India's hydrogen market to surge: Morgan Stanley projects $19 billion opportunity by 2030

The renewable hydrogen sector in India has attracted significant interest, with both listed and unlisted companies making substantial investments. Morgan Stanley estimates that the total addressable market for hydrogen in India could reach $19 billion by 2030, encompassing both blue and green hydrogen.

Blue hydrogen is produced by converting methane and steam into gray hydrogen, which is a polluting form of hydrogen. The process for producing blue and gray hydrogen is the same, but the management of CO2 differs. Carbon capture and storage technology is used to capture CO2 from gray hydrogen production, resulting in the production of blue hydrogen. Although carbon capture technology is still in its early stages in India, many companies are investing in its development.

On the other hand, green hydrogen is considered cleaner as it is produced by splitting water using renewable sources such as solar and wind energy. This process involves the use of an electrolyser, and numerous Indian companies are investing in this technology.

Morgan Stanley's estimates indicate that the $19 billion hydrogen market in India will be divided among various sectors. The telecom space is expected to account for approximately $0.2 billion, while heavy trucks and buses will contribute around $0.1 billion. Although the usage of hydrogen in commercial vehicles may take some time to gain momentum, the city gas distribution companies are projected to create a $1.6 billion market by 2030 as they blend in green hydrogen.

The refining and fertiliser sectors will have a mandatory 25 percent usage of hydrogen, leading to a market worth between $6.9 billion to $7.3 billion. Steel is expected to be a $2.6 billion market for green hydrogen, followed by cement and shipping at $0.1 billion each.

The significance of the hydrogen market extends to stock markets, as major players have already invested in this sector. For instance, Reliance Industries plans to manufacture low-cost electrolysers for the production of green hydrogen for both domestic and global use. IOC is venturing into green hydrogen projects with the aim of achieving 5 percent green hydrogen production by 2027-2028 and 10 percent by 2029-2030.

ONGC has partnered with Greenko to invest $6.2 billion in renewables and green hydrogen. BPCL will establish a 5 MW electrolyser system for green hydrogen manufacturing, while GAIL plans to set up an electrolyser for producing 4.3 metric tonnes of hydrogen per day.

NTPC aims to achieve a 5 GW capacity in green hydrogen and ammonia business as part of its 60 GW green portfolio target by 2032. JSW Energy has contracted the production of India's largest commercial-scale green hydrogen, and Antique predicts that green hydrogen manufacturing will act as a catalyst for growth.

IGL has signed an MoU with ACME to jointly supply green hydrogen and has already set up infrastructure for production. They also see potential in producing green ammonia from green hydrogen. MGL is exploring the green hydrogen space and considering blending it into compressed natural gas (CNG).

L&T has commissioned a green hydrogen plant in Hazira, which produces 45 kg of green hydrogen daily for captive consumption. Additionally, HPCL aims to have a green hydrogen capacity of 24,000 tonnes per year, with plans for gradual expansion.

Currently, the price of green hydrogen stands at $10 per kg, but it is anticipated to decrease to around $2 per kg by 2030.

In fact, a recent report by the International Energy Agency (IEA) suggests that the transition to clean energy presents a significant economic opportunity in India.

Clean technologies such as renewable batteries, green hydrogen, and others could create a market worth up to $80 billion by 2030. Considering Morgan Stanley's projection of $19 billion from hydrogen alone, it could contribute approximately 23-24 percent.