Funds for The Global South Future-Oriented Co-Creation Program"

• An analysis was conducted, in collaboration with Hygenco-MHI's partner in India for this study-to assess the economic viability of utilizing green hydrogen and green ammonia produced in India for export to countries such as Singapore
  
• The analysis provided results on optimal logistics and operations at each facility from the production stage to the transportation stage, supporting decarbonization strategies by governments and operators
  

Mitsubishi Heavy Industries, Ltd. (MHI) has demonstrated, through analysis of the economic viability of utilizing Indian-produced green hydrogen and green ammonia in countries such as Singapore, that with optimization throughout the value chain, dramatic cost reductions can be expected. The study, titled the "Master Plan for the Optimal Facilities and Logistics Required to Export Green Hydrogen and Green Ammonia from India¹," was conducted under the FY2023 Global South Future-Oriented Co-Creation supplementary program commissioned by the Ministry of Economy, Trade and Industry (METI). A report² was published by METI.

As initiatives for decarbonization take place, there are growing expectations for green hydrogen and ammonia produced using renewable energy, but reducing the costs of full-scale implementation has been identified as an issue.

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In this study, MHI analyzed the economic viability of the value chain in a scenario where green ammonia is produced in India, a country with highly cost-competitive renewable energy, and utilized for electricity and bunkering (supply of fuel to ships) in Singapore. The analysis was conducted based on production data and local information provided by cooperating partners such as Hygenco, an Indian developer of green ammonia. The results of the study indicated that if the overall value chain is optimized, dramatic cost reductions can be expected. Hygenco is also developing a green ammonia project in Odisha, India's east coast, with an annual production capacity of 1.1 million tons.

Based on the analysis results, MHI and operators in India and Singapore discussed issues that need to be resolved to realize the business opportunities for the production and utilization of this green energy. MHI also engaged with the Indian and Singaporean governments, proposing measures for production, introduction, and demand creation for green ammonia, explaining the need for a master plan to establish a value chain, and working on the formulation of the plan. MHI intends to continue discussions with the governments and business stakeholders in India and Singapore.

MHI Group will continue to contribute to the realization of a carbon-neutral society by supporting the promotion of decarbonization strategies and the implementation of related projects. Going forward, MHI will work closely with government agencies and businesses in Japan and overseas, focusing on areas such as the value chain for utilizing decarbonized fuels.

Overview of Study

1. Analysis method:

A model was created for the entire value chain from production to transportation, and Mixed-Integer Linear Programming³ was used to optimize the specifications of each facility and operations in time units to minimize overall costs.

2. Execution:

• MHI analyzed the degree to which costs can be reduced in each element from production to supply, including transportation from India to Singapore, and created cost reductions measures.
  
• The results also indicated the possibility for cost reductions by optimization of operations through cooperation between business operators in the value chain, utilizing factors such as seasonal fluctuations in renewable energy output in India.
  
• MHI proposed measures to the Indian and Singaporean governments, including creation of demand for green ammonia, reduction of capital cost, support for technology development, and evaluation of green premium.
  

(1) METI supports projects relating to anticipated future growth industries: for example, projects aimed at building strong supply chains and realizing carbon neutrality in Global South countries, with Japanese and local businesses each applying their respective strengths. Following an open call for entries issued by Boston Consulting Group, which is undertaking this project on consignment from METI, MHI conducted a study including formulation of a plan for creating the optimal facilities needed for exporting India's green hydrogen and green ammonia.

Refer to the following press release for details https://www.mhi.com/news/25100301.html

(2) The report published by METI is provided below (in Japanese only).

https://www.meti.go.jp/policy/external\_economy/cooperation/oda/r5\_hosei\_mpkouhyou\_finalreport.html

(3) A method that numerically determines the most efficient solution in a series of variables or integer variables to accomplish a purpose under restricted conditions.

About MHI Group

Mitsubishi Heavy Industries (MHI) Group is one of the world’s leading industrial groups, spanning energy, smart infrastructure, industrial machinery, aerospace and defense. MHI Group combines cutting-edge technology with deep experience to deliver innovative, integrated solutions that help to realize a carbon neutral world, improve the quality of life and ensure a safer world. For more information, please visit www.mhi.com or follow our insights and stories on spectra.mhi.com.