Can Newtrace Turbocharge India’s Push For Green Hydrogen Dominance?

Green hydrogen, often called the fuel of the future, is quickly becoming a reality across the globe. India, too, is working to keep up with the shift towards alternative fuels. 

Amid this, green hydrogen is being touted to have a wide range of applications, from road transport and aviation to industrial processes.

For the uninitiated, green hydrogen is produced using renewable energy sources, like wind and solar power, to split water into hydrogen and oxygen through electrolysis. The result is hydrogen without a carbon footprint, with water as the only by-product.

While hydrogen research began in the 19th century, practical applications didn’t take off globally until the 20th century. 

The focus on green hydrogen is a more recent development, driven by the worldwide push to lower CO2 emissions and meet net-zero targets.

With India aiming to achieve net-zero emissions by 2050, the government approved the National Green Hydrogen Mission in 2023, allocating INR 19,744 Cr. The mission aims to develop the capacity to produce at least 5 Mn metric tonnes (MMT) of green hydrogen annually by 2030.

Sensing the shift in the global energy market, Bengaluru-based cleantech startup Newtrace has entered the scene at just the right time.

Founded in 2021 by Prasanta Sarkar and Rochan Sinha, Newtrace has built an electrolyser technology that can enable green hydrogen production and its application at a lower cost.

While a few other top conglomerates, including Adani Group, Reliance, and L&T Electrolysers, are also aiming to build green hydrogen electrolysers, Newtrace claims that its proprietary, patent-pending membrane-less electrolyser technology gives almost 99.9% pure hydrogen at the lowest capex (60% reduced cost).

It is pertinent to mention that if the startup can maintain this benchmark while scaling up, it could become one of the leading names in the country’s domestic hydrogen market, as well as the export market, in the coming years. Also worth mentioning is the fact that the global demand for green hydrogen is expected to cross the 100 MMT mark by 2030.

How Newtrace Came Into Being

Sarkar and Sinha, both PhD scholars from prestigious global universities, had no intention of settling in India. However, when the first wave of the Covid-19 pandemic hit in 2020, they found themselves stuck in the country. As fate would have it, they eventually crossed paths for the first time at an event organised by Entrepreneur First in Bengaluru. 

The scholar duo synced on the fact that both were driven by the motivation of tackling climate change problems. However, riding the trend of India’s IT services market, the two started working on building a software company, a material informatics platform.

Within a year, the duo chose to pursue their true calling and started working on the electrolyser technology for green hydrogen in June 2021. After building the technology, they incorporated Newtrace in October 2021. 

“When we started building our first electrolyser from our apartment in Bengaluru, everybody had only heard about hydrogen from Elon Musk, and the first question was Gaadi kitni kilometres chalegi? (How much mileage can hydrogen cars give?),” cofounder and CEO Sarkar said. 

He, however, added that they were looking beyond mobility. “We were looking at applications at refineries — for the processing of steel or cement, and ammonia for fertilisers.”

There were not only misconceptions and a lack of knowledge around the role of hydrogen as a molecule but also inhibitions around a startup’s ability to enter this space, he added.

By the end of 2021, the Newtrace founders found their first home in IIT Madras. After doing a proof of concept (PoC) for its first electrolyser, MARK 1, Newtrace started working on a lab prototype of the electrolyser with the help of Dr Satyanarayanan Chakravarthy at the university. Since then, there has been no looking back.

In the last three years, the startup has made significant progress in coming out with three versions of its electrolysers — MARK 2 (a 1kW stack), MARK 3 (a 10-100 kW fully automated system), and MARK 4 (a 100-500 kW system).

For context, a 10 kW electrolyser produces around 4 kg of hydrogen per day. Notably, the startup’s MARK 4, with a 10 kW stack (which can be increased to 500 kW as per requirement), is already being piloted by Bharat Petroleum Corporation Ltd. (BPCL).

Sarkar explained that there is a growing demand among refineries for hydrogen to process crude oil. Besides, everybody in the oil and gas industry is looking to produce hydrogen in a decentralised manner and then supply it as fuel for the next generation of mobility solutions, he said.

Hence, Newtrace is currently looking to largely tap the players in the oil and gas industry. It is soon making its next commercial deployment with ONGC Energy Center.

The startup is also exploring the deployment of its electrolysers in the steel sector. Sarkar believes that it will take long before hydrogen becomes popular in mobility; hence, it is not a major focus for the company yet.

Helped by its innovation and technology, Newtrace has also garnered significant investor attention. It became a part of Peak XV’s Surge 09 cohort in 2023. 

The startup raised $5.65 Mn in its Seed funding round from Peak XV, Aavishkaar Capital, Speciale Invest, Micelio Fund, and a few other angel investors last year. Besides, it’s also one of the beneficiaries of the Indian government’s production-linked incentive (PLI) for setting up 30 MW/year electrolyser manufacturing.

It started generating operating revenue in FY24. So far, Newtrace has deployed and secured orders worth $300K. 

What’s In The Newtrace Technology Stack

Before we dive deeper, it’s important to understand that using hydrogen in industrial processes in India isn’t new. According to government data, around 5 MMT of grey hydrogen is used annually in the country, with 99% of it going towards petroleum refining and making ammonia for fertilisers.

Grey hydrogen is produced by burning fossil fuels like natural gas and coal. A report by the International Renewable Energy Agency (IRENA) showed that by the end of 2021, about 47% of global hydrogen production came from natural gas, 27% from coal, 22% from oil (as a by-product), and only 4% was made using electrolysis.

One of India’s key goals in its Green Hydrogen Mission is to replace grey hydrogen with green hydrogen to lower carbon emissions and reduce reliance on fossil fuels. However, the high cost is a major obstacle.

Newtrace’s technology aims to solve this. While traditional electrolysers (such as alkaline water, anion exchange membrane, proton exchange membrane, and solid oxide electrolysers) cost between $1,200 to $3,000 per kW, Newtrace’s membrane-less electrolyser brings that down to just $1,000 per kW.

While Newtrace develops its own electrocatalyst, different vendors manufacture the other parts of the electrolyser based on Newtrace’s design. The final assembly is done by Newtrace, with each electrolyser costing between INR 1 Cr and INR 3 Cr, depending on its size.

Newtrace’s Action Plan

As the startup’s commercial deployments pick up pace, it is now focussing on larger industrial applications with mega-sized electrolysers rather than smaller projects. 

The startup is building a 1 MW electrolyser system, which it plans to start deploying early next year, followed by even larger units, which will include 5 MW and 10 Mw systems.

Soon, as the company scales and with the PLI in place, it will have a capacity of 30 MW per year. To support this growth, the founders are planning to set up a new manufacturing facility in Bengaluru next year, which will enable large-scale production of electrolysers. In addition to this, the startup is looking at global expansion starting next year. 

“There’s a lot of appetite in the Middle East for electrolysers and green hydrogen production. Then there are countries like Japan also that have started looking at it. We want to complete the development cycle and demonstration cycle in India first, and then go out to explore other geographies,” Sarkar said.

To fund its global expansion and manufacturing, Newtrace has set its eyes on raising a “substantial amount” in the next six months. 

However, the startup is currently faced with a few challenges, including reducing the current two- to three-month timeline for deploying commercial orders. Also, the cleantech startup could face headwinds from fluctuations in demand and rising competition from large enterprises. 

For now, with access to India’s first industrial-scale demonstration of membrane-less electrolyser technology, can Newtrace lead India’s green hydrogen ambition?