The potential of India’s green hydrogen value chain to create a cumulative investment opportunity of up to $125 billion by 2030 is driven by several factors, including a growing emphasis on sustainability, demonstrated commercial viability, expanding use cases, and robust regulatory support. Avendus Capital, in a recent report, highlighted the significant investment prospects within this sector.
Renewable energy production, a fundamental component of the green hydrogen value chain, stands out as the largest opportunity, with an investment potential of nearly $80 billion by 2030. Additionally, green hydrogen and green ammonia production offer investment opportunities of $30 billion and $10 billion, respectively, while electrolyser production presents a $5 billion opportunity.
Prateek Jhawar, Managing Director & Head of Infrastructure & Real Assets Investment Banking at Avendus Capital, emphasized India’s advantageous position, citing its globally competitive renewable electricity costs, ample availability of fresh water, and emerging status as a manufacturing hub—essential elements for competitively priced green hydrogen production.
Jhawar noted that while the commercial and industrial (C&I) business model will initially drive investments, the steel industry is poised to become a significant consumer, particularly due to the Carbon Border Adjustment Mechanism (CBAM) in the EU. This regulatory framework is expected to prompt Indian steel manufacturers to consider shifting to green hydrogen to avoid taxes.
Akhil Dokania, Director of Infrastructure & Real Assets Investment Banking at Avendus Capital, highlighted the importance of early commitments to infrastructure deployments to facilitate the production of green steel in the coming years.
The Indian government’s introduction of a production-linked incentive (PLI) scheme aims to bolster green hydrogen production and local electrolyser manufacturing. Some capacity has already been allocated in the initial tranche.
Despite the substantial investment potential, Avendus acknowledged constraints such as resource limitations, including solar resources, vendor sources, and transmission infrastructure. Additionally, funding requirements pose a challenge, with an estimated equity investment need of close to $40 billion by 2030.
However, there is considerable interest in the sector from a diverse range of investors beyond traditional infrastructure/energy-focused ones. Jhawar noted a global shift towards core sectors, driven by the recognition of energy transition as a primary destination for capital deployment. Investors are increasingly willing to make early bets across the value chain, from venture capital funds to private equity growth funds.
