Net Zero Pathway: Status and outlook of the green hydrogen market

Energy transition is a spectrum; it presents diverse opportunities for various fuels and technologies across several use cases. As there is no one-size-fits-all, exploring different emerging sources of green energy is likely to play a crucial role in making India’s energy transition a smoother process. Green hydrogen, frequently known as the fuel of the future, is often termed as one of the most important emerging green fuels, globally. The global demand for hydrogen is ex­pected to increase by four to seven times to 500-800 MT by 2050. Domestic dema­nd is expected to increase by four times from 6 MT at present to 25-28 MT by 2050. The share of hydrogen in the transition to a net zero carbon economy is ex­pected to increase from near-0 per cent at present to 17-18 per cent by 2050.

The Government of India has launched several initiatives to promote green hydrogen production in India. These include the National Green Hydrogen Policy, along with a Rs 197.44 billion initial outlay under the National Green Hydrogen Mission. Des­pi­te some promising initiatives, the segment demands a lot more in terms of sector-specific mandates and increased budgetary outlays for research and development. Moreover, to ensure the viability of green hydrogen in the long run, certain roadblocks such as the high cost of electrolysers, and transportation and storage issues need to be overcome.

Application and use cases

Early green hydrogen use cases are ex­pected to emerge around industrial clusters with shared infrastructure for hydrogen production, distribution and storage. Due to the increased expenses and energy losses during the ammonia-to-hydrogen co­nversion, both international trade via pipelines and ship-borne ammonia tra­nsportation will be required. Currently, the top three industries driving demand for green hydrogen are oil refining (33 per cent), am­monia (27 per cent) and metha­nol (10 per cent). However, demand for green hydrogen is anticipated to diversify to include in­dustries such as chemicals, iron and ste­el, cement, power, transportation and heating.

Compared to lithium-ion batteries, compressed hydrogen, liquid hydrogen and liquid ammonia have a substantially hi­gher energy density per volume. The en­er­gy density of hydrogen per kg is gr­eater than that of petrol and natural gas. Additionally, hydrogen has a higher energy density per unit of mass than batteries, making it mo­re desirable where significant amounts of energy are needed at low weight, such as in aircraft, shipping and long distance tra­nsportation. How­ever, as ammonia has a higher volume density than hydrogen, the former is better suited for long distance travel.

The considerable mass and volume needed for large-scale, long-duration energy storage with batteries makes it challenging. Green hydrogen is thus anticipated to be important even if there are considerable energy losses in the power-hydrogen-power reconversion. This is because renewable energy sources require long-term energy storage to balance the grid. Batteries will probably be more cost effective for certain energy-intensive sites and for storage times under four hours. Clean hydrogen alternatives, however, might be more cost effective than diesel power ge­nerators for longer-term backup. However, the low energy efficiency of green hydrogen, which is only about 25 per cent as op­posed to 70 per cent for battery electric vehicles, may limit its application in the transportation sector, particularly in the road sector.

Long-term end-customers of green hydrogen are projected to include crude oil refineries that employ hydrogen for hydrocracking and desulphurisation. Addi­tionally, it is anticipated that there will be an increase in demand for ammonia, whi­ch is used to make fertilisers and metha­nol, which is used to make petrochemicals, plastics, paints and explosi­ves. Gr­e­en hydrogen is also likely to take the place of coking coal as a reducing agent in the production of steel. The need for green hydrogen in the steel industry will increase as a result of many steel co­m­panies setting net zero emission goals for 2050. However, other than for sh­orter journeys, it seems unlikely that hydrogen will be used in aircraft.

Electrolyser market

According to the Ministry of New and Renewable Energy, India already has six alkaline electrolyser manufacturers. How­ever, there is a need to improve electrolyser technology in order to make it more efficient and cost effective. When it comes to stack production, India’s initial position is hampered by its reliance on imported metals such as platinum, iridium and even nickel. Critical commodities are in limited supply worldwide, with China accounting for about 95 per cent of the supply. Europe currently leads the worldwide electrolysis sector. China, Japan and the US are also expanding their manufacturing capacity, but they are currently less active in the global market than some of the larger European manufacturers. No­ne­theless, China enjoys a huge cost ad­van­tage over other regions. By 2050, In­dia’s internal market for electrolysers mi­ght be worth roughly $31 billion, with a demand of 226 GW. India forecasts a need of 20 GW by 2030. Fuel cell demand from heavy duty trucks alone will represent a $4 billion market opportunity in India by 2050, accounting for 10-18 per cent of worldwide fuel cell demand.

