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Larsen & Toubro on Thursday said that it has partnered with Norway-based HydrogenPro to access its electrolyser technology to enter the green hydrogen market that most clean-energy space observers tout as the next big thing.

As part of the agreement, L&T and HydrogenPro will set up a joint venture company in India to manufacture gigawatt-scale alkaline water electrolysers based on the latter’s technology.

Electrolysers are used to split water into oxygen and hydrogen using electricity. When the electricity used in the process is sourced from renewable sources, the end-product is called green hydrogen. The elemental hydrogen can then be used as a fuel in industries such as steel manufacturing that presently burn coal.

"The energy industry is undergoing a tectonic shift with Green Hydrogen emerging as a key fuel in the future energy basket,” S N Subrahmanyan, the managing director of L&T said in a press statement.

“This will be a win-win partnership given our extensive relationship across the energy industry, deep EPC experience in this sector and successful ongoing collaborations with many MNCs and HydrogenPro's focus to stay ahead of the curve as far as technology leadership is concerned,” he said.

With the global focus on sustainability, investors are keen to back green hydrogen. While the technology is nascent and the end-product expensive, investors are betting that technology advancements will soon bring the costs as par with non-renewable energy sources.

Indian energy big-wigs like Reliance Industries and the Adani Group too have announced their interest in the green hydrogen market. The former invested in Danish company Stiesdal last October to manufacture electrolysers through its subsidiary Reliance New Energy Solar (RNESL).

Energy companies have been chasing manufacturers with proven expertise in manufacturing electrolysers at scale as it is a key piece of the green hydrogen puzzle.

According to a recent report by market intelligence and consulting firm Future Market Insights, the global hydrogen electrolyser market is estimated to reach $426.3 million by the end of 2028 and expected to register a compound annual growth rate of 7.2 % per cent between 2018 and 2028.

German conglomerate Thyssenkrupp is another player to have developed technology to manufacture electrolysers at scale. Informed sources told ET that over a dozen Indian companies approached Thyssenkrupp to strike a partnership around its proprietary technology, but the latter declined.