Indian Oil Corp and L&T bet big on green energy
It looks like green energy strategies like green hydrogen appear to be the in thing in the renewable energy industry. In the latest round of clean energy initiatives, Indian Oil Corporation and L&T have formed a joint venture with ReNew Power for the manufacture of green hydrogen.
The 3 companies will have an equal stake of 33.33% in the joint venture. This is an area where Reliance and Adani group are already quite active.
There is a lot more brewing between these companies. In another similar venture, L&T has entered into a binding contract with IOCL to form another JV with equal equity participation to manufacture and sell electrolysers.
Electrolysers actually help to split water into atoms of hydrogen and oxygen. When the electricity used in this electrolysis is generated through renewable means, then this process becomes known as green hydrogen process.
This is part of the government announced mission to encourage these green fuels. Under the National Hydrogen Mission policy on green hydrogen and green ammonia, the aim is to boost production of hydrogen and ammonia using renewable energy.
The joint venture between L&T, IOCL and ReNew will focus on developing green hydrogen projects in a time-bound manner to supply green hydrogen at industrial scale, without cost overruns.
Clearly all the 3 companies bring some unique skill sets to the table. As a result, the joint venture will leverage on L&T’s EPC expertise, chemical and refining process experience of IOCL as well as leveraging the renewable energy presence of ReNew.
The idea here is to provide research and development capabilities in different aspects of the complete green hydrogen value chain. The joint venture synergies are likely to be overall accretive.
IOCL already has mega refineries at Mathura and Panipat and the joint venture will focus on setting up green hydrogen projects in these locations.
IOC has consistently held the view that refining companies will be the pivot around which the green hydrogen initiatives will have to pivot, if they have to be successful in India. That is the only way that India’s green hydrogen revolution can materialize and contribute to the economy in a meaningful way.
The timing is also of importance here. For instance, currently countries across the world are looking at the green hydrogen technology but the focus will also be on the technology that is scalable and cost effective.
Clearly, as the challenges of climate change and global warming worsen, these projects are likely to assume a lot of importance. India is already a signatory as it is one of the major incremental contributors to greenhouse gases.
It is estimated that in India the estimated demand for hydrogen could touch as much as 12 million metric tonnes (MMT) by the year 2030. While most of the hydrogen produced in India still comes from coal and gas that is likely to change.
In the next few years, it is estimated that 40% of the element produced in the country (approximately 5 MMT) will be produced from renewable and green sources.
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