India should adopt Japan’s contracts-for-difference (CFD) model to make green hydrogen projects bankable and accelerate final investment decisions (FIDs), according to Amrit Singh Deo, Senior Managing Director at FTI Consulting and advisor to the India Hydrogen Alliance (IH2A).

Speaking during a gasworld/H2 View webinar, Deo said the main bottleneck preventing projects from reaching FID is not a lack of demand, but rather a lack of bankability.

IH2A has formally recommended that the Government of India adopt Japan’s CFD framework to address this financing challenge. Under a CFD mechanism, a public agency compensates producers when market prices fall below a predetermined strike price, ensuring stable and predictable revenues for investors. This structure helps mitigate risks associated with price volatility and market uncertainty, two of the biggest barriers to large-scale hydrogen deployment.

“We’ve asked the Government of India to actually replicate the Japanese CFD model,” Deo said. “India and Japan have signed a strategic partnership agreement, and hopefully we’ll see more FID-stage projects because of that.”
Deo added that refineries and fertiliser plants are expected to act as early offtakers under any future CFD-backed system, given their existing demand for hydrogen and established infrastructure.

He further noted that such a partnership could become the foundation for bilateral support similar to Japan’s Asia Zero Emission Community (AZEC) programme, which aims to de-risk low-carbon hydrogen and ammonia projects across Asia.

Referring to the recent Solar Energy Corporation of India (SECI) auction for green ammonia, Deo highlighted that half of the winning bids reflected Japan’s approach by integrating both producers and offtakers within a single consortium. This structure enhances project feasibility and investor confidence, setting an example for future Indian projects seeking bankability.

Source: 

https://www.gasworld.com/story/india-urged-to-adopt-japans-cfd-model-to-unlock-green-hydrogen/2168150.article/