India has taken a significant step toward establishing a domestic green hydrogen economy by setting a benchmark price of ₹397 per kilogram through a competitive tender led by Indian Oil Corporation Ltd (IOCL). The price, approximately $4.67/kg, marks the outcome of a transparent bidding process and is being viewed as a major stride toward the commercialisation of green hydrogen in the country.

L&T Energy Green Tech submitted the winning bid, positioning itself as a key contributor to India’s green hydrogen roadmap. The discovered price places India in a globally competitive bracket, especially when compared to current rates in regions like Europe and the Middle East, which range between $4.50 and $6.00/kg.

India’s advantage largely stems from its relatively low solar power tariffs, which currently range between ₹2.5 and ₹3 per unit. This cost efficiency supports more affordable production of green hydrogen via electrolysis and strengthens the case for scaling up domestic projects.

Despite this progress, green hydrogen continues to be significantly costlier than conventional grey hydrogen, which is derived from natural gas. Bridging this gap will require further reductions in renewable energy prices and capital costs associated with electrolysers.

In the near term, demand is expected to be driven by industrial users, including refineries and fertilizer manufacturers. Between 2024 and 2027, this segment could stimulate $2–3 billion in investment in India’s electrolyser manufacturing sector. By the end of the decade, India aims to capture a notable share—estimated between 5% and 10%—of the global electrolyser market, particularly as sectors such as steel and transport begin to adopt green hydrogen solutions.

The Panipat project’s 25-year offtake agreement at the benchmark price is likely to provide long-term price stability, enhancing investor confidence and setting a model for future green hydrogen tenders. As more players enter the market and capacities increase, further price reductions are anticipated, potentially bringing costs below ₹350 per kg.

This price discovery is being closely monitored as India advances its clean energy ambitions and builds capacity in the evolving global hydrogen landscape.

Source:

DeepDive: India’s green hydrogen journey starts at ₹397 per kg - ET EnergyWorld