Green Hydrogen: Deepening Electrolyser Stack and Component Manufacturing

Demand Outlook to 2030

By 2030, we estimate India’s green hydrogen demand could reach between 1.2–3.4 million tonnes per annum (MTPA), combining domestic consumption and export-oriented production. Domestic demand is projected to reach 0.6–1.6 MTPA, driven primarily by early adoption in refining, green ammonia substitution in fertilizer manufacturing, blending in city gas distribution, and pilots in hard- to-abate sectors like steel and chemicals. Export-linked demand including for green ammonia exports, bunkering and other international uptake arrangements could add another 0.6–1.8 MTPA contingent on domestic manufacturers’ ability to secure long-term contracts in global markets, and sustain prices discovered through recent SECI tenders.

Translating this into electrolyser capacity, we estimate that India will require electrolyser installations of approximately 10–28 GW by 2030. This capacity deployment will be shaped by the pace at which early projects for green hydrogen take off and achieve financial closure, the success of the PLI schemes for manufacturing within green hydrogen, and the evolution of offtake mechanisms under the National Green Hydrogen Mission.

Value Chain Structure, Cost Stack, and Domestic Value Capture

India currently captures value in balance of plant (BoP) manufacturing and system integration, leaving much on the table when it comes to the electrolyser stack and its critical components. Across alkaline and PEM electrolysers, balance of plant forms 68–76% of total electrolyser costs. Domestic firms have experience in undertaking metal fabrication for these balance-of-plant components (e.g., frames, vessels, piping) and integrating off-the-shelf components (e.g., control or SCADA systems) with the core electrolyser stack. Despite these strengths, components like power electronics and sensors remain import dependent.

Beyond BoP, key stack components like membranes and diaphragms, electrodes, catalysts, bipolar plates, and porous transport layers account for 24–32% of total electrolyser cost and are both material and IP-intensive. Even though they represent a smaller share of total electrolyser cost, these components are the locus of upstream innovation and technology differentiation. Domestic value addition is negligible across most stack components. As a result, India’s current domestic value addition is around 35% for electrolyser systems, depending on the final configuration and the extent of BoP localisation.

Table 1: Green Hydrogen Value Chain and Current Domestic Value Capture

Source: Dalberg analysis; Expert consultations. Note: While renewable energy contributes over half of green hydrogen costs and is covered under the solar sector, this section focuses on the electrolyser stack.

Manufacturing Footprint: Current Base, Announcements, and Gap to 2030

India’s existing electrolyser manufacturing footprint is set to expand and will be able to serve the projected green hydrogen demand. Existing electrolyser manufacturing capacity in the country stands at approximately 2.1 GW/year. The existing manufacturing base is well positioned to serve the approximately 9.8 GW of installed electrolyser capacity needed in 2030 to meet the projected demand for green hydrogen production in the conservative scenario. Additionally, approximately 26 GW/year of electrolyser manufacturing capacity has been announced, of which approximately 3 GW/year is expected to come up under the PLI scheme.

However, over 90% of the announced manufacturing capacity is yet to begin construction and focus is skewed towards assembly rather than stack localisation. The announced capacity coming online could result in overcapacity compared to the likely demand for green hydrogen in 2030. Given the weak demand signal, the entire announced capacity is unlikely to come online. Further, the announced manufacturing plants are expected to continue to rely on imported membranes, catalyst coatings, and other key stack elements via technology partnerships from international suppliers. While this pipeline could establish India as a large electrolyser assembly hub, without targeted incentive to deepen stack manufacturing, the sector risks locking into an assembly-led pathway with continued dependence on imported embedded value.

Bottlenecks to Scaling Domestic Manufacturing

Despite strong policy intent under the National Green Hydrogen Mission, India’s green hydrogen manufacturing ecosystem remains constrained by a set of interlinked bottlenecks that collectively raise costs, delay scale-up, and weaken incentives for deep localisation. Slow and uncertain demand growth limits the ability of manufacturers to commit to capital-intensive investments in electrolyser stacks and components. Fragmented R&D and dependence on imported materials and equipment constrain domestic learning and technology absorption. Together, these challenges risk locking India into an assembly-led manufacturing pathway.

