India Set to Make a Significant Leap in Green Hydrogen, Says SBICAPS' Report

India is strategically positioned to become a global leader in green hydrogen production, thanks to its vast renewable energy potential, low energy costs, and strong domestic demand. This was revealed in the latest report by SBICAPS on green hydrogen titled, 'The H2ero of Net Zero?'

The report says that the country has one of the highest renewable energy potentials in the world, estimated at 2.1 TW, with a balanced mix of wind (55 percent) and solar (36 percent). This diversity in energy sources ensures a reliable 24x7 power supply, making India an ideal location for green hydrogen production.

In addition to this, India’s renewable energy costs are among the lowest globally, with electricity priced at INR 2.5-3.5 per unit. Furthermore, FDRE tariffs, including storage, are also very affordable, enhancing the competitiveness of green hydrogen production in India.

As per the report, India’s domestic demand for green hydrogen is driven by its substantial consumption of key sectors such as fertilisers, petroleum, and steel. These industries are poised for significant growth, unlike in many other countries, ensuring a robust and growing demand for green hydrogen. The government’s target of producing 5 million tonnes of green hydrogen annually by 2030 will not only reduce India’s reliance on fossil fuel imports by over INR 1 trillion but also create substantial export potential to markets like Europe and Japan.

The National Green Hydrogen Mission (NGHM), with an investment of INR 175 billion, aims to achieve this target and establish India as a leader in green hydrogen production. The SIGHT (Strategic Interventions for Green Hydrogen Transition) program provides key incentives, including supply-side subsidies and demand-side incentives, to accelerate growth in this sector.

Further, by 2030, it is estimated that 13 percent of India’s hydrogen consumption will come from emerging applications like power, transport, and residential use. This shift from grey hydrogen (produced from fossil fuels) to sustainable green hydrogen is critical in helping India decarbonise hard-to-abate sectors such as refining, ammonia production, and methanol manufacturing.

India’s ability to produce green hydrogen at competitive costs is key to its future success in this sector. While India’s green hydrogen production costs are among the lowest globally, there is still a need for further cost reductions to achieve the government’s target of price parity at USD 2 per kilogram. Several measures are recommended to achieve this, including the reduction of GST on electrolysers, scaling up production to benefit from economies of scale, and monetising byproducts such as oxygen. Providing affordable green financing will also help reduce costs.

India’s green hydrogen ecosystem will require substantial investments, estimated at INR 8-10 trillion by 2030. These investments will cover electrolyser capacity, green molecule manufacturing, and renewable energy projects for green hydrogen facilities. Overcoming challenges such as uncertain demand, low production scale, and high capital costs is crucial to attracting these investments. If successful, India will not only decarbonise key industrial sectors but also position itself as a significant exporter of green hydrogen to international markets.

The development of centralised green hydrogen hubs near demand centres will streamline infrastructure for renewable energy, water, and storage, further reducing production costs and supporting the industry’s growth. By 2030, ammonia production, refining, and power generation will dominate hydrogen consumption, but emerging sectors such as transport and residential use will also contribute to the expansion of green hydrogen adoption.

With its vast renewable energy resources, favourable energy costs, and growing domestic demand, India is well-positioned to lead in the global green hydrogen market. Through the right policies, investments, and innovative financing solutions, India can decarbonise industrial sectors, reduce fossil fuel imports, and become a major exporter of green hydrogen, contributing significantly to global climate goals. The successful execution of the National Green Hydrogen Mission will redefine India’s energy landscape and solidify its leadership in the global clean energy transition.