India's green hydro ambitions falter on demand uncertainty

India's green-hydrogen ambitions are slipping due to the slow commissioning of projects, which is largely driven by insufficient infrastructure and unclear demand signals. This was stated by a U.S. energy think tank on Friday.

The Institute for Energy Economics and Financial Analysis stated in a note that despite strong investor interest, 94 percent of the planned green hydrogen capacity of the country is still at the announcement phase. Higher costs were cited as a major deterrent for buyers.

In 2023, the government launched its National Green Hydrogen Mission with a budget of 197 billion rupees ($2.2 billion), aiming to produce 5 million metric tons per year (MMTPA).

A top official in the clean energy department said this week that India will likely achieve its target by 2032.

IEEFA reported that India has 158 project under development but only 2.8% of them are operational, and only 0.1% are under construction.

IEEFA said that the announced projects totaled 11.2 MMTPA, which is more than twice the target. However, progress was hampered due to a weak demand and a lack in storage and transportation facilities.

The note stated that industry estimates place India's total demand for hydrogen at 15-20 MMTPA in 2030. Green hydrogen could meet 25% to 33% if policies encourage uptake in transport, chemicals, steel and exports.

The report recommends hydrogen purchase obligations, aggregated demand and hubs that share infrastructure in order to reduce costs and speed up adoption.

Charith Konda is an energy specialist with IEEFA. He said: "Policy nudges, high-level goals and decarbonisation will likely drive the demand. But sustained uptake requires global collaboration and tangible domestic steps." (Reporting and editing by Sethuraman NR)

(source: Reuters)