Green Hydrogen Production Pathways for India

The report analyzes green hydrogen production in India, finding that state-level transmission waivers and capital subsidies are critical for cost competitiveness. It compares on-site, ISTS-connected, and STU-connected project models, highlighting that while on-site projects avoid transmission costs, they face land and demand constraints. The study identifies Odisha as a leader in cost competitiveness due to aggressive incentive packages and emphasizes that off-site projects require at least a 50% cost reduction to compete with grey hydrogen.

• State-level policy waivers and national support can reduce renewable power costs for green hydrogen projects by more than 90%. Odisha is the most competitive state, offering a unique additional ₹3/kWh ($0.036/kWh) waiver that can slash landed power costs by up to 94%.
• Stand-alone on-site projects are highly cost-competitive, with production costs between $4.4/kg and $4.8/kg, and can see power cost reductions of 20%–22% through state capital subsidies of 25% to 35%. However, these projects are limited by land requirements and the need for proximity to industrial demand centers.
• Projects connected to the Inter-State Transmission System (ISTS) or Central Transmission Utility (CTU) are often preferred by developers, offering production costs 20% to 30% lower than non-subsidized projects connected to State Transmission Utilities (STU).
• Off-site projects require a minimum 50% reduction in production costs to become competitive with grey hydrogen. Transmission charges can increase the landed cost of power to 1.5–2.5 times the base renewable generation cost.
• Increasing electrolyzer system utilization from 25% to 85% significantly reduces capital requirements—from nearly $1.8 billion to approximately $537 million for a 100 ktpa project—though gains in the levelized cost of hydrogen (LCOH) become marginal beyond 75% utilization.
• Developers can optimize project size and cost by choosing between battery storage, hydrogen storage, or a hybrid approach. Battery storage allows for higher utilization but requires significantly more oversized renewable capacity (over 7 GW for a 100 ktpa project) compared to hydrogen storage (3 GW).
• Oversizing renewable energy assets can create additional revenue streams by selling excess power into the electricity market. In Gujarat, this could reduce production costs by nearly 33%, while in Maharashtra, selling excess power at the Green Day Ahead Market (GDAM) price can offset costs by 15%.
• Sourcing renewable energy through third-party Power Purchase Agreements (PPAs) allows for up to 100% plant utilization but results in the highest production costs ($5.9/kg to $8.5/kg) due to higher landed electricity costs compared to vertically integrated or captive models.

APA

RMI (2025). Green Hydrogen Production Pathways for India. https://rmi.org/resources/green-hydrogen-production-pathways-for-india/

Chicago

RMI. Green Hydrogen Production Pathways for India. 2025. https://rmi.org/resources/green-hydrogen-production-pathways-for-india/.

Wikipedia

{{cite report |author=RMI |title=Green Hydrogen Production Pathways for India |date=10 July 2025 |url=https://rmi.org/resources/green-hydrogen-production-pathways-for-india/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025green, author = {{RMI}}, title = {{Green Hydrogen Production Pathways for India}}, institution = {RMI}, year = {2025}, month = jul, url = {https://rmi.org/resources/green-hydrogen-production-pathways-for-india/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }