In a bid to enable India’s decarbonization push, three leading Indian companies have announced the signing of a binding term sheet for the formation of a Joint Venture (JV) company to develop the nascent green hydrogen sector in the country.
Indian Oil Corporation Ltd, (IOCL), the country’s top refiner and fuel retailer, Larsen & Toubro Ltd (L&T), India’s premier engineering and construction conglomerate, and ReNew Power Pvt Ltd, India’s leading renewable energy company, have agreed to form a tripartite venture to develop the nascent green hydrogen sector in India.
Being the Energy of India, we are committed to powering India’s drive towards carbon neutrality by leveraging the power of green hydrogen. IndianOil is forging this alliance to realize India’s green hydrogen aspirations, which is in sync with the Hon’ble Prime Minister’s vision of making India a green hydrogen generation and export hub, said Shrikant Madhav Vaidya, Chairman, IOCL.
The tripartite venture is a synergistic alliance that brings together the strong credentials of L&T in designing, executing, and delivering EPC projects, IOCL’s established expertise in petroleum refining along with its presence across the energy spectrum, and the expertise of ReNew in offering and developing utility-scale renewable energy solutions.
In alignment with the government’s broader strategic climate goals for 2030 and 2070 set by honourable Prime Minister Narendra Modi, ReNew looks forward to working with L&T and IOCL to build the green hydrogen business in India. ReNew, as a leader in intelligent energy solutions and with advanced capability across renewable energy technologies, is well poised to complement the capabilities of our partners, said Sumant Sinha, Chairman, and CEO of ReNew Power.
Additionally, IOCL and L&T have signed a separate binding term sheet to form a JV with equity participation to manufacture and sell electrolyzers used in the production of green hydrogen.
The IndianOil-L&T-ReNew JV will focus on developing green hydrogen projects in a time-bound manner to supply green hydrogen at an industrial scale. We consider this partnership a significant step in India’s quest for alternative energy. Addressing another gap in the green hydrogen manufacturing chain, IndianOil-L&T JV will focus on the production and sale of electrolyzers. The timing for these proposed JVs is excellent as they will help support the Government of India’s recently announced green hydrogen policy to boost India Inc.’s decarbonization journey, said S N Subrahmanyan, CEO and Managing Director of L&T.
Enable green hydrogen transition
The planned JVs both aim to enable India’s transition from a grey hydrogen economy to a greener economy that increasingly manufactures hydrogen via electrolysis powered by renewable energy.
In February 2022, the central government notified its Green Hydrogen policy aimed at boosting the production of green hydrogen and green ammonia to help the nation become a global hub for the environmentally friendly version of the element.
Crucial for energy security
For countries like India, with its ever-increasing oil and gas import bill, green hydrogen can also help provide crucial energy security by reducing the overall dependence on imported fossil fuels.
While nearly all hydrogen produced in India today is grey, it is estimated that the demand for hydrogen will be 12 million tonnes by 2030 and around 40 percent of hydrogen produced in the country (around 5 million tonnes) will be green, as per the draft National Hydrogen Mission guidelines.
By 2050, nearly 80 percent of India’s hydrogen is projected to be ‘green’ – produced by renewable electricity and electrolysis.
Green hydrogen may become the most competitive route for hydrogen production by around 2030. This may be driven by potential cost declines in key production technologies and in clean energy technologies such as solar PV and wind turbines.
Today, hydrogen is mainly used in the refining, steel, and fertilizer sectors, which will be the focus of the JVs’ initial efforts.
The country’s refining sector consumes approximately 2 million tonnes of grey hydrogen every year, with IOCl owning one of the largest shares of its refining output.
To start with, this partnership will focus on green hydrogen projects at our Mathura and Panipat refineries. Alongside, other green hydrogen projects in India will also be evaluated. While the usage of hydrogen in the mobility sector will take its due time, however, the refineries will be the pivot around which India’s green hydrogen revolution will materialize in a substantial way, Shrikant Madhav Vaidya said.
To help decarbonize India’s industry, the new green hydrogen policy provides for the waiver of Inter-State transmission charges for a period of 25 years and a banking provision of up to 30 days, which will help reduce the cost of green hydrogen significantly.
This will, therefore, push the replacement of grey hydrogen with green. The Ministry of Power has also provided a single -window-clearance portal for all clearances and open access on priority to green hydrogen projects.