Indian Oil Corporation Limited (IOCL) has completed its first tender for the procurement of 10,000 metric tonnes of green hydrogen per annum for its Panipat refinery. Under the terms of the agreement, the winner will supply hydrogen for 25 years at a fixed price set during the bidding process.

Tender Terms and Bidders

L&T Green emerged as the winner, offering a price of Rs 397 (around $4.6) per kilogram. This is 27% lower than the average global cost of producing green hydrogen. Other bidders, including NTPC and ReNew, offered less favorable terms.

L&T Green will build the hydrogen production unit on or near the refinery premises and will be responsible for its operation.

Context: An initiative by oil and gas companies

Initially, the green hydrogen tenders were planned by Solar Energy Corporation of India (SECI) under the Scheme for Incentivising Green Hydrogen (SIGHT). However, due to delays, oil refiners including IOCL, BPCL and Mangalore Refinery and Petrochemicals have started their own procurement.

IOCL’s plans to switch to green hydrogen

After the expansion of Panipat refinery, the hydrogen demand will increase by 84,000 tonnes. Part of this volume will be met by purchased green hydrogen.

IOCL aims to meet 50% of its hydrogen needs (about 350,000 tonnes per annum) from renewable sources by 2030.

Price dynamics and future tenders

It is expected that in future procurements, the price of green hydrogen may decrease to Rs 350-360 per kg (about $4.2**) due to scaling and government support under the **SIGHT scheme.

For comparison:

• Grey hydrogen costs an average of $2.1 per kg.
• In 2022, according to ICRA, the cost of green hydrogen in India was $5.5-6 per kg.

National Hydrogen Mission and Government Policy

In August 2021, Indian Prime Minister Narendra Modi announced the launch of the National Green Hydrogen Mission. Its goal is to produce 5 million tonnes of green hydrogen by 2030 and develop the accompanying renewable energy infrastructure.

In February 2022, the government published the Green Hydrogen/Green Ammonia Policy, but the mechanism of mandatory quotas for oil refineries has not yet been introduced.

Current projects in India

• Bharat Petroleum (BPCL) commissioned a 5 MW unit at its Bina refinery in Madhya Pradesh.
• Hygenco says it is already supplying green hydrogen at a lower price than grey hydrogen.

Way to Go Forward

Large tenders like the one IOCL has held could accelerate the decline in the cost of green hydrogen in India. Further development of the industry will depend on the implementation of government programs such as SIGHT and growing demand from refineries and industrial enterprises.