Green Hydrogen: The Energy Investment Revolution of the Decade

Green hydrogen—produced using renewable electricity to split water—has shifted from experimental to economically viable in India. After years of being a policy aspiration, it now represents one of the most significant energy investment opportunities of the decade for Indian markets.

"India is positioning itself as a global green hydrogen powerhouse," says industry analysts tracking the National Green Hydrogen Mission (NGHM).

Unlike traditional renewables, green hydrogen can decarbonize hard-to-abate sectors like steel, ammonia, heavy transport, and chemicals—areas where India has significant industrial presence.

Why Now?

Three major tailwinds have made green hydrogen commercially attractive in India:

• Falling renewable costs – India's solar tariffs have dropped to among the world's lowest, reducing input costs for electrolysis.

• Scaling electrolyzer manufacturing – Indian companies are building domestic manufacturing capabilities, reducing dependency on imports.

• Strong policy support – The National Green Hydrogen Mission backed by ₹19,744 crore allocation up to FY 2029-30 supports the entire hydrogen value chain.

This convergence has triggered massive investments across Indian industrial giants.

The Investment Opportunity: Beyond Just Production

"Investors who view hydrogen as just another renewable play are missing India's industrial transformation potential," notes market analysts.

Green hydrogen touches an entire ecosystem in India:

• Upstream: Electrolyzer manufacturing is being scaled by Indian companies, with government support for domestic production capabilities.

• Midstream: Infrastructure development including pipelines, storage, and distribution networks requires massive capital investment across states.

• Downstream: Industrial applications in steel, fertilizers, and petrochemicals offer the clearest path to scale, given India's large industrial base.

The real opportunity lies in supporting technologies—compressors, materials science, storage solutions, and integrated systems.

Infrastructure: The Critical Foundation

India's hydrogen infrastructure requires significant development. The challenge is moving hydrogen efficiently across the country's vast geography. While blending hydrogen into existing natural gas networks offers a short-term solution, dedicated infrastructure is essential for large-scale adoption.

Several Indian states are developing hydrogen corridors and hubs, with Gujarat, Rajasthan, Tamil Nadu, and Karnataka leading the charge.

End-Use Applications: Following India's Industrial Needs

• Heavy Industry: Green steel and ammonia production are gaining momentum. India's steel industry, being the world's second-largest, presents enormous opportunities for hydrogen-based steelmaking.

• Fertilizers: India's ammonia production for fertilizers—critical for food security—is a natural fit for green hydrogen adoption.

• Transport: Long-haul trucking, railways, and coastal shipping present strong hydrogen use cases where battery solutions may be limited.

• Refineries: India's large refining capacity offers immediate hydrogen demand, with potential for green hydrogen substitution.

  
  

The Policy Foundation

India's hydrogen future is strongly supported by government policy. The National Green Hydrogen Mission aims for 5 million metric tons annual production capacity by 2030, with investments exceeding $96.68 billion.

Key policy measures include:

• Enhanced budget allocation of ₹600 crore for 2024-25 (up from ₹100 crore in 2023-24)

• Inter-state transmission charge exemptions for renewable energy projects

• Production Linked Incentive (PLI) schemes for electrolyzer manufacturing

• Green hydrogen purchase obligations for industrial sectors

Leading Indian Players

• Reliance Industries: Plans to invest ₹5 trillion over 10-15 years in renewable energy and green hydrogen ecosystem development.

• Adani Group: Targeting $50 billion investment in green hydrogen and sustainable energy projects over the next decade, aiming to become one of the world's largest green hydrogen producers.

• NTPC: India's largest power generator is developing multiple green hydrogen projects and establishing itself as a key player in the hydrogen value chain.

• Indian Oil Corporation: Leveraging its refinery infrastructure and distribution network for hydrogen applications.

• ONGC: Exploring green hydrogen opportunities across its upstream and downstream operations.

State-Level Initiatives

• Gujarat: Leading with comprehensive hydrogen policies and industrial infrastructure.

• Rajasthan: Leveraging abundant solar resources for large-scale green hydrogen production.

• Uttar Pradesh: Recently launched Green Hydrogen Policy 2024 with capital subsidies up to 40% for first 5 projects (capped at ₹225 crore per project annually).

• Karnataka: Attracting major investments with companies like ReNew proposing ₹26,400 crore for 0.22 MMTPA green hydrogen production capacity.

Market Projections

India's electrolyzer market is projected to grow from $4 billion in 2030 to $78 billion by 2050, driven by demand from steel, ammonia, and methanol industries.

The country aims to achieve 5 million metric tons of green hydrogen production capacity by 2030, potentially making India a major global exporter.

Investment Cautions

Despite the promise, investors should consider:

• Energy efficiency challenges: Electrolysis and fuel cell cycles involve energy losses, making direct electrification more efficient in some applications.

• Water requirements: Electrolysis demands purified water, which could be challenging in water-stressed regions despite India's coastal advantages.

• Infrastructure timeline: Large-scale infrastructure development takes years, adding execution risk to investments.

• Supply-demand coordination: Ensuring synchronized development of production capacity and industrial demand remains challenging.

How to Invest in India's Green Hydrogen Sector

Investment approaches include:

• Direct equity: Investing in pure-play hydrogen companies and established industrial giants with hydrogen divisions.

• Mutual funds and ETFs: Accessing diversified exposure across the hydrogen value chain.

• Infrastructure investments: Participating in hydrogen infrastructure development projects.

• Private equity: Early-stage investments in technology and manufacturing companies.

• Government bonds: Participating in green bonds funding hydrogen infrastructure project

  
  

Final Outlook

India's green hydrogen sector represents a transformative opportunity comparable to the country's renewable energy revolution of the 2010s. With strong government support, abundant renewable resources, large industrial demand, and growing private sector participation, India is well-positioned to become a global green hydrogen leader.

Success will favor investors who understand the complexity of the hydrogen ecosystem, manage infrastructure and execution risks, and position themselves before the market fully matures.

The next decade could see India emerge as both a major producer and consumer of green hydrogen, fundamentally reshaping its energy landscape and industrial competitiveness.

Start Your Investment Journey

We bring our app for Mutual Fund Investing - you may download the ANDROID APP here or SIGNUP at wealth.tikonacapital.com

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Please consult a licensed advisor before making investment decisions.