India's Latest Green-Hydrogen Bid Shows Power Firming, Not Electrolyser Capex, Sets the Real Price Floor
Original illustration created for RenewaNews.
India's discovered price for green hydrogen under the SIGHT scheme sits at Rs 397/kg for Indian Oil Corporation and Rs 387/kg for BPCL and HPCL. Grey hydrogen from natural gas trades at roughly Rs 150–200/kg. That gap is the story industry accounts keep returning to, and the cost breakdown behind it points somewhere most people don't expect: not the electrolyser stack, but the power supply feeding it.
The Rs 397/kg number, traced back
The figure originates with Indian Oil's first green hydrogen offtake auction, concluded in May 2025. JMK Research & Analytics reported on May 20, 2025 that L&T Green won the tender at Rs 397 (approximately $4.6) per kg, agreeing to supply 10,000 metric tonnes per annum to IOCL's Panipat refinery under a 25-year build-own-operate structure. That remains the only public sourcing on the winner, volume and contract term available; no primary tender document or IOCL release naming the same terms has been located, so the auction result rests on JMK's reporting alone. IEEFA's analysis frames the same rupee figure, converted separately to $4.67/kg, as competitive with low-cost producers in the Middle East — a reference point that matters for investors comparing India against other hydrogen-export geographies rather than against domestic grey hydrogen. The two dollar figures reflect different conversions of the same Rs 397 by different publications, not two different prices.
Domestically, though, the comparison is less flattering. ETEnergyworld's June 6, 2025 analysis put grey hydrogen at roughly half the SIGHT price, and Prashant Vasisht of ICRA told the outlet the discovered rate is not yet competitive with the fossil-fuel benchmark, arguing that parity depends on further declines in both renewable power prices and electrolyser capex. BusinessToday called this the sector's "cost problem."
Where the money actually goes
The Ministry's Rajya Sabha statement cites a World Bank Group estimate that renewable power — solar and wind, inclusive of the storage needed for round-the-clock delivery — accounts for 50–70% of total green hydrogen production cost, or roughly Rs 235/kg of the Rs 397/kg total. IMARC's report confirms the same 50–70% share and adds a second finding: electrolyser utilization above 75% and plant load factor, not the upfront cost of the stack itself, are the more critical levers for financial viability.
A technical note from GH2 India, published July 4, 2025, sharpens why round-the-clock power is expensive to deliver. Electrical balance-of-plant components — transformers, rectifiers, control systems that stabilize fluctuating renewable output for electrolysers — account for 30–50% of total project cost, and for a 100 MW PEM installation those systems alone run Rs 1,000–1,200 crore. Whether that electrical balance-of-plant spend sits inside the World Bank's 50–70% power-cost share or represents a separate cost bucket is not settled by either report; the sourcing does not say which. What both do establish is that firming intermittent solar and wind into a steady electrolyser feed carries substantial capital cost of its own.
India's ultra-low solar tariffs — Rs 2.5–3/kWh, per ETEnergyworld's June 6, 2025 report — are real. But the delivered cost of power to an electrolyser running at high utilization, with storage, transformers and grid balancing layered on top, is a different number than the tariff on a spot solar PPA.
Demand hasn't caught up to supply-side ambition
Cost isn't the only constraint. IEEFA's report said some SECI hydrogen hub tenders were cancelled in mid-2025, without naming which hubs or what volumes were affected, and that developer and government attention has since shifted toward building firm domestic offtake in steel and refining rather than export-scale hubs. That is the extent of what is documented on the cancellations; no tender names or capacity figures accompany the claim. RMI's report offers a contrast within India's own hydrogen-derivative chain: green ammonia, per RMI, has reached what the report calls a record low of Rs 49.75/kg — a figure resting on that single account — even as green hydrogen for refinery use sits at Rs 397/kg. RMI argues that domestic demand is moving from pilot volumes to commercial uptake, but that closing the gap with grey hydrogen still requires larger contracted volumes and continued policy support.
What this means for offtake structure
For developers and investors already committed to Indian green hydrogen capacity, the cost breakdown argues for treating power-firming infrastructure as the primary underwriting risk rather than a line item beneath electrolyser procurement. The L&T-IOCL structure — a 25-year build-own-operate contract rather than a shorter PPA-plus-merchant arrangement — locks in offtake for a quarter-century, though the sourcing here does not disclose how the contract allocates firming risk between L&T and IOCL, and that detail matters more to underwriters than the headline price.
Reslink Energy's guide for EPC contractors — a single trade source, and its methodology for the projection is not disclosed beyond referencing electrolyser scale-up and ISTS waivers — projects that levelized green hydrogen costs could fall to Rs 260–310/kg as electrolyser manufacturing scales domestically and inter-state transmission charge waivers take full effect. Even that projected floor sits above the Rs 150–200/kg grey hydrogen benchmark cited across the IMARC and Reslink reports. If the renewable-power share of cost is the binding constraint, ISTS waivers and storage co-location — not electrolyser localization alone — are what future scheme design needs to target.
Sources
This article was reported from the following sources.
- India Commissions 8000 TPA Green Hydrogen Capacity till February 2026 — Press Information Bureau (PIB) / Ministry of New and Renewable Energy, 2026-03-25
- IOCL Ends First Green H2 Auction at $4.6/kg - JMK Research & Analytics — JMK Research & Analytics, 2025-05-20
- DeepDive: India's green hydrogen journey starts at ₹397 per kg — ETEnergyworld, 2025-06-06
- India's green hydrogen ambitions face a reality check — BusinessToday, 2026-06-11
- Steel without the energy security challenge: India's green hydrogen opportunity — IEEFA, 2026-02-20
- Green Hydrogen Projects in India 2026: Growth and Opportunities — IMARC Engineering, 2026-04-16
- Electrical Components in Green Hydrogen Production: Why they matter? — GH2 India, 2025-07-04
- How India Can Enhance Global Energy Security Through Green Hydrogen — RMI (Rocky Mountain Institute), 2026-01-16
- India Green Hydrogen Price Per Kg 2026: EPC Guide — Reslink Energy, 2026-04-22
