Top 4 Stocks that Will Benefit from the Government's Electrolyser Incentive Scheme

Beneath the vibrant tapestry of India's industrious landscape, a profound transformation is taking shape. The nation, once heavily reliant on fossil fuels, is now poised to embrace a future fuelled by a clean and sustainable energy source: green hydrogen.

India is poised well towards meeting the essential climate goals it has set out for itself at different global fora over the last several years.

The recent announcement of the detailed guidelines for the Production Linked Incentive (PLI) schemes for Green Hydrogen production and Electrolyser manufacturing by MNRE under the flagship SIGHT programme of the National Green Hydrogen Mission is one such step.

In July, India invited pilot bids under its US$ 2 billion (bn) programme to incentivise the production of green hydrogen and the manufacturing of electrolysers.

The pilot bid process attracted immense interest from leading Indian companies, with twenty heavyweights like Reliance Industries, Adani Group, Jindal India, Larsen & Toubro, and Bharat Heavy Electricals vying for electrolyser manufacturing incentives.

This strong participation underscores the industry's confidence in the program's potential and India's commitment to green hydrogen development.

Electrolyser PLI would be provided for five years starting from the date of commencement of manufacturing of electrolysers. Incentives would start at Rs 4,400/kW gradually, tapering down over five years.

On 15 December, both sets of bids for green hydrogen production and electrolyser manufacturing, were officially opened. With the evaluation process now underway, here are 4 listed companies chosen for the electrolyser incentive scheme.

#1 Advait Infratech

First on the list is Advait Infratech.

It is involved in manufacturing optical fibre ground wire (OPGW), OFC cables, aluminium-clad steel wire, emergency restoration systems, and OPGW joint boxes. It provides live-line and offline installations of the OPGW system.

The company also offers a range of sustainable solutions for renewable energy. It encompasses the production of Green Hydrogen, the manufacturing of electrolysers and fuel cells, the facilitation of carbon credits, carbon neutrality services, and climate adaptation projects.

On 5 January 2024, Advait Infratech hit a 20% upper circuit after the company announced signing MoUs with the Government of Gujarat.

Being a chosen beneficiary of this scheme, it has signed two MoUs (Memorandum of Understanding) with the Government of Gujarat with a proposed investment of Rs 450 m.

The first MOU is for the manufacturing and assembly of fuel cells and electrolysers at Kadi, Mehsana, Gujarat, in the year 2024. The second MoU is for the design, manufacturing, testing, and supply of an Emergency Restoration System at Kadi, Mehsana, Gujarat, in the year 2024.

This project aligns with our commitment to providing innovative solutions and strengthening our presence in the state.

Both the MoU signs were formalised as a part of the Vibrant Gujarat Global Summit 2024.

Advait Infratech's move into the manufacturing and assembly of Fuel Cell and Electrolysers aligns seamlessly with the summit's key focus on green and renewable energy.

Apart from this, the company with KPI Green Energy inked a Memorandum of Understanding (MoU) with the government of Uttarakhand. This landmark agreement is set to pave the way for the establishment of a colossal 500 MW solar park under the captive power producer (CPP) segment.

Going forward, the company plans to bolster its position in the green hydrogen space by expanding its renewable energy capacity.

For more details, see the Advait Infratech company fact sheet and quarterly results.

#2 John Cocokerill and Greenko JV (Greenko ZeroC)

Second on the list is John Cocokerill and Greenko JV.

Greenko Group and John Cockerill signed a Framework Agreement on 18 March 2022 to exclusively partner in joint market development initiatives for Green Hydrogen Electrolysers in the Indian sub-continent, hastening a domestic green supply chain.

This joint venture is to accelerate the deployment of the green hydrogen ecosystem in India and to enable the building of a gigawatt electrolyser manufacturing plant, expandable to a multi-gigawatt scale, to serve the local market.

Last year, the 300 metric tonnes per day plant, being jointly developed by Greenko ZeroC (GZC), a subsidiary of Greenko group, and John Cockerill, will be the largest green ammonia plant in India to date and will contribute to the country's efforts to build large-scale green hydrogen production capacity.

The twenty-eight 5 MW electrolyser units will be installed at the Una site will enable a hydrogen production capacity of 140MW of high-pressure alkaline electrolyser, with the highest levels of purity (99.999%).

Apart from this, Greenko ZeroC partnered with ONGC to build a 1 MMTPA green ammonia production plant in India, one of the largest in the world.

