India's renewable hydrogen developers highlight difficulties in securing FID

India's renewable hydrogen developers say insufficient subsidies, a lack of infrastructure and changing rules are among the factors creating uncertainty among buyers, thus impacting the Final Investment Decision, a crucial milestone before plant construction can start.

India aims to produce 5 million mt/year of renewable hydrogen by 2030 and secure a 10% share of global trade around the same time, but headwinds worldwide threaten to impact project timelines.

"What was earlier thought [to take] about three to five years is actually taking us five to eight years," Harish Jayaram, VP of business development at Hygenco said at GH2's Green Hydrogen India Symposium April 4. "I think we're looking at probably a couple of years longer for us to get there, which also means that the customers will sign their binding offtake that much more later."

Jayaram added that the subsidy gap between required and actual allocations worldwide, alongside delays in infrastructure development such as terminals and cracking facilities, are factors causing consumer doubt and delaying FIDs.

Other speakers at the symposium highlighted additional delays due to difficulties in securing land, water and power, and a lack of experience in the nascent sector. Furthermore, buyers are increasingly favoring low-carbon hydrogen/ammonia, which Indian projects are not planning to produce.

"The ground reality is a huge constraint on getting the right land," said Sudhir Pathak, head of engineering and quality at Hero Future Energies. "There is a huge paucity of substations, huge paucity of the right wind, solar [assets]... solar [project] you can make anywhere, but wind is a very difficult element to handle."

Pathak underscored the chemical industry's requirements, noting that the stages of the feasibility study, pre-front-end engineering and design and FEED are time-consuming processes that must be conducted in detail to ensure projects rest on strong foundations.

"Most of the players... are from the independent power producer [sector]... they are used to developing renewable energy plants in one year, 18 months," Pathak said, highlighting the long lead for renewable hydrogen/ammonia projects. "...there is a huge mindset gap between what IPP wishes and how this chemical derivative behaves."

Hero Future Energies' website says it offers end-to-end solutions, from renewable power to renewable hydrogen production on a Build-Own-Operate basis, as well as Engineering, Procurement and Construction.

Hygenco, meanwhile, is developing an upcoming plant in Gopalpur, Odisha, which will produce 1.1 million mt/year of renewable ammonia. Phase one is expected to be operational by 2027. It also operates plants for renewable hydrogen supply to Jindal Stainless in Haryana and Sterlite Technologies in Maharashtra.

Hygenco secured certification for renewable fuel of non-biological origin in January and earlier selected Topsoe as the plant's licensor. Additionally, it has a memorandum of understanding with Mitsubishi Power and a term sheet with Ameropa for potential renewable ammonia supply.

S&P Global Commodity Insight's Hydrogen Production Assets database shows India has almost 143 renewable or low-carbon hydrogen projects, including multiple phases of the same projects, with a combined capacity of 10.55 million mt.

The government's Rupees 197.44 billion ($2.37 billion) National Green Hydrogen Mission is driving the production of renewable hydrogen/ammonia and electrolyzers, and the development of related ecosystems.

Lack of mandates, changing rules

Samir Saxena, VP of engineering, green hydrogen at ReNew, which has a renewable ammonia and a renewable methanol project in Odisha, said the lack of mandates and changing rules are also preventing timely FIDs.

"There are changes in laws, which can make things even worse," said Saxena. "I see finance and bankability becoming an even bigger challenge because you are employing certain parts of the plant that are still not proven."

Saxena highlighted competition from low-carbon products, especially as the largest consumers of Asia, Japan and South Korea seek "clean" ammonia. Clean ammonia is inferred to mean low-carbon ammonia that is cheaper than renewable hydrogen/ammonia.

Consuming nations "have come up with certain clauses that are very difficult for developers to accept. And I think it is a way people are learning with time," Saxena added.

According to sources, Indian renewable ammonia suppliers participated in South Korea's hydrogen-to-power tender in 2024. However, the tender, which offered a total capacity of 6,500 GWh, was undersubscribed. The market is considering re-tendering or new tenders from South Korea.

Meanwhile, Hintco, running the H2Global hydrogen auction mechanism, has confirmed a lower budget for its second import auction to supply renewable hydrogen and its derivatives to Germany and the Netherlands, with a value of up to Eur2.5 billion.

Renewable energy tendering arm Solar Energy Corp of India and H2Global signed an MOU in November to design joint tender plans to promote global trade for renewable hydrogen, signaling more changes on the horizon.

Platts assessed Queensland hydrogen produced via alkaline electrolysis (including capital expenditures) at $5.35/kg on April 3, up 48.61% month over month.

Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $5.27/kg April 4, down 33% from a month ago.