New Delhi: India’s green hydrogen sector has drawn strong investor interest, but most planned capacity is struggling to move beyond the announcement stage due to the absence of committed buyers, high production costs and regulatory uncertainty, the Institute for Energy Economics and Financial Analysis (IEEFA) has said in a new briefing note released on Friday.
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IEEFA said, “As of August 2025, India had 158 green hydrogen projects at various stages of development. However, 94 percent of the planned capacity is yet to move beyond the announcement stage, 0.1 percent is under construction, and only 2.8 percent is operational, highlighting the slow pace of project commissioning.”
Despite the National Green Hydrogen Mission (NGHM) targeting the production of 5 million metric tonnes per annum (MMTPA) by 2030, the note warns that project execution is lagging. “Although the announced capacity is nearly 2.4 times the government’s target — reflecting strong investor interest in India’s green hydrogen story — there are concerns about how much of this capacity will materialise,” said Charith Konda, Energy Specialist at IEEFA.
IEEFA identifies four major bottlenecks: unclear demand signals, high production costs, varying definitions of green hydrogen across countries, and inadequate infrastructure. The note states that global offtake arrangements remain weak, noting that by January 2025, only a fraction of planned capacity worldwide had secured buyers.
“Most projects in India struggle to reach financial closure without confirmed buyers and long-term demand certainty,” said the report.
IEEFA highlights that the cost gap between grey and green hydrogen remains a major hurdle. Grey hydrogen currently costs USD 1.5–3/kg, compared with USD 3–6/kg for green hydrogen. Even India’s recent benchmark discovery of Rs 397/kg is still above grey hydrogen prices.
Green hydrogen uptake also depends heavily on supporting infrastructure, including storage, transport networks and electrolysers. “Green hydrogen’s ability to serve as a versatile fuel… also depends on the development of infrastructure, including electricity transmission and distribution grids, electrolysers, storage tanks, and pipelines,” IEEFA notes. “In India, it is easier to transmit electricity rather than hydrogen, given that the country already has a well-spread-out transmission and distribution grid,” says Konda.
India’s hydrogen demand is expected to reach 15–20 MMTPA by 2030. With the government targeting 5 MMTPA of green hydrogen production, this could account for “approximately 25–33 percent” of total projected demand, said IEEFA. Industry projections suggest green hydrogen demand could climb further to “4.08–6.57 MMTPA… if supported by robust policy frameworks.”
Kaira Rakheja, Energy Analyst at IEEFA, said, “The demand for green hydrogen and its derivatives is expected to come from three sources: replacing existing grey hydrogen uses, new applications in hard-to-abate sectors, and exports.”
Replacing grey hydrogen in sectors such as oil refining and fertilisers alone could generate “a demand of 5MMTPA.”
A key recommendation is the creation of a globally harmonised emissions accounting system. The note cites the International Energy Agency’s (IEA) proposed hydrogen product passport, which would include emissions intensity data for each shipment. Developing such a system, IEEFA argues, is essential because current “differences in the definitions and standards of green hydrogen are leading to market fragmentation.”
Domestically, IEEFA recommends hydrogen purchase obligations (HPOs) for industries using grey hydrogen today. These could “create sustained demand by requiring industries to source a portion of their energy from green hydrogen,” IEEFA said.
The briefing note also stresses the need for hydrogen hubs with shared infrastructure, stating that “developing geographically concentrated ecosystems for green hydrogen can help scale up its use, reduce costs, and accelerate infrastructure development.”
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Konda emphasised that immediate policy nudges will not be enough: “While policy nudges and high-level decarbonisation goals will likely drive the demand for green hydrogen, sustained demand generation in the long term will require global collaboration and concrete steps towards the domestic adoption of green hydrogen.”
