By Preeti Wadhwa
India is emerging as a key player in the global green hydrogen economy, recognising hydrogen’s potential as a versatile and clean fuel essential for achieving decarbonisation targets. The Indian government considers green hydrogen not only as a solution to meet domestic storage and energy needs but also as an opportunity to become a major global exporter. This aligns with India’s broader objectives of expanding renewable energy capacity, ensuring energy security and achieving self-sufficiency in energy needs. In the past year, the sector has experienced various policy announcements and increased tender activity. Both Indian public and private institutions, including renewable energy developers, electrolyser manufacturers, oil and gas entities, steel producers and other stakeholders, have announced plans for investments across the green hydrogen value chain. Renewable Watch presents a roundup of key developments in the past year…
Policy announcements
There have been several policy announcements under the National Green Hydrogen Mission (NGHM) in the past one year. The Ministry of New and Renewable Energy (MNRE) issued guidelines for pilot projects in the mobility, steel and shipping sectors. For the transport sector, the scheme allocates Rs 4.96 billion until FY 2025-26 to replace fossil fuels with green hydrogen in vehicles and develop refuelling infrastructure. In the steel industry, Rs 4.55 billion is budgeted until FY 2029-30 to substitute fossil fuels with green hydrogen. For the shipping sector, Rs 1.15 billion is allocated until FY 2025-26 to promote green hydrogen use in ship propulsion and establish bunkering facilities at ports. The MNRE has also approved three pilot projects to use hydrogen in steel production – a 50 tonnes per day (tpd) project to Matrix Gas and Renewables Limited; a 40 tpd project to Simplex Castings; and a 3,200 tpd project to Steel Authority of India
Limited (Ranchi).
In 2024, the MNRE also waived off the Approved List of Models and Manufacturers (ALMM) requirement for solar projects and the Revised List of Models and Manufacturers requirement for wind projects to be used for green hydrogen production. This waiver, applicable to renewable energy projects situated within export-oriented units or special economic zones and providing electricity only to green hydrogen production facilities within these demarcated zones, will be in effect for all projects that become operational by December 31, 2030. However, it remains to be seen whether industry stakeholders will fully appreciate this indirect incentive, given the inconsistency of the ALMM policy over the years.
Additionally, the government has extended the waiver of interstate transmission system charges for green hydrogen and ammonia production units using renewable energy. Projects commissioned on or before December 31, 2030, are eligible for this waiver, which has been a key incentive for both renewable energy and green hydrogen developers.
Moreover, the MNRE issued guidelines for disbursing incentives for the production of up to 450,000 metric tonnes(mt) of green hydrogen annually under Component II (Mode 1, Tranche II) of the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. Incentives for green hydrogen producers will be distributed over three years, with limits set at Rs 50 per kg in the first year, Rs 40 per kg in the second year and Rs 30 per kg in the third year.
In addition, the government introduced funding guidelines for green hydrogen testing facilities as part of the NGHM. These guidelines aim to establish standards and a regulatory framework by providing financial support for testing facilities, infrastructure and institutional backing. With a total budget of Rs 2 billion, the programme will run until 2026, focusing on identifying gaps in existing testing facilities for components, technologies and processes within the green hydrogen value chain. It also aims to establish new testing infrastructure to validate, certify and assess these essential elements.
Under the NGHM’s SIGHT programme, various auctions were conducted in the past year. In January 2024, eight companies were selected for Solar Energy Corporation of India Limited’s (SECI) bid for setting up 1,500 MW (Tranche 1) of electrolyser manufacturing capacity in India. Reliance Industries Limited, John Cockerill and Jindal Steel and Power Limited each secured 300 MW with maximum incentives of Rs 4.44 billion. Other winners included Ohmium Operations (137 MW), Advait Infratech Limited (100 MW) and L&T Electrolysers (63 MW), receiving incentives of Rs 2.03 billion, Rs 1.48 billion and Rs 932.4 million respectively. These companies were awarded capacity under Bucket 1. Meanwhile, in Bucket 2, HomiHydrogen won 101.5 MW and Adani New Industries Limited 198.5 MW, with incentives of Rs 1.5 billion and Rs 2.94 billion respectively.
