To support India's decarbonization efforts, Indian Oil Corporation Ltd. (IndianOil), the country's largest refiner and retailer of petroleum products, Larsen & Toubro (L&T), India's largest engineering and construction conglomerate, and ReNew Power, India's leading renewable energy company, announced the signing of a binding term sheet for the formation of a joint venture (JV) company to develop the country's nascent green hydrogen sector.
The tripartite venture is a synergistic partnership that brings together L&T's established expertise in engineering, procurement, and construction (EPC) projects, IndianOil's expertise in petroleum refining and its presence across the energy spectrum ReNew's expertise in offering and developing utility-scale renewable energy solutions.
Additionally, IndianOil and L&T have signed a binding term sheet to establish a joint venture with equity participation to manufacture and market electrolyzers used in the production of Green Hydrogen.
"India plans to rapidly march ahead in its decarbonization efforts and production of Green Hydrogen is vital in this endeavor. The IndianOil-L&T-ReNew JV will focus on developing Green Hydrogen projects in a time-bound manner to supply Green Hydrogen at an industrial scale. While L&T will bring its strong EPC credentials to the table, IOC, India's premier oil refiner with extensive chemical processes and refining capabilities, has established deep R&D capabilities in many aspects of the green hydrogen value chain. In a short time, Renew Power has established itself as a leading renewable energy supplier and has built a solid reputation. We consider this partnership a significant step in India's quest for alternative energy. Addressing another Green Hydrogen manufacturing chain gap, IndianOil-L&T JV will focus on production and sale of Electrolyzer."
- Mr. SN Subrahmanyan, CEO & MD, L&T
"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. Being the Energy of India, we are committed to powering India's drive towards carbon neutrality by leveraging the power of green hydrogen. IndianOil is forging this alliance to realise India's green hydrogen aspirations, which is in sync with the Hon'ble Prime Minister's vision of making India a Green Hydrogen generation and export hub. To start with, this partnership will focus on green hydrogen projects at our Mathura and Panipat refineries. Alongside, other green hydrogen projects in India will also be evaluated. While the usage of hydrogen in the mobility sector will take its due time, however the refineries will be the pivot around which India's green hydrogen revolution will materialize in a substantial way."
- Mr. Shrikant Madhav Vaidya, Chairman, IndianOil
"In alignment with the government's broader strategic climate goals for 2030 and 2070 set by honorable Prime Minister Narendra Modi, ReNew looks forward to working with L&T and IndianOil to build the green hydrogen business in India. ReNew, as a leader in intelligent energy solutions and with advanced capability across renewable energy technologies, is well poised to complement the capabilities of our partners. 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 decarbonization journey."
- Mr. Sumant Sinha, Chairman and CEO of ReNew Power
The planned JVs are intended to facilitate India's transition from a grey hydrogen industry to a more environmentally friendly one that increasingly creates hydrogen using electrolysis powered by renewable energy.
The central government announced the Green Hydrogen strategy in February to increase the production of green hydrogen and green ammonia and assist the country in becoming a global hub for the element's environmentally benign variant.
Green hydrogen can also help countries like India, with its ever-growing oil and gas import bill, achieve critical energy security by lowering total reliance on imported fossil fuels.
While practically all hydrogen produced in India currently is grey, the proposed National Hydrogen Mission guidelines estimate that demand for hydrogen will reach 12 MMT by 2030 and that roughly 40% of the element produced in the country (around 5 MMT) will be green.
By 2050, over 80% of India's hydrogen production is expected to be 'green' - derived from renewable energy and electrolysis. By roughly 2030, green hydrogen may become the most cost-effective method of hydrogen production. Possible cost reductions could influence this in critical manufacturing and clean energy technologies such as solar photovoltaics and wind turbines.
Hydrogen is currently primarily used in the refining, steel, and fertilizer industries, which will be the initial focus of the JVs' activities. The country's refining sector consumes approximately 2 MMT of grey hydrogen every year, with IndianOil accounting for a sizable portion of that output.
To aid in the decarbonization of Indian industry, the new green hydrogen policy includes a 25-year remission of inter-state transmission tariffs and a 30-day banking provision, which will drastically cut the cost of green hydrogen. As a result, this will accelerate the transition from grey to green hydrogen. Additionally, the Ministry of Power established a single-window clearance portal for all clearances and priority access to green hydrogen projects.