The advantages of green hydrogen in sectors such as transport and steel are immense, but the use cases remain underdeveloped on account of high costs.
SBI CAPS in a report on green hydrogen pointed out that emerging hydrogen applications in transport, steel production and piped gas blending remain underdeveloped due to current cost premia relative to incumbent solutions and the comparable emissions profile of grey hydrogen (H2) production.
“Green H2 presents a transformative potential, with various pilot projects exploring these applications. While demand from these nascent sectors is contingent on significant cost reductions, an estimated incremental demand of around 2-5 million tonnes (mt) could materialise by 2030,” it added.
Launched in 2023, the National Green Hydrogen Mission (NGHM) targets production of 5 mt per annum by 2030. The project has been allocated an initial budget of ₹19,744 crore.
The government introduced Strategic Interventions for Green Hydrogen Transition (SIGHT), a supply-side incentive programme, to support domestic electrolyser manufacturing and green hydrogen production.
SIGHT incentives for green molecule production are projected to reduce costs by around ₹15 per kg over the project lifecycle.
However, this subsidy is insufficient to bridge the current cost differential, with green hydrogen priced at around ₹300 per kg compared to grey at around ₹150.
“Achieving project viability necessitates a confluence of factors, including substantial reductions in power costs, enhanced electrolyser scale and efficiency, operational expenditure optimisation, and supplementary revenue generation from heat and O2 byproducts,” SBI CAPS added.
Key success factors for green hydrogen projects include substantial operational scale and access to captive renewable energy sources with storage in favourable regions (potentially yielding savings up to ₹75/kg).
Besides, securing demand through internal consumption or long-term HPAs; access to cost-effective, high-efficiency electrolysers (benefiting from intra-group access to electrolyser manufacturing subsidies); adequate storage and transport infrastructure (proximity to demand centres, green H2 hubs, or East Coast for exports), and high average incentive capture (ideally exceeding ₹25/kg) are other success factors.
“Consequently, vertically integrated players with access to low-cost financing are best positioned for success, while smaller, pure-play operators lacking off-take agreements face significant viability risks,” SBI CAPS said.
India’s hydrogen demand constitutes a significant around 9 million tonnes (mt), which is predominantly grey hydrogen. Natural gas is largely imported for making grey hydrogen for application in the fertiliser and refinery sectors.
SBI CAPS explained that end users are near saturation (and expected to grow by only around 3 per cent per annum hereon), hydrogen demand in India has grown slowly at around 5-6 per cent per annum.
Hence, bulk of the demand from traditional sectors would be for substitution of natural gas imports — which is one of the aims of the NGHM, it added.
“Since these end users are near saturation (and expected to grow by only around 3 per cent per annum hereon), Hydrogen demand in India has grown slowly at around 5-6 per cent per annum. Hence, bulk of the demand from traditional sectors would be for substitution of natural gas imports — which is one of the aims of the NGHM,” it added.
Published on May 9, 2025
The advantages of green hydrogen in sectors such as transport and steel are immense, but the use cases remain underdeveloped on account of high costs.
SBI CAPS in a report on green hydrogen pointed out that emerging hydrogen applications in transport, steel production and piped gas blending remain underdeveloped due to current cost premia relative to incumbent solutions and the comparable emissions profile of grey hydrogen (H2) production.
“Green H2 presents a transformative potential, with various pilot projects exploring these applications. While demand from these nascent sectors is contingent on significant cost reductions, an estimated incremental demand of around 2-5 million tonnes (mt) could materialise by 2030,” it added.
Launched in 2023, the National Green Hydrogen Mission (NGHM) targets production of 5 mt per annum by 2030. The project has been allocated an initial budget of ₹19,744 crore.
The government introduced Strategic Interventions for Green Hydrogen Transition (SIGHT), a supply-side incentive programme, to support domestic electrolyser manufacturing and green hydrogen production.
SIGHT incentives for green molecule production are projected to reduce costs by around ₹15 per kg over the project lifecycle.
However, this subsidy is insufficient to bridge the current cost differential, with green hydrogen priced at around ₹300 per kg compared to grey at around ₹150.
“Achieving project viability necessitates a confluence of factors, including substantial reductions in power costs, enhanced electrolyser scale and efficiency, operational expenditure optimisation, and supplementary revenue generation from heat and O2 byproducts,” SBI CAPS added.
Key success factors for green hydrogen projects include substantial operational scale and access to captive renewable energy sources with storage in favourable regions (potentially yielding savings up to ₹75/kg).
Besides, securing demand through internal consumption or long-term HPAs; access to cost-effective, high-efficiency electrolysers (benefiting from intra-group access to electrolyser manufacturing subsidies); adequate storage and transport infrastructure (proximity to demand centres, green H2 hubs, or East Coast for exports), and high average incentive capture (ideally exceeding ₹25/kg) are other success factors.
“Consequently, vertically integrated players with access to low-cost financing are best positioned for success, while smaller, pure-play operators lacking off-take agreements face significant viability risks,” SBI CAPS said.
India’s hydrogen demand constitutes a significant around 9 million tonnes (mt), which is predominantly grey hydrogen. Natural gas is largely imported for making grey hydrogen for application in the fertiliser and refinery sectors.
SBI CAPS explained that end users are near saturation (and expected to grow by only around 3 per cent per annum hereon), hydrogen demand in India has grown slowly at around 5-6 per cent per annum.
Hence, bulk of the demand from traditional sectors would be for substitution of natural gas imports — which is one of the aims of the NGHM, it added.
“Since these end users are near saturation (and expected to grow by only around 3 per cent per annum hereon), Hydrogen demand in India has grown slowly at around 5-6 per cent per annum. Hence, bulk of the demand from traditional sectors would be for substitution of natural gas imports — which is one of the aims of the NGHM,” it added.
Published on May 9, 2025
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It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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