NTPC arm in talks with HPCL, Hindalco for green hydrogen supply joint ventures

NGEL, a subsidiary of India's top power producer NTPC Ltd, is discussing the possibility of seeding joint ventures (JVs) with HPCL and Hindalco—as with other public and private sector companies—on the lines of the JV it has created with IndianOil Corporation Limited (IOCL), the people said.

Last June, NGEL had incorporated a 50:50 JV with IOCL to supply the latter's refineries with renewable energy for captive consumption. Later, in October, IOCL's board approved an investment of up to ₹1,660.15 crore in the JV.

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“NGEL has a tie-up with IOCL. It is also taking to HPCL and Hindalco, among a few others. The plan is to cater to the captive requirement of these companies including refineries," one of the two persons mentioned above said.

Queries sent to NTPC, HPCL and Hindalco remained unanswered till press time.

Logic for the JV route

NGEL's keenness on JVs gains significance as it helps assured offtake for renewable energy and green hydrogen by the JV partner for captive consumption.

Assured offtake is key for green hydrogen producers as it is a highly capital-intensive commodity. 

“The cost of green hydrogen production is about $3.7-5.3 per kg and that of electrolyzers, which is used for producing green hydrogen, is $450-$550 per kilowatt," said Prashant Vasisht, senior vice president and co-group head, corporate ratings, ICRA. "The Centre is eyeing to bring it (green hydrogen production cost) below $1 to make it more viable." 

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Green hydrogen is produced with the help of renewable energy, and refineries and manufacturing of steel and metals like aluminium are key areas where it can be used.

The net-zero angle

Further, with the focus on India's net-zero target by 2070 and specific targets of the companies themselves, there is a major focus on adoption of green hydrogen in industries in place of grey hydrogen, which uses polluting inputs such as natural gas or methane. 

India produces and consumes about 6 million tonnes of hydrogen currently, most of which is grey hydrogen. 

IOCL aims to achieve net-zero by 2046, and Hindalco, an Aditya Birla Group company, by 2050.

The public sector oil refining and marketing major has already announced its intent to achieve net zero with an investment of around $30 billion through several emission mitigation pathways such as green hydrogen, biofuels, renewables, carbon offsetting, and carbon capture utilisation and storage (CCUS), among others.

Hindalco, in its annual report for FY23 said that it is researching the market for green hydrogen and exploring options for utilizing captured CO2. 

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For companies like Hindalco, a faster transition also gains significance in the wake of the European Union's Carbon Border Adjustment Mechanism, a tool to ensure lower carbon emission in products imported by the EU countries. India is a major exporter of products like steel and aluminium to Europe, thereby making India companies take steps to emit lesser carbon in a bid to avoid carbon tax.

NTPC's green plans

Green hydrogen is one of the key commodities being look at by the state-run NTPC for its diversification journey into the overall energy and chemicals space, where it is looking at becoming a major producer of green hydrogen, methanol, ethanol and sustainable aviation fuel.

Meanwhile, NGEL plans to raise up to ₹8,000 crore through an initial public offering (IPO) and expand its footprint in the energy transition space. It has already appointed merchant bankers for the IPO, according to a company notification.

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NTPC will also set up an 'Integrated Green Hydrogen Hub', India's largest green hydrogen production facility on 1,200 acres of land near Visakhapatnam in Andhra Pradesh.

Under the National Green Hydrogen Mission, the government aims to achieve 5 million tonnes of green hydrogen annual production by 2030.