Indian Renewable Energy Development Agency Limited (IREDA) Chairman and Managing Director Pradip Kumar Das discussed the need to make green hydrogen projects cost-competitive and bankable.

He was speaking in a panel discussion on “Financing Green Hydrogen: Bridging the Cost Gap” at the second International Conference on Green Hydrogen.

He emphasized the need to drive down project costs through innovative financing solutions, aligning green hydrogen with renewable technologies like solar, wind, and hydro.

IREDA endeavors:

IREDA is making significant strides in this direction.

• IREDA Global Green Energy Finance IFSC Limited, a wholly owned subsidiary of IREDA, has received provisional registration as a finance company at GIFT City from the International Financial Services Centre Authority (IFSCA).
• It is financing its first green ammonia project and facilitating foreign-currency loans for export-oriented developers through its subsidiary at GIFT City, Gujarat.
• With the aid of these loans, developers will be able to reduce their hedging expenses by 250–350 basis points, increasing the appeal of green hydrogen and its derivatives to international markets.
• The company is also working on an in-house, standardized credit appraisal model to capture risks associated with green hydrogen projects more accurately.
• The agency recently funded its first green ammonia project, indicating its entry into the green hydrogen space.

A standard internal credit model:

IREDA is developing a standardized internal credit appraisal model.

By factoring these risks into interest rates, the model aims to more precisely represent the risks related to green hydrogen projects. It is anticipated that these financial interventions will reduce project costs and improve the overall viability of green hydrogen initiatives.

Mr Das emphasized the significance of developing comprehensive strategies to address the difficulties in establishing a green hydrogen financing ecosystem.

To reduce risks and guarantee the sustainability of projects over the long run, this entails creating reliable testing facilities for producers of electrolysers, setting up central organizations to evaluate plant designs, and putting in place standardized offtake agreements, he said.

Panelists:

The panel also comprised distinguished industry leaders and experts, including Mr. V K Dewangan, CMD, REC; Mr. Ranjit Gupta, Chief Executive Officer, Ocior; Mr. Tarun Shankar, Senior Investment Professional, International Finance Corporation; Mr. Nishaanth Balashanmugam, Country Manager – India, Green Hydrogen Organisation; Mr. Moez Cherif, India Energy Lead, The World Bank; Mr. K Mukundan, Senior Principal – Strategic Initiatives and Policy Advisory, National Investment and Infrastructure Fund; and Mr. Hitesh Sachdeva, Partner, KPMG, who moderated the panel.