NTPC Arm Talks Green Hydrogen JV Goldmine with HPCL and Hindalco

NGEL, a subsidiary of NTPC Ltd, India’s largest power producer, is in talks with HPCL and Hindalco to form joint ventures (JVs) for supplying green hydrogen. This follows a similar partnership with IndianOil Corporation Limited (IOCL) established last year.

Expanding Partnerships

In June 2023, NGEL and IOCL set up a 50:50 joint venture to provide IOCL’s refineries with renewable energy. By October, IOCL committed to invest up to ₹1,660.15 crore in this venture. Now, NGEL is looking to create similar partnerships with other companies including HPCL and Hindalco.

A source familiar with the discussions said, “NGEL is exploring partnerships with HPCL and Hindalco, similar to its agreement with IOCL, to meet their renewable energy and hydrogen needs.”

NTPC, HPCL, and Hindalco did not respond to queries before press time.

Why Joint Ventures?

NGEL prefers JVs because they ensure a guaranteed buyer for their renewable energy and green hydrogen. This is crucial because producing green hydrogen, which is made using renewable energy, is very costly. According to Prashant Vasisht, a senior vice president at ICRA, the cost of producing green hydrogen is around $3.7-5.3 per kg, while the equipment needed, called electrolyzers, costs $450-$550 per kilowatt. The goal is to reduce these costs to make green hydrogen more affordable.

Green hydrogen can be used in industries like oil refineries and the production of steel and aluminium.

Moving Towards Net Zero

India aims to reach net-zero carbon emissions by 2070, and many companies are setting their own targets. Using green hydrogen instead of the more polluting grey hydrogen, which is made from natural gas or methane, is a key part of this plan. Currently, India produces about 6 million tonnes of hydrogen, mostly grey.

IOCL aims to be net-zero by 2046, and Hindalco, part of the Aditya Birla Group, by 2050. IOCL has announced plans to invest around $30 billion to reach net-zero, including using green hydrogen, biofuels, renewables, and other technologies to reduce emissions. Hindalco is also exploring green hydrogen and ways to use captured CO2.

For Hindalco and others, moving quickly to green hydrogen is important due to the European Union’s Carbon Border Adjustment Mechanism, which imposes taxes on high-carbon products imported into Europe. As India exports a lot of steel and aluminium to Europe, reducing carbon emissions can help avoid these taxes.

NTPC’s Green Initiatives

NTPC is focusing on green hydrogen as part of its plan to diversify into new energy and chemicals, aiming to become a major producer of green hydrogen, methanol, ethanol, and sustainable aviation fuel. NGEL plans to raise up to ₹8,000 crore through an initial public offering (IPO) to support its expansion in green energy and has already hired bankers for the IPO.

Additionally, NTPC plans to build India’s largest green hydrogen production facility, called an ‘Integrated Green Hydrogen Hub,’ on 1,200 acres near Visakhapatnam in Andhra Pradesh.

Under the National Green Hydrogen Mission, India aims to produce 5 million tonnes of green hydrogen annually by 2030.