In the same month, SECI also announced the results of its green hydrogen project auction to develop facilities producing 450,000 mt annually. The auction included two buckets: Bucket 1 for 410,000 MT with technology-agnostic pathways, and Bucket 2 for 40,000 mt with biomass-based pathways. Reliance, Greenko and ACME each won 90,000 mt at incentives averaging Rs 18.9 per kg and Rs 30 per kg, respectively. Welspun (20,000 mt at Rs 20 per kg), JSW Energy Limited (6,500 mt at Rs 34.66 per kg), Hygenco (75,000 mt at Rs 25.04 per kg) and Torrent Power (18,000 mt at Rs 28.89 per kg) were also awarded capacity. Calcutta Electric Supply Corporation and UPL Limited secured 10,500 mt and 10,000 mt respectively at zero incentives. Bucket 2 allocated 2,000 mt to Bharat Petroleum Corporation Limited (BPCL) at Rs 30 per kg.
In August 2024, SECI announced the winners of Tranche II of the electrolyser manufacturing auction, with a total capacity of 1,500 MW under the SIGHT scheme. Thirteen companies were selected across three categories. The largest, Bucket 1, with 1,100 MW of capacity based on any stack technology, saw Waaree Energies secure 300 MW, followed by Matrix Gas and Renewables with 237 MW and Advait Infratech with 200 MW. Other winners included Ohmium Operations (137 MW), GH2 Solar (105 MW), Newage Green Electro (71.5 MW) and Avaada Electrolyser (49.5 MW). In Bucket 2B, which focused on indigenously developed stack technology for smaller units, the maximum capacity awarded was 100 MW. Of this, Adani Enterprises, Eastern Electrolyser and Newtrace were each awarded 30 MW, while Suryaashish KA1 Solar Park secured 10 MW. Meanwhile, in Bucket 2A, dedicated to indigenously developed stack technology, Adani Enterprises was awarded 71.5 MW and Newage Green Electro received 228.5 MW, fulfilling the total capacity of 300 MW.
Industry developments
It is positive that the government has targeted high-emission, hard-to-decarbonise sectors such as transport, steel and shipping for green hydrogen pilot projects in the past year. The demand for green hydrogen will surge with its greater uptake in these critical industries. Going forward, the policy developments are expected to create an attractive environment for industry investments. If sustained, this could help India establish itself as a competitive producer of green hydrogen, with foreign companies viewing the market as open and supportive of innovative projects. Public and private companies have already started to invest and have developed concrete plans in the Indian green hydrogen sector. A brief of select industry developments in the past year…
Plans of select public sector companies
GAIL India Limited commissioned its maiden green hydrogen facility in Vijaipur, Madhya Pradesh. The plant has a capacity to produce about 4.3 tpd of hydrogen.
BPCL collaborated with Sembcorp Green Hydrogen India to develop green hydrogen projects across the country.
SJVN Limited launched a multi-purpose green hydrogen pilot project at its 1,500 MW Nathpa Jhakri hydropower station in Himachal Pradesh. The project will generate 14 kg of green hydrogen per day to fuel the plant’s high-velocity oxygen fuel coating facility and produce power via a 25 kW fuel cell.
NTPC Green Energy Limited (NGEL) signed MoUs with Gujarat State Petroleum Corporation Limited (GSPCL) and Gujarat Pipavav Port Limited (GPPL) to incorporate green hydrogen into GSPCL’s gas networks and facilitate its use in transportation through the establishment of fueling stations. NGEL also signed an MoU with Rajasthan Rajya Vidyut Utpadan Nigam Limited for the advancement of green hydrogen derivatives, with capacity reaching 1 million tonnes within Rajasthan.
THDC India Limited launched a pilot green hydrogen project at its office complex in Rishikesh, Uttarakhand.
Plans of select private players
The Essar Group announced plans to invest Rs 300 billion over the next four years in setting up a 1,000 MW green hydrogen plant in Jamnagar, Gujarat.
