In a significant breakthrough for India's clean energy ambitions, the price of green hydrogen has fallen to a range of USD 4.4 to USD 4.5 per kilogramme in recent tenders floated by state-owned oil marketing companies. This represents a reduction of over USD 1 per kg from previous levels of around USD 5.5, marking a critical step towards making the zero-carbon fuel cost-competitive.

The announcement was made by the Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, at the S&P Global Commodity Insights World Hydrogen India conference. The minister highlighted that this price decline is a direct result of the strategic impetus provided by the National Green Hydrogen Mission.

Citing a specific example, Minister Puri revealed that in a major tender floated by Indian Oil Corporation (IOC) for a 10,000 tonnes per annum green hydrogen production facility at its Panipat refinery, infrastructure major Larsen & Toubro (L&T) submitted a highly competitive, tax-inclusive price of USD 4.5 per kg for a 25-year period. This long-term price commitment is a strong indicator of growing confidence in the technology's scalability and decreasing renewable energy costs.

This substantial cost reduction is a game-changer for the industry's economics. Green hydrogen, produced by splitting water using renewable electricity, is crucial for decarbonising hard-to-abate sectors like steel, cement, and fertiliser production. It also serves as a direct replacement for fossil fuel-derived grey hydrogen in refinery processes. A lower production cost enhances the commercial viability of these transitions, accelerating India's journey towards energy independence and net-zero goals.

For engineering and construction leaders like L&T, this trend validates their early investments and strategic focus on building a comprehensive green hydrogen ecosystem. The ability to secure large-scale projects at competitive prices demonstrates advanced technical capabilities and project management expertise essential for integrating renewable energy generation with electrolysis technology. This price milestone is expected to spur further investment and innovation across the value chain, from manufacturing electrolysers to developing storage and transportation solutions, solidifying India's position as a future global hub for green hydrogen.

This price discovery through competitive bidding is a key objective of the government's strategy to scale up the green hydrogen industry. The tenders by public sector undertakings are designed to create an initial market and provide visibility for domestic and international investors fast-tracking the establishment of a domestic manufacturing base for Green Hydrogen plants, manufacturing of electrolyser and other critical components, which is expected to drive costs down further through economies of scale and indigenisation.

Source:

https://economictimes.indiatimes.com/industry/renewables/green-hydrogen-cost-falls-to-usd-4-4-4-5-per-kg-in-oil-co-tenders/articleshow/124119702.cms