Indian Green Hydrogen Financing Issues

• India’s ambitious target of producing 5 million metric tonnes of green hydrogen annually by 2030 is hindered by the high cost of green hydrogen production.

• The disparity between green hydrogen production costs and traditional grey/blue production costs makes it difficult to attract domestic offtake and private investment.

• The economics of green hydrogen production are influenced by the levelised cost of electricity (LCOE) and electrolyzer costs, both driven by the cost of capital.

• The global perspective on investments reflects these barriers, with only 27.6% of the 1,572 announced large-scale clean hydrogen projects valued at $370 billion having reached final investment decisions by May 2024.

• India needs to adopt innovative financing mechanisms and policy frameworks to effectively de-risk investments and attract capital to scale its green hydrogen sector.

• Countries like the U.K.’s Low Carbon Hydrogen Standard Certification and strategic hydrogen hubs in the U.S., Japan, and Australia are fostering integrated ecosystems where infrastructure, production, innovation, and consumption co-evolve.

• To de-risk investments, India needs a multi-pronged approach: a comprehensive policy framework, innovative financing approaches, international collaboration, and a focus on delivering hydrogen at prices that suit key industries.