India's renewable hydrogen developers bank on cost advantage in lackluster global market: S&P report

New Delhi [India], March 20 : India's renewable hydrogen developers hope cost advantages and offtake interest will help kickstart "green ammonia" export opportunities in 2027 despite the sector's uncertain outlook, according to S&P Global Commodity Insights.
India aims to export more than half of its targeted production of 5 million mt of renewable hydrogen by 2030 from emerging hubs in the coastal states of Odisha, Andhra Pradesh, Tamil Nadu, Kerala, and Gujarat, where a handful of the large developers are in preparatory stage involving front-end engineering designs and final investment decisions.
"India is one of the few countries to be able to produce very competitive green hydrogen, so it is very important for regions like Europe where they have particular mandates, which necessitates green hydrogen consumption," said Anri Nakamura, associate director at S&P Global Commodity Insights.
"For the Far East markets, the story is a little bit different because the carbon intensity limit for both South Korea and Japan in terms of clean hydrogen is lenient and the threshold can be met by blue hydrogen/ammonia from other parts of the world, which may be more competitive than Indian green hydrogen/ammonia."
S&P Global Commodity Insight's Hydrogen Production Assets database shows India has almost 143 renewable or low-carbon hydrogen projects with a combined capacity of 10.55 million mt. The government's Rupees 197.44 billion ( USD 2.37 billion) National Green Hydrogen Mission is driving the production of renewable hydrogen/ammonia, electrolyzers and hubs, among other things.
Market indications on Platts Market Heards show there is a wide gap between the cost of production of renewable hydrogen/ammonia in India and the willingness to pay from refineries and fertilizer manufacturers, which remains one of the key stumbling blocks for deals.
While renewable hydrogen costs were reported widely above USD 5/kg, the willingness to pay remained below USD 4/kg, according to the Heards. In case of renewable ammonia, Indian fertilizer companies imported conventional ammonia at an average price of USD 398/mt in 2024, but the replacement feedstock renewable ammonia was offered in the country mostly around USD 800/mt on an FOB basis.
Platts assessed Queensland hydrogen produced via alkaline electrolysis (including capital expenditures) at USD 4.32/kg on March 12, down 16.44 per cent from a month ago. Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at USD 5.44/kg March 12, down 19 per cent from a month ago.