Demand and Market Architecture

• Higher cost of green hydrogen. Green hydrogen (USD 3.5–5 per kg) is 1.5–2x more expensive than grey hydrogen (USD 2.3–2.5 per kg). Higher DISCOM charges levied on renewable electricity supply contribute to 50–70% of this cost differential, resulting in limited voluntary offtake.
• Absence of blending mandates and price stabilisation. The lack of strong, phased blending mandates and green hydrogen price stabilisation mechanisms has led to uncertainty around offtake, making it difficult for manufacturers to justify investments in stack components.
• Delinked PLI schemes. Current green hydrogen and electrolyser manufacturing PLI schemes are delinked from each other. Overall green hydrogen production incentives do not specify any requirement to procure domestically manufactured electrolysers, resulting in most production via imported electrolysers only assembled in India.

R&D and Product Innovation

• Fragmented research ecosystem. Existing infrastructure is distributed across IITs, IISc, research centres, and national labs that often operate in silos and are de-linked from industry, reducing the opportunity for collective learning and commercialisation-oriented development.
• Lack of MW-scale testing infrastructure. Many domestic research initiatives focus on electrolyser components, but the lack of megawatt (MW) scale testing and validation infrastructure has restricted research to TRL 3–5 levels, delaying commercialisation and increasing reliance on imported technologies.
• Limited investment in alternative materials. Research investments for finding alternatives to imported membranes, catalysts, and coatings are limited, slowing domestic IP creation and innovation tailored to Indian operating conditions.

Upstream Raw Materials and Critical Inputs

• Near-total import dependence for key minerals. India has near-total import dependence for materials such as nickel, zirconium dioxide, titanium, platinum, and iridium required to manufacture membranes and porous transport layers. None of these minerals are mined or refined domestically.
• Proprietary membrane technologies. Technologies such as Nafion and Zirfon are produced by a small set of global firms, creating supply security issues and leading to higher licensing costs that reduce profitability for domestic manufacturers.
• No domestic circularity pathways. India currently lacks domestic refining and circularity pathways for key electrolyser minerals, leaving recovery value from end-of-life systems unclear for manufacturers.

Capital Equipment and Infrastructure

• Limited availability of high-precision equipment. Limited availability of equipment for membrane casting, bipolar plate stamping, and advanced coating has restricted domestic production of high-value stack components. Reliance on imported capital equipment has lengthened project timelines and increased upfront capex, particularly for first movers attempting to localise stacks.
• Adjacent-industry retrofitting unrealised. Partial retrofitting of adjacent-industry machinery can support domestic manufacturing, but investments in adapting this machinery are yet to materialise at scale.

Talent and Workforce Development

• Outdated curricula and insufficient infrastructure. Outdated manufacturing-oriented curricula and lack of demonstration infrastructure for green hydrogen and electrolyser production in ITIs will limit the availability of job-ready technicians for stack manufacturing, testing, and O&M operations.
• Shortage of specialised faculty. India’s green hydrogen workforce development is constrained by a shortage of faculty with hands-on expertise in hydrogen production systems, fuel cells, and safety standards.
• Missing industry-linked learning models. Industry-linked learning models for ITI and engineering graduates are currently missing. While some structured apprenticeship and internship programs exist, they are yet to be scaled up to meet the expected workforce demand over the next five years.

Financing and Taxation

• Large investment requirement with uncertain returns. We estimate that an investment of INR 20,400–46,300 crore is needed over five years to achieve higher indigenisation in the green hydrogen value chain, including electrolyser manufacturing. Investors are wary of large capex investments due to uncertain long-term offtake and competition from grey hydrogen.
• Lack of risk-sharing financing instruments. The lack of financing instruments that can cover investors’ risk and ensure low-cost capital for establishing production lines has further constrained investments and in some cases led to shelving of planned investments in electrolyser manufacturing.