Being the beneficiary of it, the company will receive financial support, helping to offset the costs of the project and making it economically more viable.

Going forward, they aim to create a supportive ecosystem for green hydrogen by collaborating with research institutions, universities, and startups.

This will involve knowledge sharing, technology development, and capacity building to accelerate the adoption of green hydrogen technologies across India.

For more details, see the John Cockrill company fact sheet and quarterly results.

#3 Reliance Industries

Third on the list is Reliance Industries.

Reliance Industries is a Fortune 500 company and largest private sector corporation in India. It has evolved from being a textiles and polyester company to an integrated player across energy, materials, retail, entertainment, and digital services.

The company is on a mission to make India a place with the most affordable green energy by 2030.

Reliance is not new to hydrogen, as it is the largest producer of grey hydrogen globally. It plans to transition to green hydrogen production by 2025 and become net zero by 2035.

The company plans to invest Rs 750 billion (bn) over the next three years to set up its clean energy business.

It also plans to invest Rs 5 trillion (tn) in the next 10-15 years to set up a 100 GW renewable-energy power plant and green-hydrogen ecosystem development.

To achieve this goal, the company has partnered with Stiesdal A/S, a Danish company, to develop and manufacture hydrogen electrolysers, which will help make green hydrogen. It plans to use green hydrogen for captive use and domestic and international sales.

The current cost of producing green hydrogen is US$ 3-8 per kg, but the company aims to produce it under US$ 1 per kg within a decade.

The electrolyser manufacturing facility will enable RIL to establish large-scale green hydrogen production at Jamnagar, gradually transition its captive requirements, and simultaneously integrate with green ammonia and green methanol production for domestic and international markets.

With being a chosen beneficiary of this PLI Scheme, the company will receive benefits for it for the five years, aiding this mission.

For more details, see the Reliance Industries company fact sheet and quarterly results.

#4 L&T

Last on the list is L&T.

Semiconductors, 5G telecom, renewable energy, SpaceTech, metro rail, and defence. How many Indian companies have won orders in each of these segments recently? The only company is L&T.

The company is the most respected multinational conglomerate that operates in over 50 countries with unmatched capabilities in all its businesses, including construction, engineering, technology, and manufacturing.

In green hydrogen space, in August 2023, the engineering major L&T announced that it had along with IOC and ReNew formed a company called GH4India Private. Each company has a 33.3% stake in GH4India.

Together, they will invest up to US$ 4 bn in their green hydrogen businesses over the next three to five years.

Apart from this, the company is working on setting up the world's largest green hydrogen plant being built by a Saudi-based green hydrogen company - NEOM Green.

In this venture, L&T will undertake the engineering, procurement, and construction of various components, including a 2.2 GWAC PV solar plant, a 1.65 GW wind generation balance of plant, and a 400 MWh battery energy storage system at Oxagon in NEOM.

The project is a collaboration between NEOM Green Hydrogen Company (NGHC), a joint venture between ACWA Power, Air Products, and NEOM.

Going forward, L&T plans to expand its focus on green hydrogen projects in global markets, aiming to strengthen its presence in the sustainable energy sector.

For more details about the company, check out L&T's fact sheet and quarterly results.

Conclusion

India's national-level PLI programs in sectors such as electronics, automobiles, and semi-conductors have already gained global attention.

These measures, combined with continued efforts in the green hydrogen space, will further enhance India's reputation as a resilient and rapidly growing powerhouse. India is expected to achieve significant growth in the coming decades.

Before this, in January 2023, the Union Cabinet had approved the National Green Hydrogen Mission (NGHM) with an outlay of Rs 197.4 bn to make India a global hub for manufacturing this clean source of energy.

The mission is expected to lead to the development of 5 million metric tonnes per annum of green hydrogen production capacity by 2030.

The mission aims to develop India as a global hub for the production, usage and export of green hydrogen and its derivatives.

It is expected to promote multilateral engagement and collaboration with various international efforts in hydrogen and fuel cells. The mission provides for the setting up two green hydrogen hubs in the initial phase.

Thus, the green hydrogen sector offers promising investment opportunities, but investors must stay vigilant amid evolving challenges and recent developments.

As an investor, awareness and adaptability are crucial for those seeking to capitalise on this sector's potential.

To stay updated on recent green hydrogen trends, check out our guide on the best green hydrogen stocks.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...