India’s REC to finance green H2 projects with $6bn

Market: Fertilizers, Hydrogen
26/09/23

Indian state-controlled financier of energy projects REC has signed preliminary agreements worth 500bn Indian rupees ($6bn) to develop green hydrogen and ammonia projects, REC's chairman and managing director Vivek Kumar Dewangan told Argus.

REC made its first major publicly-announced contribution to a green hydrogen and ammonia project in July, with a Rs40bn loan to Indian renewables developer Acme for a site in Oman. REC separately also signed a preliminary deal with Acme for a loan that could go towards building green ammonia projects in the Indian states of Odisha and Tamil Nadu.

REC has received requests from state-owned refiners like HPCL, IOC, BPCL and MRPL to finance green hydrogen projects, Dewangan told Argus. India is mulling mandates for use of green hydrogen in key sectors that currently consume fossil fuel-based hydrogen, including oil refining. REC is also willing to provide financing to refiners as they prepare to switch to cleaner supply, Dewangan added.

Other project developers are looking to set up production facilities around port areas as they are eyeing exports to capitalise on demand from Europe and elsewhere, he said. REC has received proposals for financing green hydrogen and ammonia projects in the coastal states of Odisha, Andhra Pradesh, and Tamil Nadu.

The planned India–Middle East–Europe Economic Corridor (IMEC) — which was announced at the recent G20 summit in New Delhi — may also provide export opportunities, with REC generally seeing large potential in the green hydrogen and ammonia ecosystem, according to Dewangan.

REC has so far signed agreements worth Rs500bn, but Dewangan said the company is open to financing "whatever [green hydrogen and green ammonia] projects come, without any fixed limit on the budget." The firm will also be open to infrastructure projects such as pipelines or storages, "if it is viable and the borrower can generate enough money to repay the loans," he said.

REC is also evaluating green hydrogen and ammonia projects in neighbouring countries like Bhutan, Nepal, Bangladesh, Myanmar, and Sri Lanka, Dewangan said, adding that the firm is "open to financing any company, be it Indian or multinational."

REC's Rs500bn for green hydrogen and ammonia projects is part of a larger package of 20 preliminary agreements for renewable energy projects worth a total Rs2.86 trillion. Besides Acme, renewables firms like Avaada, ReNew and Hero Future Energies are also due to receive funding from REC. REC uses instruments like corporate bonds, green bonds, foreign currency non-resident (FCNR) loans and term loans from banks to raise funds.

By Akansha Victor

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