India’s ambitious goal of producing 5 million tonnes of green molecules annually by 2030 is not just a lofty aspiration; it’s a clarion call for investment that could reshape the country’s energy landscape. The recent report by SBICAPS lays it out plainly: achieving this target will require a staggering investment of INR 8-10 trillion. This isn’t just about numbers; it’s about laying the groundwork for a sustainable future, one that could position India as a leader in the global green hydrogen race.
Breaking down the investment, INR 1.6 trillion is earmarked for building a whopping 60 GW of electrolyzer capacity. This is the backbone of green hydrogen production, enabling the conversion of renewable energy into hydrogen through water electrolysis. But that’s just the tip of the iceberg. An additional INR 4.2 trillion will be needed to establish the production capacities for those green molecules, while another INR 4.5 trillion will go into creating the renewable energy infrastructure to power these ambitious factories. The scale of this undertaking is monumental, but so is the opportunity it presents.
However, the road to this green hydrogen utopia isn’t without its bumps. The report highlights several challenges that could hinder effective financing. Uncertain demand offtake, high capital expenditure, logistical headaches in sourcing water and electricity, and the risk of stranded assets loom large. These are not just bureaucratic hurdles; they represent real barriers to progress that need addressing if India is to realize its green hydrogen vision.
Solutions are already in the pipeline. The government is rolling out initiatives like electrolyzer production subsidies through the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, waiving ISTS charges, and establishing green hydrogen hubs. These measures aim to create a more favorable environment for investment while also ensuring that there are firm demand commitments for green hydrogen and its derivatives. Furthermore, specialized power finance institutions could help streamline funding and mitigate some of the financial risks associated with this burgeoning sector.
The potential for hydrogen use in India is set to triple by 2030, soaring from the current 5-7 million tonnes to an impressive 15-20 million tonnes annually. This growth trajectory is not just faster than the global average; it’s a testament to the robust domestic demand that exists. While industrial applications will still dominate, there’s a growing acknowledgment that new sectors—transport, residential, and commercial—will account for about 13% of hydrogen consumption.
With over 95% of the world’s hydrogen production still reliant on fossil fuels, India stands at a pivotal crossroads. The country possesses a renewable energy potential of 2.1 TW and the ability to produce energy at remarkably low costs, making it ripe for a green hydrogen revolution. But to harness this potential, the financing ecosystem must evolve, aligning with the scale and ambition of the green hydrogen initiative.
In a world increasingly aware of the climate crisis, India’s green hydrogen ambitions could not only fulfill domestic energy needs but also position the nation as a significant player in the global energy market. The stakes are high, but so are the rewards. As the nation gears up for this monumental shift, it’s clear that the future of energy is green—and India is ready to lead the charge.
