 "green hydrogen")
India’s green hydrogen (H) plans currently finds itself in a tight spot, where consumption from both exports and domestic markets has not risen as rapidly as envisaged.
Industry executives and representatives note that the global rethink around green hydrogen is yet to directly hit Indian companies. However, there are other global and domestic winds at play. While domestic tenders have been slow to come by, export markets remain riddled with shifting geopolitical priorities.
India’s fertiliser companies and refineries were expected to drive demand for green hydrogen/ammonia on the domestic front. Industry executives note that while the fertiliser industry is yet to make any move, due to the need for a subsidy push, those at refineries have so far dragged feet.
“We were to expect 200 kilo tonnes per annum of demand from the refineries alone, why are those tenders not coming,” asked a senior executive from the industry, adding, tenders from two of the refineries have finally reached the reverse auction stage. “This should have happened earlier, some of the new tenders from other refineries are worded differently and have termination clauses that are not developer-friendly,” the executive said.
S&P Global in a recent note on the sector pointed out: “Market indications on Platts Market Heards show there is a wide gap between the cost of production of renewable hydrogen/ammonia in India and the willingness to pay from refineries and fertiliser manufacturers, which remains one of the key stumbling blocks for deals.”
India H2 Alliance (IH2A), an industry coalition of global and Indian companies committed to the creation of a hydrogen value-chain, has been asking the government for sectoral demand mandates and incentives by increasing the National Green Hydrogen Mission (NGHM) allocations for demand interventions. “The Government of India should prioritise and define green and low-carbon hydrogen purchase volume targets by refineries, fertiliser and chemical plants,” an executive from IH2A noted.
Of the state-run refineries, so far Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) have successfully floated tenders, after a slow start. “The refineries took time as it was a request from the vendors who wanted more time to figure out land and other requirements,” said an oil industry executive, adding that the tenders should now come out faster, subject to price-discoveries.
For those making green hydrogen investments in India, the initial plan was to focus on exports, while domestic demand catches up. That plan has now come a cropper. “In almost every region, the incumbent governments have changed their priorities,” the executive quoted earlier said, adding they are not witnessing any strong demand across regions, including the earlier-focused European, Japanese and Korean markets.
Commenting on the EU market, Amrit Singh Deo, IH2A secretariat lead, said, “The H2Global tenders for EU imports for green hydrogen are progressing into the second wave of region-specific tenders. India project developers have been active in the first tender and expected to participate in the Asia-specific tender.”
Singh Deo also added more nuance to this demand trend. “There is a captive and a merchant model. We have seen progress on a number of captive projects, including plans by refineries, steel plants and some chemical plants… Progress has been slower in such merchant-model projects, with very few announced projects crossing the final investment decision (FID) stage. The export-oriented projects are in this category,” Singh Deo said.
He also noted that there is reason to celebrate —JSW’s green hydrogen plant is close to being commissioned, Hero Future Energies has already commissioned a hydrogen plant for H2-blending in PNG and LPG to make green alloys, and AM Green has announced FID closure for its green hydrogen and ammonia plant in Andhra Pradesh. Last week, Larsen & Toubro (L&T) announced it has shipped an indigenously manufactured High-Pressure Alkaline Electrolyser for a green hydrogen project at Deendayal Port at Kandla in Gujarat.
Even as these capacities prepare to go on-stream, executives noted the demand for green hydrogen will need to build up, and soon. “Under the production linked incentive (PLI) scheme, the milestones are related to sales and for five years from the first reported sale. For the PLI to be a success for these companies, the five years need to see optimised sales," said the green hydrogen industry executive quoted earlier.
The steel industry is the third part of this demand puzzle. So far, executives agreed this segment’s green ambitions stay. “The focus on green steel remains unchanged, what is evolving are the overall steel capacity addition plans, given the geopolitical situation. If those progress, green steel progresses along with it,” said Hitesh Avachat Associate Director at CARE Ratings.
Here again, capacities may precede consumption. JSW Energy, for instance, was expected to commission its green hydrogen project this month. However, it is not clear whether JSW Steel’s unit is ready to utilise any such production. An email query sent to JSW on Monday remained unanswered.
Eco-friendly goals
> JSW Energy had set March deadline for commissioning for green hydrogen unit
> RIL plans to commence transition from grey to green hydrogen in 2025
> L&T shipped an electrolyser from Hazira unit for Kandla Port in March
> AM Green to start green ammonia production in the second half of 2026
> Adani Enterprises’ initial phase of green hydrogen to start production by FY27
