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India’s Hydrogen Reckoning: From Chasing Volume to Creating Value
Context:
As global hydrogen technologies undergo rapid transformation, up to 80% of today’s electrolyser manufacturers risk being rendered obsolete by an innovation wave they never anticipated.
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- The forces driving this shift — system integration, intelligent controls, and relentless cost compression — are fundamentally reshaping the industry.
- For India, which has placed a strategic bet on green hydrogen through its ambitious Production-Linked Incentive (PLI) scheme, the moment to reassess and recalibrate has arrived.
PLI Push — Bold, but at Risk
- India’s PLI scheme for electrolysers was both timely and necessary, designed to spark domestic manufacturing and reduce import reliance.
- However, the global innovation landscape — especially developments in China — is evolving so quickly that investments made today risk becoming outdated tomorrow.
- If India is to remain competitive and relevant in this space, its strategy must evolve to match the pace of technological advancement.
China’s Leap in Electrolyser Technology
- China Energy Construction Hydrogen Company has received national clearance for an advanced 8,000 Nm³/hour flexible alkaline water electrolysis system.
- At first glance, it may seem like another step forward in technology, but its implications are transformational.
- This new system incorporates a 10-megawatt IGCT (integrated gate-commutated thyristors) intelligent power source, creating a comprehensive platform that unifies power electronics, load flexibility, and ultra-fast responsiveness.
- It can operate flexibly from 10% to 110% load — a significant upgrade from the conventional 30-100% range — and can respond in milliseconds.
- Such agility enables off-grid hydrogen production without destabilising the energy system.
- As a result, associated energy storage costs have dropped by 30%, cutting the levelised cost of hydrogen by $0.04/Nm³.
- This is not just a hardware upgrade — it’s a redefinition of what hydrogen production systems can and should be.
- The industry is moving from hardware-focused manufacturing to intelligent, software-augmented energy ecosystems. And it’s moving fast.
Indian Manufacturers Face Headwinds
- For Indian electrolyser manufacturers, the challenge is twofold: integration and performance.
- Traditional players are struggling to keep pace with system integration — the convergence of hardware, control systems, and software intelligence.
- As these components become bundled into single EPC (engineering, procurement, and construction) contracts, legacy business models are under threat.
- This mirrors the mobile phone industry’s shift, where component suppliers vanished as value creation moved to integrated solutions.
- Performance benchmarks also tell a sobering story.
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- Many Indian systems still lack the ability to provide 100% negative load regulation — a standard feature in newer global systems.
- Meanwhile, Chinese manufacturers are not only meeting such standards but setting new ones, positioning themselves as both market leaders and rule-setters.
Reimagining India’s PLI Scheme
- To stay in the game, India’s PLI framework must pivot from rewarding volume to nurturing value.
- Currently, the scheme incentivises capacity — megawatts installed, plant sizes, and capital deployed.
- But volume without viability is a precarious strategy.
- The lithium battery boom offers a cautionary tale: in 2015, over 200 Chinese start-ups collapsed after CATL redefined the sector through vertical integration.
- India cannot afford a similar misstep in hydrogen.
Three strategic course corrections are critical for India:
- Technology Readiness as a Gatekeeper: The PLI scheme should support only those companies that meet global performance standards — including wide-range load flexibility, millisecond responsiveness, and seamless power electronics integration.
- Margin Sustainability as a Filter: Manufacturers must be able to demonstrate a sustainable gross margin — at least 15% in a systems-integrated model.
- Use-Case Relevance Over Scale: Priority should be given to companies building for real-world applications like off-grid hydrogen, green ammonia production, and chemical process decarbonisation.
India’s path to leadership in the hydrogen economy won’t be paved by producing the most electrolysers. It will be carved by creating the smartest ecosystems — integrating technology, software, and real-world use cases. If India truly aims to lead the hydrogen revolution, it’s time to shift our focus. The future belongs to value, not just volume.
