The cost of producing green hydrogen in India is gradually declining, but the country remains some distance from reaching the ambitious target of USD 1–2 per kilogram, according to a recent report by Emkay Global Financial Services.
Currently, green hydrogen is priced at around USD 3.8 per kg, excluding GST, based on recent bidding activity in the refinery and fertilizer sectors, the report noted. While this represents a slight improvement over the FY24 estimate of USD 4 per kg, the target of achieving cost parity at USD 1–2/kg is still a challenge.
“Green hydrogen prices seem to be gradually declining, but the targeted rate of USD 1–2/kg still seems far,” the report stated, adding that realizing this goal would require continued cost reductions and robust policy support.
The report highlighted that improved electrolyzer efficiency and recent reductions in the Goods and Services Tax (GST) on renewable energy equipment have contributed to the downward trend in green hydrogen prices. Specifically, the GST on renewable energy equipment has been reduced from 12% to 5%, helping lower the cost of electricity—one of the biggest components in hydrogen production.
However, the report flagged the 18% GST on green hydrogen itself as a key barrier, suggesting it should be reconsidered to enhance the fuel’s price competitiveness.
Despite current cost hurdles, the Indian government remains committed to its goal of producing 5 million metric tonnes per annum (MMTPA) of green hydrogen by 2030.
On the project front, the Solar Energy Corporation of India (SECI) recently launched its first green ammonia tender under the SIGHT scheme. Under the tender, approximately 0.72 MMTPA of green ammonia will be supplied to 13 fertilizer plants over a 10-year period.
Winners of the tender offered an average price of USD 0.6 per kg of green ammonia, supported by government incentives of Rs 8.8, 7.1, and 5.3 per kg for the first three years, respectively. Since hydrogen comprises roughly 17–18% of ammonia by weight, this translates to an effective green hydrogen price of USD 3.8–3.9 per kg.
The Emkay report concluded that while India is moving in the right direction, reaching globally competitive price levels will depend on tax reforms, technology advancements, and efficient scaling of production. These will be key not only to lowering costs but also to meeting the country’s ambitious green hydrogen production targets.
