The Indian government’s National Green Hydrogen Mission, launched in 2021, is gaining momentum with significant developments in recent months.
The mission aims to boost the production and usage of green hydrogen and ammonia, which are seen as crucial for India’s renewable energy ambitions.
The mission’s incentive scheme has led to the allocation of 1.2 million tonnes per annum (mtpa) of green hydrogen and ammonia. This initiative is expected to spur investments of nearly $18 billion, equivalent to Rs 1.6 lakh crore, and enhance renewable energy power generation capacity by around 30 gigawatts (GW).
Adani Enterprises, Reliance Industries, and Larsen & Toubro (L&T) are among the prominent companies that have won significant contracts under the mission. Adani has secured incentives for 0.3GW of electrolyser manufacturing capacity, while Reliance and L&T have received incentives for green hydrogen and electrolysers, said ICICI Securities in a note.
The new bids, rolled out by aggregating demand from end users such as refineries and fertilisers, mark an important phase in the green hydrogen mission. These sectors are currently using grey hydrogen, and the government is encouraging a shift to green hydrogen with minimal impact on product costs.
ICICI Securities has noted that the recent rounds of bids have attracted a mixed bag of winners. L&T secured a contract to supply green hydrogen to Indian Oil Corporation Limited (IOCL). Meanwhile, lesser-known firms like NTPC Green have made significant inroads, winning bids for large green ammonia capacities.
ICICI Securities further highlights the price discovery process, which has revealed a price range of USD 3.5-4 per kilogram for green hydrogen compared to less than USD 2 per kilogram for grey hydrogen. This highlights the economic challenges that green hydrogen still faces in competing with conventional alternatives.
The mission is also set to transform India into a potential global export hub for green ammonia, supported by collaborations like L&T’s tie-up with Itochu for ammonia offtake. Despite the promising incentives and investments, ICICI Securities cautions that not all proposed capacities might come to fruition, with realistic expectations set at about 0.5 mtpa,
The brokerage suggest that while significant progress has been made, the mission’s long-term success will depend on continued policy support, technological advancements, and cost reductions. The initial successes are viewed as crucial steps towards establishing a robust green hydrogen sector in India.
The government’s proactive approach in aggregating demand and incentivising green hydrogen production demonstrates its commitment to transitioning towards cleaner energy sources. This strategic push positions India as a key player in the global green energy landscape, it noted.
ICICI Securities has a ‘buy’ rating on Larsen & Toubro, CECS and JSW Energy, while it has a an ‘add’ rating NTPC Green Energy. However, the brokerage has not rated Adani Enterprises and Waaree Energies.