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H2GO: India-made Electrolysers Set for an Early Start

India’s early start on electrolyser manufacturing under the PLI scheme: implications for investors and industries.

Source and citation: Kalpana Pathak, ET Bureau, July 10, 2024

TLDR For This Article:

India’s electrolyser manufacturing under the PLI scheme is ahead of schedule, boosting green hydrogen production and reducing costs.

H2GO: India-made Electrolysers Set for an Early Start

Analysis of this news for a layman:

India is pushing forward with its green energy ambitions by speeding up the production of electrolysers, which are crucial for creating green hydrogen. Electrolysers split water into hydrogen and oxygen using electricity from renewable sources. Green hydrogen is essential for reducing industrial carbon emissions. Thanks to a production-linked incentive (PLI) scheme, several companies like Reliance, Adani, and L&T are set to begin manufacturing electrolysers ahead of the 2026 deadline, with units ready by 2025. This early start is expected to lower costs and reduce reliance on imported electrolysers.

Impact on Retail Investors:

  • Investment Opportunities: Companies involved in electrolyser manufacturing may see stock price increases due to early project completion and potential market leadership.
  • Green Energy Focus: The push towards green hydrogen can lead to growth in related sectors, offering diverse investment options.
  • Cost Reduction: Lower production costs for electrolysers might enhance profit margins, positively affecting stock performance.

Impact on Industries:

  • Renewable Energy: Boost in local electrolyser production will lower costs, making green hydrogen more competitive.
  • Manufacturing Sector: Increased demand for manufacturing components for electrolysers will benefit the broader industrial sector.
  • Technology and Partnerships: Companies with advanced electrolyser technology or strategic partnerships will see growth opportunities.

Long Term Benefits & Negatives:

  • Benefits:
    • Sustainability Leadership: India positions itself as a leader in green hydrogen production, attracting global investment.
    • Economic Growth: Development of a green hydrogen ecosystem can spur economic growth and job creation.
    • Technological Advancements: Local manufacturing capabilities will enhance technological expertise and innovation.
  • Negatives:
    • Market Competition: Competitive pricing from countries like China may pose a challenge.
    • Infrastructure Needs: Significant investment in infrastructure and technology development is required.

Short Term Benefits & Negatives:

  • Benefits:
    • Early Market Entry: Companies commissioning units ahead of schedule gain a first-mover advantage.
    • Cost Efficiency: Initial reduction in electrolyser costs can lead to lower green hydrogen production costs.
  • Negatives:
    • Implementation Risks: Rapid commissioning may face operational and logistical challenges.
    • Market Volatility: Short-term market reactions to announcements and progress updates may cause stock price fluctuations.

Impact of Indigenous Electrolyzer Manufacturing in India

Indian Companies Likely to Gain:

  • John Cockerill Greenko Hydrogen (Joint Venture):
    • Gains first-mover advantage in the Indian electrolyser market due to early commissioning (by 2025).
    • Partnership with a global leader (John Cockerill) strengthens brand image and technology expertise.
    • Potential for positive market sentiment due to its association with green initiatives.
  • L&T Electrolysers:
    • Already achieved early success with its indigenous 1 MW electrolyser plant.
    • Likely to benefit from experience gained and potentially lower costs due to domestic manufacturing.
    • Positive market sentiment for its clean energy technology focus.
  • Reliance Electrolyser Manufacturing:
    • Strategic partnerships with Stiesdal (Denmark) and Nel ASA (Norway) for technology and licensing.
    • Access to advanced technology could lead to efficient and cost-competitive electrolysers.
    • Potential for positive market sentiment due to its investment in green hydrogen.
  • Adani New Industries:
    • Collaboration with multiple technology partners allows for knowledge sharing and potentially faster innovation.
    • Early commissioning by 2025 can lead to a competitive edge in the domestic market.
    • Positive market sentiment for its foray into clean energy solutions.
  • Other PLI Scheme Winners (Jindal India, Ohmium Operations, Advait Infratech, homiHydrogen):
    • Early capacity creation (by 2025) can lead to market share gains.
    • Participation in the government’s green initiative could improve brand image.
    • Potential for positive market sentiment due to their contribution to India’s green ambitions.

Global Companies Likely to Gain:

  • Electrolyser Technology Providers (McPhy Energy (France), Stiesdal (Denmark), Nel ASA (Norway), etc.):
    • Increased demand for their technology due to India’s domestic manufacturing push.
    • Potential for licensing agreements and joint ventures with Indian companies.
    • Positive market sentiment due to their contribution to global green hydrogen development.

Global Companies Likely to Lose:

  • Dominant Global Electrolyser Manufacturers (unidentified in the article):
    • Increased competition from Indian manufacturers could lead to price pressure.
    • Potential loss of market share in India if domestic players become competitive.
    • Negative market sentiment if they fail to adapt to the changing market dynamics.

Indian Companies Unlikely to Be Affected (for now):

  • Existing Indian companies not involved in electrolyser manufacturing (companies across various sectors) – The impact on these companies would depend on future developments in the green hydrogen market and government policies.

Disclaimer: This analysis is based on the information provided in the article. The actual impact on specific companies might vary depending on future developments in the electrolyser market.

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