NTPC, Reliance, Adani top green hydrogen plays to bet on, say analysts

As per analysts, electrolyser manufacturers, fuel cell makers for non-emission vehicles, traditional players engaged in energy storage solutions or batter makers are among key beneficiaries

The government’s National Green Hydrogen mission is set to provide a fillip to the renewable energy sector by making green hydrogen significantly cheaper, aiding the industry to establish global supply chains, analysts say.  

 

The reduced cost of the green fuel is meant to make it competitive against the widely used grey hydrogen, which is produced from fossil fuels. 

 

As per experts, producing grey hydrogen currently costs around Rs 160-220 per kg, much lower than green hydrogen. Though the policy push will bring the cost of the green fuel at par with that of grey hydrogen.

 

“Green hydrogen production cost has been closer to Rs 500/kg but now with the new policy, it can drop by 50 per cent. The incentive of Rs 50 per kg will also bring the cost closer to that of grey hydrogen. This could make India a leading player by 2050 with a $340 billion (bn) market,” said Ambareesh Baliga, an independent market analyst.
 

 

The policy aims to put India on the global map as one of the leading producers and suppliers of green hydrogen and its derivatives.  

 

With an initial outlay of Rs 19,744 crore, it targets to domestically produce 5 million tonnes (mt) of green hydrogen annually by 2030 with a focus on the manufacturing of electrolysers – a key component for making the fuel.

 

“The beneficiaries within the value chain would be electrolyser manufacturers, fuel cell makers for non-emission vehicles, traditional players engaged in energy storage solutions or battery manufacturers, among others,” says Nitin Tiwari, executive vice president, Yes Securities.
 

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The government estimates the price of the green fuel to come down to $1 per kg by 2030 from the current $4-5. This will benefit domestic refiners through healthier margins, while Reliance Industries (RIL) and Adani New Industries (ANIL) will be other key beneficiaries, as per Nuvama Institutional Equities.
 

 

RIL, as part of its Rs 75,000 crore green investment push, is in partnership with Denmark’s Stiesdal to make electrolysers.

 

Jefferies on Tuesday said that the European Union’s and India’s green hydrogen policy could translate into a $74-bn market for RIL’s electrolyser business by 2030. It has valued the conglomerate’s green hydrogen business at $8 bn, raising the base case target on the stock to Rs 3,100.

 

“RIL would replace grey hydrogen with green hydrogen at its refineries and could monetise the captive green hydrogen production by moving it into an InvIT and inducting investors. Any meaningful capital subsidy to RIL should aid the valuation of its green hydrogen foray,” the brokerage said.

 

Adani group arm ANIL is also in pact with France-based TotalEnergies SE to invest $50 bn over the next 10 years in India to produce green hydrogen, while Adani Enterprises has signed a pact with Ashok Leyland and Canada's Ballard Power to develop a hydrogen fuel cell electric truck.
 

 

NTPC remains another key player, which is setting a 5MW electrolyser with several other projects across mobility and green hydrogen blending. 

 

CLSA sees NTPC as a key play on India’s entry into the global green hydrogen space and expects it to corner 15 per cent of domestic demand translating to 7.6 lakh kg of annual production by 2031-2032 (FY32).

 

“NTPC’s green hydrogen business could add Rs 155 bn to its revenue and Rs 58 bn to its Ebitda by FY32. This could add Rs14.4/share, or 9 per cent to its current market price,” it said. The brokerage has a buy rating on the stock with a target price of Rs 188.

 

Besides, Tata Power, Adani Green and Sterling & Wilson Renewables will be other key gainers as a result of the rise in demand for renewable energy, a major cost component of green hydrogen, said Nuvama Institutional Equities.

 

L&T, Indian Oil Corp, GAIL, BPCL, and Oil India are other prominent companies currently investing in and setting up green hydrogen plants. MTAR Technologies, Linde India, Thermax and ReNew Power are some other players with exposure to this theme.