India’s green hydrogen ambitions took a decisive turn with Larsen & Toubro’s (L&T) subsidiary, L&T Energy GreenTech (LTEG), securing the country’s largest industrial green hydrogen contract to date—a 10,000-tonne-per-year supply agreement with Indian Oil Corporation (IOC) at its Panipat refinery.
The project, awarded on a build-own-operate (BOO) basis, follows two failed tender rounds and offers a critical proof point for India’s National Green Hydrogen Mission amid developer reticence and policy uncertainty.
The plant will be powered entirely by renewable energy, operating continuously to supply green hydrogen that replaces fossil-based hydrogen currently used in IOC’s refining operations. Set to be commissioned by December 2027, it will deploy high-pressure alkaline electrolysers manufactured by L&T’s facility in Hazira—signalling an effort to localise key technologies and reduce upstream reliance on imports.
While L&T executives framed the contract as an endorsement of their vertically integrated capabilities—from electrolyser production to project delivery—the deal is also a reflection of structural challenges that have plagued India’s hydrogen rollout. IOC’s earlier tenders, floated in September 2024, saw minimal private sector interest, with deadlines extended twice and ultimately cancelled due to unviable risk-sharing terms and offtake uncertainty.
By shifting to a BOO structure with an experienced domestic EPC major, IOC has bypassed early developer hesitance and regained control over timeline and delivery. Yet the scale of the project—10,000 tonnes per year—remains modest when juxtaposed with India’s long-term target of producing 5 million tonnes of green hydrogen annually by 2030. For context, refineries and fertiliser plants alone account for over 2 million tonnes of current grey hydrogen demand.
Still, the Panipat project is being closely watched. It offers insights into cost structures, technology selection, and operational models that could be replicated in future deployments. Notably, L&T’s decision to use high-pressure alkaline electrolysis rather than PEM suggests a prioritisation of mature, lower-cost technology, even as newer alternatives promise higher efficiency and load flexibility. The project’s round-the-clock operation requirement—key for industrial integration—also raises questions about renewable energy procurement strategy, grid connectivity, and storage.
While financial details of the agreement remain undisclosed, the project is expected to carry a significant capital investment given its multi-decade scope and energy demands. It also locks in a long-term buyer in IOC, whose decarbonisation strategy hinges on displacing fossil-derived feedstocks. IOC’s move into green hydrogen comes as part of broader efforts to diversify its energy portfolio, but it remains unclear how quickly other refineries or sectors will follow without stronger mandates or subsidies.
Stay updated on the latest in energy! Follow us on LinkedIn, Facebook, and X for real-time news and insights. Don’t miss out on exclusive interviews and webinars—subscribe to our YouTube channel today! Join our community and be part of the conversation shaping the future of energy.
