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A significant reduction in electrolyser prices and improvements in their efficiency are crucial for lowering the levelised cost of green hydrogen (GH2) to $2.1 per kg by FY30, according to CareEdge Ratings. In a recent press release, the agency highlighted that India's green hydrogen momentum will be driven by falling renewable energy costs and its decarbonization goals. Currently, the levelised cost of GH2, which includes both capital and operational expenditures, is 1.75 times higher than grey hydrogen and 1.5 times higher than brown hydrogen, even with interstate transmission charge waivers for renewable power. CareEdge projects that a 35-40% decline in electrolyser costs and a 12-14% improvement in efficiency, combined with supportive policies, could bring GH2 costs down to competitive levels. This reduction, alongside lower renewable energy prices, is expected to give India a significant advantage in the global green hydrogen market. To produce one million metric tonnes (MMT) of GH2, an investment of Rs 2.4 trillion is required. The levelised cost of hydrogen (LCOH) was estimated at $3.74 per kg in CY23, despite transmission charge waivers. Maulesh Desai, Director at CareEdge Ratings, emphasised the importance of achieving cost parity with grey and brown hydrogen to enable large-scale GH2 adoption. The agency also noted that long-term offtake arrangements for GH2 remain a challenge for developers and lenders. Hardik Shah, Director, CareEdge, suggested incentivising downstream users to transition from alternatives to GH2. Refineries are expected to be early adopters, with a potential demand of 2.7-3.0 MMT of GH2 between FY27 and FY30. Green ammonia production could further drive demand, with an estimated 3.75-4.25 MMT of GH2 required during the same period, one-third of which may come from the non-urea sector. With the right mix of cost reductions, efficiency gains, and policy support, GH2 could become a cornerstone of India’s energy transition strategy. (ET)