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MUMBAI : Construction major Larsen & Toubro (L&T) and leading renewable energy company ReNew Power (ReNew) on Thursday signed an agreement to tap the $60 billion emerging green hydrogen market in India.

The companies are targeting a business potential of $2 billion from the segment in India and neighbouring countries in two years.

“The partnership brings together the track record of L&T in designing, executing and delivering EPC (engineering, procurement and construction) projects and the expertise of ReNew in developing utility-scale renewable energy projects," said S.N. Subrahmanyan, chief executive officer (CEO) and managing director of L&T.

Green hydrogen is produced by a process that does not emit any greenhouse gases. Efforts are on globally to make green hydrogen the fuel that can help countries attain their net-zero emission targets.

It is anticipated that the green hydrogen demand in India for applications such as refineries, fertilizers, and city gas grids will grow to 2 million tonnes per annum by 2030 in line with the nation’s green hydrogen mission. This would call for investments upward of $60 billion.

A number of opportunities are available in the green hydrogen segment and the partnership will not be constrained by capital availability, said Sumant Sinha, chairman and CEO at Gurugram-based ReNew. “For each opportunity that comes up, we will essentially put together a specific entity that will go ahead and pay for that particular project," said Sinha. He added that the companies will pool all their resources and put in a bid.

Many countries, including India, have announced specific policy interventions to push for widespread adoption of green hydrogen.

For India, with its ever-increasing energy import bill, it can also provide energy security by reducing the dependence on fossil fuels.

The estimated cost of setting up a 500-megawatt hydrogen plant would be about a billion dollars, 70% of which typically goes into setting up renewable energy capacity, and 30% into electrolyzers. Subramanian Sarma, whole-time director and senior executive vice president (energy), L&T, said the companies are already exploring opportunities in the Indian market for green hydrogen. “We believe that in maybe two to three years’ time we should be having something like a $2 billion of a business building up, but it can accelerate quite quickly depending upon how the market works," he said.

“We will see more such partnerships as the market is huge and with all companies announcing net zero ambitions, green hydrogen will help them achieve that," said a senior renewable energy official from an advisory company

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