Major investments by Indian companies

In recent months, several Indian companies have come forward with plans to in­vest in the green hydrogen economy.

  • Reliance Industries plans to invest $10 billion over the next three years to develop low-cost electrolysers with the aim of reducing the green hydrogen production cost to around $1 per kg.
  • Adani New Industries Ltd plans to invest over $50 billion over the next 10 years in green hydrogen and its associated ecosystem.
  • In May 2023, the ACME Group and Indra­prastha Gas Limited, a city gas distribution company signed an MoU to jointly explore the potential business op­portunities of green hydrogen.
  • Ocior Energy India Private Limited will establish a 1 million tonne per annum (mtpa)  gre­en ammonia plant in Andhra Pra­desh at an investment of Rs 400 billion. The co­mpany will invest Rs 400 billion to establish a 1 mtpa facility for gr­een hy­drogen and ammonia in Gujarat’s Kutch district.
  • Indian Oil Corporation Limited has set up green hydrogen plants at its Mathura and Panipat refineries. The Mathura pla­nt is the largest in India, with a capacity of 40 MWh, while the Panipat plant has a capacity of 15 MWh.
  • GAIL is also setting up India’s largest polymer electrolyte membrane (PEM) el­ectrolyser plant at the Vijaipur complex, in Guna district of Madhya Prade­sh, with a capacity of 10 MWh. The pl­ant aims to produce 4.3 million tonnes of green hydrogen per day.
  • BPCL plans to install a 5 MW electrolyser system to set up a green hydrogen production facility in a phased manner at one of its city gas                      distribution projects. It also plans to set up a 20 MW electrolyser at its Bina refinery in Madhya Pradesh.
  • H2e Power, a Pune-based clean tech st­a­rt-up, is setting up an electrolyser pla­nt in Pune. The h2e steam electrolysis syst­em, based on solid oxide fuel cell technology, aims to lower on-site hydrogen pr­o­duction costs and maximise efficiency.
  • Ohmium International, a green hydrogen company that desig­ns, manufactures and deploys PEM el­ectrolysers, is collaborating with Shell India on green hydrogen applications, ma­rkets and project opportunities in India and globally.


Given the cheap cost of renewables, India has the potential to become one of the world’s most competitive producers of green hydrogen and green hydrogen-embedded products such as green steel and green ammonia. Many countries are expected to rely on imports due to the land and renewable resource limits that would make it difficult to create green hydrogen domestically. Japan, South Korea and Europe have already expressed an interest in importing green hydrogen. By 2030, the global demand for green hydrogen and its derivatives such as green ammonia is estimated to exceed 100 mmt. India has the capacity to export approximately 10 mmt of green hydrogen/green ammonia per year, capturing about 10 per cent of the global market. Exporting hydrogen invol­ves technological and commercial hurdles, such as a lack of pipes. As the infrastructure for ammonia production for the fertiliser business already exists, India might become a major ammonia exporter. The low cost of hydrogen would also enable India to produce green steel at a reduced cost. How­ever, major capital and energy cost reductions will be necessary. Me­chanisms such as carbon pricing can also help speed ma­rket development.

Furthermore, investment in research, de­ve­­lopment and commercialisation of low-cost electrolyser technologies requiring little rare earth metals will be required in the fu­tu­­re. It is also vital to establish a reliable me­­tal and mineral supply chain and to de­fine electrolyser recycling solutions. On the policy front, the government may offer a target-backed production-linked incentive plan as well as non-fiscal measures su­ch as improved regulatory clearance pro­ce­ss­es and preferential treatment in public bids. Fi­nally, increasing local dema­nd for gr­een hydrogen through obligations and in­ce­n­ti­v­es will be critical to the segment’s growth.

This article is based on a presentation by Prashant Vashisht, Vice-President, Co-Group Head, Corporate Ratings at ICRA at the fifth edition of the “Green Hydrogen in India” conference organised by Renewable Watch recently.