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India’s green hydrogen pilot gathers steam, economics yet to add up – EQ Mag

India’s green hydrogen pilot gathers steam, economics yet to add up – EQ Mag


Top executives from Adani Enterprises earlier this month informed analysts, work on their electrolyser manufacturing unit is likely to start in the current or next quarter

FY24 is shaping up to be the year when numerous Indian companies are putting their green hydrogen ambitions into motion, albeit at the pilot stage. As this progresses, industry insiders and experts note that demand and financial closures remain elusive.

Earlier this month, top executives from Adani Enterprises revealed to analysts that work on their electrolyser manufacturing unit is likely to commence either in the current or next quarter. The conglomerate is not alone in initiating its green hydrogen pilot.

Among others, Larsen & Toubro (L&T), Indian Oil Corporation, and Renew Power are anticipated to form a joint venture (JV) company in the coming weeks, said Subramanian Sarma, whole-time director and senior executive vice president (Energy) for L&T. The trio first unveiled plans in April 2022 to create a JV to foster the nascent green hydrogen sector in India. Another executive in the know shared, “All the required approvals for the tripartite JV are now in place, with the JV formation under process.”

Construction work is underway at Reliance Industries’ Giga complex in Jamnagar, which will also accommodate the planned electrolyser manufacturing unit, as per sources. Sandeep Kumar Gupta, chairman for state-owned GAIL India, told shareholders on Wednesday that the company’s 10 MW green hydrogen production unit, the largest in India, with a daily capacity of 4.3 tonnes at Vijaipur in Madhya Pradesh, is anticipated to be commissioned by December.

Dipankar Ghosh, Sustainability & ESG Partner & Leader at BDO India, stated, “Several Indian companies are in the process of commissioning commercial-scale green hydrogen plants in India in FY23-24 and beyond. Like most large-scale fuel manufacturing units, these will take time to scale up to full capacity due to market demand, technological barriers, and regulatory conditions.”

Ghosh expects that most Indian green hydrogen manufacturers should be able to produce green hydrogen at a price of USD 1-2 by 2030. However, not all agree. Pranav Master, senior practice director-consulting, CRISIL, remains sceptical that $1 per kg is attainable, even with the momentum observed in the current financial year. He remarked, “To hit $1 per kg by 2030 would be very challenging; significant scale-up, technological developments, and further incentives are crucial. From where we are at in 2023, that cost looks unlikely by 2030.”

Sarma from L&T highlighted that “Technology breakthrough has to happen in storage, electrolyser efficiency must improve, and ultimately demand must be created for economies of scale. Today it is a catch-22 or chicken-and-egg situation; unless the price comes down, demand will not rise.” On the funding side, Merchant added that significant project finance closure has yet to be seen.

An anonymous company executive from a state-run entity observed that some of those planning green hydrogen units are exploring various options to ensure the electrolyser cost is as low as possible before proceeding.

Those initiating these early steps are conscious of the demand gap. Regarding the search for clients for the initial output from the Hazira (Gujarat) electrolysers manufacturing unit, the executive noted, “We are focusing on manufacturing; I think we will first use it for our own use and at the same time, we will also start marketing.” L&T has plans to establish a gigawatt-scale manufacturing facility for electrolysers in India

Anand Gupta Editor - EQ Int'l Media Network