Green hydrogen and the Net-Zero economy: India’s path to a sustainable energy future

India is strategically positioned to lead in green hydrogen, leveraging its abundant renewable resources and growing energy needs. A recent roundtable on Unlocking Opportunities in Green Molecules, hosted by PETRONAS and Gentari at India Energy Week, emphasized the need for industry collaboration, policy clarity, and financial strategies to scale hydrogen adoption. India has made significant strides in renewable energy, surpassing 200 GW in total capacity, including 90 GW of installed solar as of October 2024. This progress positions India to transition from renewable capacity to creating a robust hydrogen ecosystem with large-scale infrastructure investments. The roundtable highlighted the urgency of implementing clear hydrogen obligations and domestic demand aggregation policies to drive industrial adoption beyond initial government incentives. Long-term hydrogen off-take agreements, supported by policy mechanisms, could establish a stable market, while a structured hydrogen pricing framework and carbon credit mechanisms are crucial for improving commercial viability. Infrastructure remains a critical challenge, with investments needed in transportation networks, pipelines, ports, and storage facilities. Addressing regulatory gaps in safety and logistics is essential to facilitate hydrogen adoption. Encouraging domestic electrolyser manufacturing through incentives or import restrictions could further strengthen India's hydrogen ecosystem.
The production cost of green hydrogen, currently ranging between Rs. 253-337 (US$ 3-4) per kg, remains a key obstacle to widespread adoption. The roundtable emphasized the need for innovative financial models, including public-private partnerships and blended finance mechanisms, to de-risk investments and attract large-scale funding. India's 2025 budget introduced a partial credit guarantee to improve financing access. However, additional measures, such as a first-loss guarantee structure, are needed to mitigate investor risks further. The growing demand for ESG-aligned investments presents an opportunity to draw institutional capital into the hydrogen sector. However, concerns surrounding technology risks, off-take commitments, and renewable power stability must be addressed to enhance investor confidence. Despite global uncertainties surrounding hydrogen policy, India remains a strong contender in the green hydrogen race, with proactive policy initiatives and notable developments such as the AM Green Kakinada project reaching the Final Investment Decision (FID). The roundtable discussions reaffirmed the need for continued collaboration between industry, government, and financial institutions to address remaining barriers and accelerate adoption. By promoting strategic partnerships and securing long-term off-take commitments, India can establish itself as a global leader in green hydrogen, driving Asia's energy transition and becoming a major supplier of hydrogen to international markets.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.