In a bid to enable India’s decarbonisation push, Indian Oil Corporation Ltd.(IndianOil), the country’s top refiner and fuel retailer; Larsen & Toubro (L&T), India’s premier engineering, construction and IT/TS services conglomerate; and ReNew Power (“ReNew”), India’s leading renewable energy company, announced signing of binding term sheet for the formation of a Joint Venture (JV) company to develop the nascent green hydrogen sector in India.
The tripartite venture is a synergistic alliance that brings together the strong credentials of L&T in designing, executing and delivering EPC projects, IndianOil’s established expertise in petroleum refining along with its presence across the energy spectrum, and the expertise of ReNew 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 Electrolysers used in the production of Green Hydrogen.
Speaking about the joint venture, SN Subrahmanyan, CEO & MD, L&T, said, “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.”
Commenting on the occasion, Shrikant Madhav Vaidya, Chairman, IndianOil, said, “IndianOil is forging this alliance to realise India’s green hydrogen aspirations, which is in sync with the Prime Minister’s vision of making India a Green Hydrogen generation and export hub. The partnership forged today will thus catalyse the greening of India’s energy basket.”
Sumant Sinha, Chairman and CEO of ReNew Power said, “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 decarbonisation journey.”
The planned JVs aim to enable India’s transition from a grey hydrogen economy to a greener economy that increasingly manufactures hydrogen via electrolysis powered by renewable energy.
The central government in February notified the Green Hydrogen policy aimed at boosting production of green hydrogen and green ammonia to help the nation become a global hub for the environmentally friendly version of the element.
For countries like India, with its ever-increasing oil and gas import bill, green hydrogen can also help provide crucial energy security by reducing the overall dependence on imported fossil fuels.
While nearly all hydrogen produced in India today is grey, it is estimated that demand for Hydrogen will be 12 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 fertiliser sectors, which will be the focus of the JVs’ initial efforts. The country’s refining sector consumes approximately 2 MMT of grey hydrogen every year, with IndianOil owning one of the largest shares of its refining output.
To help decarbonise 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 grey 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.