India’s First Profitable Green Hydrogen Project? Inside Panipat’s $4.75/kg Breakthrough

India may have just unlocked a major milestone in the global race toward green hydrogen economics. While many ambitious projects worldwide have stalled or fallen short due to high costs and unclear offtake strategies, IndianOil’s Panipat Refinery is rewriting that narrative. In today’s episode, we’ll break down how this project is succeeding where others have failed, why a $4.75/kg levelized cost of hydrogen—or LCOH—is such a big deal, and what lessons developers, investors, and governments can learn from this bold refinery-backed initiative. Plus, if you’re working on your own hydrogen project, we’ll show you how to calculate your own LCOH using a downloadable Excel model just like the one IndianOil might’ve used. Let’s dive in.

At the center of India’s hydrogen strategy lies a single number: ₹397 per kilogram—or roughly $4.75 per kilogram in US dollar terms. That’s the levelized cost IndianOil locked in for its 10,000-ton-per-year green hydrogen project at its Panipat refinery. This figure is important because it offers something that has been missing in most green hydrogen conversations: price transparency.

Most developers pitch vague claims about future costs falling below $2 per kilogram, but offer little real-world evidence or clarity. IndianOil, on the other hand, published this figure upfront—before construction even began—as part of a formal offtake tender. In fact, it’s the first green hydrogen project in India to publicly declare its LCOH and award the contract to a private developer based on that bid. That level of clarity alone sets Panipat apart in a market full of uncertainty.

So, how did they pull this off?

First, the most important factor: integrated demand. IndianOil is already one of the largest consumers of hydrogen in India. It uses grey hydrogen—produced from fossil fuels—for desulfurizing fuel at multiple refineries, including Panipat. By replacing a portion of this existing demand with green hydrogen, IndianOil created a built-in customer for its own production. That eliminates one of the biggest risks plaguing hydrogen projects worldwide: who’s going to buy the hydrogen, and for how much?

Most projects fail to get off the ground because they build capacity first, then go hunting for offtake agreements. Panipat flips that script. IndianOil already uses hydrogen—so it’s not building supply for an unknown market; it’s replacing existing carbon-intensive supply with a cleaner alternative.

Next, let’s talk about the procurement model. Instead of building the plant themselves, IndianOil structured the project as a BOO—Build, Own, Operate—contract. The winning bidder, L&T Energy Green Tech, is responsible for financing, constructing, and operating the electrolyzer facility. IndianOil simply agrees to buy the hydrogen at a pre-agreed price for a fixed period.

This separates the technical risk of electrolyzer performance from IndianOil’s balance sheet and ensures that the project is built by specialists who know how to deliver. This kind of BOO model—paired with a firm offtake agreement—is increasingly seen as a best practice in bankable green hydrogen projects.

Another key point: the price per kilogram was discovered through competitive bidding. IndianOil issued multiple tenders for this project. The first attempt failed due to a lack of interest. The second was challenged in court. But the third—thanks to improved government incentives, policy clarity, and better cost structures—received five strong bids. This shows that market confidence in India’s hydrogen sector is finally maturing.

Now, $4.75/kg may still sound expensive to some. After all, grey hydrogen produced from natural gas can cost as little as $1–$1.50/kg. But it’s important to understand that this is a real LCOH, not a theoretical future projection. It includes capital expenditure, operating costs, electricity inputs, and efficiency losses. And most importantly, it’s bankable—meaning both the buyer and seller agreed to it. That’s what makes this project stand out: it’s not just economically modeled—it’s being built.

The plant itself will feature electrolyzers powered by renewable electricity, likely through solar or hybrid procurement structures. While the exact capacity of the electrolyzer system hasn’t been published, it’s expected to be around 20–30 megawatts in its first phase, scaling further depending on performance and demand. The facility is set to begin operations by December 2027, but the execution pathway is already locked in.

And here’s something else that matters: Panipat has policy wind at its back. The project is aligned with India’s National Green Hydrogen Mission, which offers capital subsidies, policy support, and investment frameworks to scale up domestic green hydrogen production. This includes funding for electrolyzer manufacturing and carbon credits for low-emission fuels. IndianOil is capitalizing on this alignment not just to decarbonize its operations—but to pilot a model that could be replicated at other refineries across the country.

So, let’s recap the six reasons why Panipat is succeeding where other green hydrogen projects have failed.

Number one: Integrated demand. The refinery already consumes hydrogen, ensuring immediate offtake.

Number two: Competitive LCOH. At $4.75/kg, the cost is transparent, bankable, and agreed upon by both parties.

Number three: Smart delivery model. A BOO contract shifts technical risk to a specialized EPC player while guaranteeing returns for IndianOil.

Number four: Policy alignment. The project fits directly into India’s green hydrogen mission, enabling access to subsidies and approvals.

Number five: Strong tender response. The final tender saw real market participation, a sign that hydrogen projects are finally investable in India.

And number six: Execution clarity. With a defined commissioning target of 2027 and a named contractor in place, Panipat is not a dream—it’s a deliverable.

All of this positions Panipat as one of the world’s most credible examples of a first-generation green hydrogen project that’s actually happening. No hype, no vaporware—just clean hydrogen tied to real infrastructure, at a price that works.

Now here’s the exciting part: if you’re planning a hydrogen project—or advising one—you can apply the same economic logic IndianOil did.

💼 Want to know your project’s LCOH? We’ve built a fully editable Green Hydrogen Excel Model to help you do exactly that.

✅ It includes CAPEX and OPEX inputs, electrolyzer efficiency, electricity costs, utilization factors, and even IRR and DSCR calculators. Whether you’re working on a 5MW pilot or a 500MW hydrogen hub, this tool will show you whether your numbers make sense—or not.

👉 You can download it now at:

https://www.reneenergy.com/product-page/green-hydrogen-financial-model

or at:

https://h2hub.reneenergy.com/templates

And if you want to see a full video walkthrough of how to use the model—let us know in the comments. We’d love to do a deep dive.

So—India’s Panipat project may not be the cheapest hydrogen on the planet. But it’s one of the most real, most transparent, and most replicable efforts yet. It marks a turning point in proving that green hydrogen doesn’t just work in theory—it can work in the real world too.

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Let’s build the future—profitably.