India’s unfolding green hydrogen story is marked by rapid policy enhancements and a slew of investments from public sector undertakings (PSUs), large industrial entities, and independent clean energy players, according to a report by Emkay Global Financial Services.
The Government of India (GoI) has set an ambitious target of producing 5 million metric tonne per annum (mmtpa) of green hydrogen by CY30. However, the report notes potential challenges. “Considering the large scale of renewable energy (125GW) and electrolyzer capacity (60GW) required, some amount of haircut to this estimate is likely. We believe 3 mmtpa is more reasonable,” the report stated.
The green hydrogen initiative, if achieved, can play a pivotal role in India’s emission reduction commitments. “Green H2 can hold a sizable position in the GoI’s emission goals for CY30, with a potential CO2 reduction of approximately 0.5 billion tonnes against the targeted 1 billion tonne,” Emkay reported.
A significant challenge for the industry is cost reduction. The report suggests a potential cost drop based on trends seen in other renewable sectors. “A 50% drop to USD 2-2.5/kg, based on learning-curve rates seen in solar & wind power, is possible by CY30,” Emkay stated.
Backing this optimism, Emkay highlighted the current renewable trends, noting, “With a 5% learning-curve rate in RTC RE cost to INR 3/kwh, 40% decline in electrolyzer cost, and 15% improvement in its efficiency, LCOH can fall to approximately USD 2.3/kg by CY30.”
The demand for green hydrogen is anticipated to surge, driven by “oil refineries, exports, and ammonia-fertilizer producers,” while supplies would originate both from major consumers and merchant players.
Highlighting the GoI’s efforts, Emkay referenced the recent initiatives, saying, “Green H2 policies have gathered pace, with the Union Cabinet approving the National Mission in Jan-2023 and a Budget outlay of INR 197.4 billion.”
PSU refiners project approximately 0.4mmtpa of captive production by CY30. In contrast, “other PSUs, industrial houses, and independent RE players have signaled a >3mmtpa green H2 equivalent output,” the report mentioned.
The report also underscored the investment opportunities sprouting from this ecosystem, spotlighting companies including RIL, Adani Enterprises, NTPC, and Tata Power. “RIL could produce approximately 1 mmtpa of green H2 and 2.5 GW p.a. of electrolyzers by CY30, logging a PAT at INR 11 billion pa,” Emkay noted, subsequently upgrading RIL to ‘BUY’ with a revised target price of INR 2,730/share for Sep-25E.