Matrix Gas and Renewables, a wholly-owned subsidiary of the Gensol Group, is planning to file for its initial public offering in 2025 and raise up to Rs 12 billion to fund its green hydrogen projects. The company is targeting the development of 1,000 MW of green hydrogen projects over the next three years. Gensol Engineering Limited and Matrix Gas and Renewables Limited Consortium have been chosen to develop a green hydrogen valley in Pune, Maharashtra.
ACME Cleantech Solutions and the Indian Gas Exchange have signed an MoU to collaborate in the green hydrogen and green ammonia space.
Tata Steel Special Economic Zone Limited signed an MoU with HHP Five Private Limited (Hygenco) for the development of a green hydrogen and green ammonia project. Hygenco plans to establish a new plant that will produce green hydrogen and its derivatives with an estimated annual output of 1 million tonnes. The first phase of the plant is scheduled to be operational by December 2026. Ohmium has also collaborated with Tata Projects to work on green hydrogen projects in India and plans to invest Rs 4 billion in Tamil Nadu to expand its manufacturing facility.
John Cockerill secured an order from AM Green for the supply of around 1.3 GW of electrolysers for the latter’s 1 million tonne green ammonia project. The supply will be split into two phases of 640 MW each to produce green hydrogen, which will be converted into green ammonia. As part of this agreement, the two companies also plan to establish a 2 GW per year electrolyser manufacturing plant in Kakinada, Andhra Pradesh.
Hygenco and REC Limited signed a MoU aimed at financing Hygenco’s green ammonia project in Gopalpur, Odisha. As per the agreement, REC will invest $280 million in the project. Hygenco plans to intensify investments in India, with $2.5 billion worth of investments planned in green hydrogen and green ammonia projects in the upcoming years. Hygenco also signed an MoU with Mitsubishi Power to produce green hydrogen/ammonia-fired gas turbine combined cycle power plants.
Future outlook
India’s green hydrogen ambitions hold substantial potential for meeting its climate goals, reducing reliance on fossil fuel imports and positioning the country as a leading exporter. To this end, several prerequisites are essential, especially regarding cost competitiveness, access to financing and setting common standards.
According to a recent report by the Clean Finance Leadership Initiative and the Council on Energy, Environment and Water, the high production costs, currently ranging from $3.5-$5 per kg, far exceed the break-even price of $2.5 per kg for green hydrogen. Achieving this goal will require significant investments in technology, infrastructure and supply chains, areas that are still in the early stages. A lack of proven technology and supply chain for green hydrogen and ammonia also complicates financing, with investors cautious about the financial risks in a nascent market. Moreover, the long-term profitability of projects remains uncertain due to the evolving nature of global and domestic policies and market dynamics.
As the demand for green hydrogen and its derivatives grow, and production facilities achieve economies of scale, these fuels are projected to become increasingly cost-competitive, which could further drive demand. Going forward, effective collaboration between the public and private sectors will be essential to develop financing mechanisms that mitigate investment risks and attract capital. One approach could be the establishment of special purpose vehicles or the issuance of green bonds to finance green hydrogen projects, drawing capital from sustainability-focused institutional investors. Carbon credits could offer an additional revenue stream for green hydrogen projects, while carbon pricing and guaranteed offtake agreements may help make these projects more financially viable.
Going forward, to become a global green hydrogen leader, India must collaborate with key importing countries to establish common standards and certification programmes. Work is already under way in this space, with the MNRE releasing a draft Green Hydrogen Certification programme to establish a framework for measuring, monitoring and certifying green hydrogen production. Additionally, aligning subsidies with international standards, such as those introduced in the US under the Inflation Reduction Act, 2022, could enhance India’s competitiveness on the global stage.
Currently, while the policy impetus is primarily through central schemes, several states including Uttar Pradesh, Odisha, Rajasthan and Maharashtra have introduced specific green hydrogen policies, and others are working on similar initiatives. These state-level policies will be key in developing a robust green hydrogen ecosystem in the coming years. A key focus in the coming years will be how the central and state governments collaborate to set up large-scale green hydrogen hubs, especially around ports, which are crucial for export purposes.
If government and industry efforts continue, India can build a resilient green hydrogen economy that meets domestic demand, achieves price competitiveness and potentially taps into export markets. Thus, the country can aim to become both a major consumer and producer in the global green hydrogen space.
