Derek Shah, Senior Vice President at Larsen & Toubro Limited (L&T), heads the company’s Green Manufacturing & Development division, which operates across the entire green energy value chain. In an exclusive interview with Discover Green Hydrogen, Derek shares insights into L&T’s rapid progress in green hydrogen, highlighting key milestones such as technology acquisition and the launch of a state-of-the-art electrolyzer manufacturing facility in Hazira, Gujarat. He also discusses the company’s ongoing research and innovation strategies, its approach to cost-effective scaling and its broader ambitions in green ammonia, fuel cells, and international project development. 

How has L&T’s green energy vertical progressed since its inception, and what strategic moves have propelled its growth in the green hydrogen sector?
L&T’s green energy vertical, launched in early 2022, has made remarkable progress in less than three years across technology, engineering, EPC, and project development. A major strategic milestone was acquiring critical green hydrogen technology—specifically alkaline electrolyzers—through a licensing agreement with European firm McPhy Energy. This enabled access to 0.5 MW and 4 MW electrolyzer designs and led to the creation of a state-of-the-art manufacturing facility in Hazira. The plant features automated production lines equipped with nine robots and has achieved a high level of indigenization, significantly reducing dependence on European imports. We’ve acquired the technology, operationalized the factory, fulfilled our first order, and are now ready to ship to clients. L&T is now among the global leaders in this space and has secured 300 MW of capacity under the Indian government’s PLI scheme, which translates into ₹444 crore in incentives, alongside support from the Government of Gujarat.

What are the primary areas of focus for research at L&T? How is the company differentiating itself in electrolyzer manufacturing, particularly in terms of technology and innovation?
We understood early on that simply licensing technology and focusing only on manufacturing wouldn’t be enough. So, we built an in-house R&D team of around 30 people, including senior scientists, and established a dedicated lab adjacent to our Hazira factory. The primary focus of this research is to develop more efficient electrolyzers. We’re examining metallurgy and exploring ways to enhance efficiency. I’m pleased to share that even our first product features innovations in specialized coating and heat treatment, resulting in an electrolyzer that’s more efficient than what our licensor currently produces in Europe. We’re also researching the replacement of certain materials with more cost-effective alternatives and are designing larger, more powerful electrolyzers with lower energy consumption.

Cost is a major concern in setting up electrolyzer manufacturing facilities. What approach did L&T take to achieve indigenization and reduce costs?
We haven’t just manufactured electrolyzers—we’ve also achieved significant indigenization. Components that were earlier imported from Europe at high costs are now being produced domestically at less than half the price. While initial government incentives are essential, long-term sustainability depends on improved efficiency and technological advancement. Our future planning is built around these factors. For example, next-generation electrolyzers will offer higher efficiency, and we’re working to incorporate those improvements to lower power consumption, which is a major cost component. We also emphasize strategically sourcing renewable power at minimal cost.

What are some of the current opportunities and challenges for the green hydrogen sector in India?
The main challenge in hydrogen, ammonia, and green fuels in general is balancing supply and demand. While L&T has addressed the supply side through technological advancement, the biggest hurdle—both in India and globally—is demand creation. Like any disruptive technology, cost is a major issue. Bridging the price gap between traditional and green alternatives is essential, and passing on the premium to consumers is unlikely. However, government targets could kickstart demand, creating a positive feedback loop once early projects become successful.

What policy interventions or incentives from the government could help accelerate India’s green hydrogen ecosystem? Could you elaborate on how government support has impacted your progress?
Clear government mandates are essential for demand creation. Without them, industries are unlikely to transition voluntarily. One significant challenge is ensuring government approval and implementation of such mandates. For example, a regulation requiring refineries to use a certain percentage of green hydrogen would immediately drive demand. We’ve already seen positive effects from existing government initiatives. Through the PLI (Production-Linked Incentive) scheme, we secured 300 MW of capacity, which translates into approximately ₹444 crore in incentives. Additionally, we’ve received considerable support from the Government of Gujarat.

How is L&T expanding its green energy capabilities beyond electrolyzers and positioning itself for global opportunities?
L&T is actively diversifying its green energy portfolio by pursuing licenses for fuel cells and batteries. We’ve set up an engineering hub in Baroda with over 70 professionals and developed proprietary hydrogen plant simulation software. Our team is already conducting FEED (Front-End Engineering and Design) studies for green ammonia plants in the United States, reflecting our international ambitions. On the project development front, L&T has acquired 500 acres at Kandla Port to establish a green ammonia facility. FEED studies are ongoing, and we’re in discussions with domestic and international buyers for off-take agreements. With planned expansions along India’s east and west coasts, we’re cementing our position as a major player in the global green energy transition.