25/12/09
Q&A: GH2 Solar outlines gaps slowing India’s H2 plans
Mumbai, 9 December (Argus) — Indian renewable energy firm GH2 Solar recently
began construction of an alkaline electrolyser manufacturing plant in Madhya
Pradesh, with an initial capacity of 105 MW/yr that it aims to expand to 500
MW/yr. The plant is developed with South Korea's AHES and UK-based Rhizome2, and
received roughly 1.6bn rupees ($17.8mn) under India's second electrolyser
manufacturing subsidy round. GH2 Solar also plans to build its own renewable
hydrogen production facilities, having secured three-year subsidies for 10,500
t/yr of output. Argus spoke with managing director Anurag Jain and
vice-president of business development and corporate strategy Sanjeev Sharma
about the company's plans, views on Indian policy and localisation of key
components for electrolysers. Edited highlights follow: What are the main
challenges that GH2 Solar and other Indian companies face in bringing hydrogen
and electrolyser projects to fruition? The challenges are quite multifaceted.
For GH2 Solar, and most other Indian developers, the biggest hurdle is project
bankability. The policy direction is clear, but long-term offtake certainty and
stable price signals are still evolving, making lenders cautious. These are
highly capital-intensive projects that combine renewable generation,
balance-of-plant and storage, which means long financing cycles. Another issue
is the intermittency of renewable energy, which affects electrolyser efficiency
and utilisation. Managing that through batteries, round-the-clock power or
hydrogen storage adds cost and complexity. India still imports critical
components such as membranes and catalysts, so building a resilient domestic
supply chain will take time. Add to that the need for skilled manpower, unified
standards and insurance frameworks — it's a steep but achievable learning curve.
How do you view India's tenders? Are they effective in driving adoption? The
tenders have created momentum. The production-linked incentives (PLIs) and the
National Green Hydrogen Mission bids have drawn strong private participation and
signalled government commitment. But we must recognise they are first-generation
schemes. Some frameworks expect immediate commercial viability and deep
localisation, which can be unrealistic early on. We need longer offtake tenors,
payment security mechanisms and phased localisation milestones. But the
direction is right. The tenders have put India firmly on the global hydrogen
map. What additional policy or regulatory measures could accelerate the sector?
India should move quickly to introduce contracts for difference (CfDs) or carbon
CfDs to bridge the cost gap between grey and green hydrogen. That single
mechanism can transform project bankability. A national hydrogen exchange or
government-anchored offtake pool would aggregate demand and provide transparent
price discovery. We also need a payment security fund, harmonised pipeline and
grid codes, and continued fiscal support for electrolyser research and
development, especially for membranes and catalysts. What are the biggest
challenges for developing a fully indigenous electrolyser manufacturing
ecosystem in India? True localisation goes far beyond assembly. The challenge
lies in mastering advanced materials — membranes, coated bipolar plates and
catalysts — and building high-precision chemical and metallurgical capabilities.
Domestic demand must scale enough to justify the capital intensity of these
facilities. We also need accredited testing and certification centres in India
to validate stack life and performance so that Indian-made systems are globally
bankable. How can project financing for green hydrogen become more viable?
Financing will follow predictability. Mechanisms such as CfDs, minimum-volume
guarantees or sovereign-backed payment windows can provide stable revenue
floors. Blended finance — mixing concessional debt and DFI [development finance
institutions] participation — will lower the cost of capital. Allowing hydrogen
assets to earn ancillary-service revenue from the grid can also enhance project
economics. And finally, standardised project templates and due-diligence
protocols will shorten financial-closure timelines. Offtake remains a
bottleneck. What measures could resolve this? We need an aggregated demand
framework. A government-backed platform that bundles demand from refineries,
fertilisers, city-gas networks and even corporate buyers could issue unified
offtake tenders. Sectoral mandates — such as blending targets in piped natural
gas or compressed natural gas and substitution quotas in refineries — will
anchor baseline demand. Tradeable green-molecule certificates would let
corporates purchase decarbonisation credits even if they don't consume hydrogen
physically. Internationally, India should also participate in global offtake
auctions with the EU, Japan and Korea. What is GH2 Solar's long-term strategy
for green hydrogen and its derivatives? Our strategy is to create an end-to-end
green hydrogen ecosystem — from renewable electrons to green molecules. We're
setting up a 105 MW/yr electrolyser manufacturing facility in Madhya Pradesh.
Civil works are progressing, equipment orders are being worked out and pilot
production is planned for late 2026, with full-scale operations set for 2027. We
are simultaneously developing green hydrogen production facilities. In the short
term, our focus is on domestic decarbonisation — supplying green hydrogen to
refineries, fertiliser and industrial clients. In the medium term, we will
expand into green ammonia — we have already announced a 100,000 t/yr green
ammonia facility with two partners — and e-methanol and SAF [sustainable
aviation fuel], especially for export markets. What is your view on the use of
Chinese electrolysers in Indian projects? It is a pragmatic bridge. Chinese
systems are currently cost-competitive and available quickly, which helps early
adopters prove the business case. But India must avoid long-term dependence.
Every import should come with localisation and technology-transfer clauses so
that we can build domestic capability over the next 3-5 years. Our goal should
be cost parity and self-reliance, not permanent import dependence. GH2 Solar was
awarded the support for the electrolyser capacity with high local-value-addition
(LVA) targets. How will you achieve these? We have created a detailed
localisation roadmap. In the first year, we will source and assemble all
balance-of-plant, frames, power electronics and casing domestically, importing
only few specialised components, achieving 80pc LVA. From year two onwards, we
will indigenise stack components through technology partnerships with Indian
material suppliers, reaching more than 90pc localisation. Which components still
need to be imported? At present, we still need to import membranes, catalysts
and coated bipolar plates — the high-tech core of the stack. Domestic production
of these components should start in the next 18-36 months through our joint
venture and targeted PLI support. With consistent policy and demand visibility,
India can achieve full indigenous capability within five years. Send comments
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