Reliance Industries To L&T: Goldman Sachs To Nomura List Potential Winners Of India’s Green Hydrogen Push
India’s Power Ministry has released the Green Hydrogen policy, in line with the National Hydrogen Mission announced last year.
Reliance Industries Ltd., Larsen & Toubro Ltd., Siemens Ltd. and major oil refiners are likely to benefit the most from India’s attempt at lowering carbon emissions and meeting global targets, according to analysts.
India’s Power Ministry on Thursday released the Green Hydrogen policy, in line with the National Hydrogen Mission announced by Prime Minister Narendra Modi on Aug. 15 last year. The fuel is produced via electrolysis of water using renewable energy.
Key policy aspects:
Interstate transmission charges waived for 25 years.
Renewable energy for green hydrogen/green ammonia production can be procured from anywhere; open access to be provided within 15 days.
Banking of unconsumed renewable energy for production of green hydrogen/ammonia allowed for up to 30 days.
Multiple avenues for procuring land for manufacturing.
Manufacturers will be allowed to set up bunkers near ports for storage.
The Ministry of New and Renewable Energy to set up a single portal for such projects.
These measures, according to Edelweiss, could make India the cheapest green hydrogen producer globally. “The country could, in effect, become the Middle East of green hydrogen.” But hydrogen, it said, is a tricky molecule to handle, especially from a transmission and export perspective. Hence, the government’s intention is to provide incentives and promote infrastructure first.
L&T, Nomura said, is “significantly ahead in terms of steps taken for green hydrogen and fuel cell manufacturing”, with its tie-up for electrolyser technology with HydrogenPro. The two are aiming to produce green hydrogen at the “lowest targeted cost of any manufacturer that has technology access in India”. The conglomerate has also tied up with ReNew Power Ltd. and Thermax Ltd. for green energy and fuel cell development, respectively.
Goldman Sachs bets on Reliance Industries Ltd. as India’s largest “greenabler”. “We see hydrogen as a major growth driver for Reliance albeit in the next decade as cost structures decline and demand pools become meaningful. We expect Reliance to tap both local and global markets as the hyper-integration and manufacturing approach to green hydrogen drives significant cost curve leadership."
Reliance’s target of $1 a kilogram hydrogen cost by 2030 is significantly ahead of BloombergNEF’s expectations but by 2050, it said.
While the key beneficiaries will likely be local players, Goldman Sachs said international players, particularly in the electrolyser equipment value chain, can aid the near- and long-term development of this market.
According to Nomura, Indian companies with overseas parents such as Siemens, ABB India Ltd. and Cummins India Ltd. could also benefit since they have green hydrogen technology access from abroad.
Aegis Logistics Ltd. and Dutch tank storage company Vopak, too, plan to develop industrial terminals in India that would allow them to engage in green ammonia transport. “Aegis can thus emerge as a player in green ammonia logistics (green hydrogen is transported after its conversion to ammonia),” Nomura said. Vopak has also developed a hydrogen bromide lamellar flow battery that can be used for green hydrogen transport as well.
Nomura also picked VA Tech Wabag Ltd.
The sewage and water treatment plant installer, in a recent interaction with BloombergQuint, had said the demand for green hydrogen could lead to a significant uptick in desalination projects in the regions where it operates. Incremental desalination opportunities at green hydrogen plants could be worth Rs 20,000 crore over the next few years, it said.
Besides Reliance, Morgan Stanley said India’s energy transition to hydrogen is best played via big consumers, which are major refiners Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp.
Indian Oil is currently leading the race. The company in July last year having announced what it called the country’s first ‘green hydrogen’ plant at its Mathura refinery. It’s also setting up about 1-tonne-a-day capacity pilot plants based on four innovative hydrogen production technologies.
Hindustan Petroleum has announced a 370-tonne-per-annum green hydrogen plant at its Vizag refinery by December this year. Bharat Petroleum, too, has tied up with Bhabha Atomic Research Centre for alkaline electrolysers and plans to set up 20 MW of electrolyser capacity for the production of the green fuel.