IndianOil, L&T and ReNew Power to develop green hydrogen in India

Indian Oil Corporation Ltd., (IndianOil), Larsen & Toubro (L&T), India’s premier engineering & construction conglomerate, and ReNew Power, India’s leading renewable energy company, have signed a binding agreement to form a joint venture (JV) company to develop green hydrogen in India.

The tripartite joint venture is a synergistic alliance that brings together the strong credentials of L&T in designing, executing, and delivering engineering, procurement and construction (EPC) projects, IndianOil’s expertise in petroleum refining, and ReNew’s expertise in offering and developing utility-scale renewable energy solutions.

Additionally, IndianOil and L&T have signed a binding term sheet to form a JV with equity participation to manufacture and sell electrolyzers used in the production of green hydrogen.

“India plans to rapidly march ahead in its decarbonization efforts and production of green hydrogen is key in this endeavor. We consider this partnership as a significant step in India’s quest for alternative energy,” said SN Subrahmanyan, CEO and managing director, L&T.

To address another gap in the green hydrogen manufacturing chain, the IndianOil and L&T joint venture will focus on production and sale of electrolyzer.

“Both these JVs aim to enable the nation’s ‘Aatmanirbhar Bharat’ mission to rapidly build, expand and bring in economies of scale to make green hydrogen a cost-effective energy carrier and a chemical feedstock for many sectors,” said Subrahmanyan.

“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,” said Shrikant Madhav Vaidya, chairman of IndianOil.

“The partnership forged today will thus catalyse the greening of India’s energy basket.”

“In alignment with the government’s broader strategic climate goals for 2030 and 2070 set by the honorable Prime Minister Narendra Modi, ReNew looks forward to working with L&T and IndianOil 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.

“The timing for these proposed JVs is excellent as they will help support Government of India’s recently announced green hydrogen policy to boost India Inc.’s decarbonization journey.”

The planned JVs aim to enable India’s transition from a gray hydrogen economy to a greener economy that increasingly manufactures hydrogen via electrolysis powered by renewable energy.

The central government in February announced India’s 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.

While nearly all hydrogen produced in India today is gray, it is estimated that demand for hydrogen will be 12 million metric tonnes (MMT) by 2030 and around 40% of the element produced in the country (around 5 MMT) will be green, as per the draft National Hydrogen Mission guidelines.

By 2050, nearly 80% 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 MMT of gray hydrogen every year, with IndianOil owning one of the largest shares of its refining output.

To help decarbonize the Indian 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 gray 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.