India’s prominent engineering and construction giant, Larsen & Toubro Ltd. (L&T), is set to make a transformative mark on the clean energy landscape with a substantial investment of up to $12 billion over the next five years. This ambitious endeavor involves a significant focus on expanding its clean energy division, aligned with the global drive to embrace sustainability.
Green Hydrogen and Ammonia Venture
A key facet of L&T’s investment strategy includes venturing into the production of green hydrogen and ammonia. With a commitment of nearly $4 billion, the company intends to establish a capacity of 2-3 million tonnes for these clean energy sources. L&T is engaging with coastal states in India to secure land for hydrogen facilities, revealing its strategic vision for a green energy future.
Collaborative Initiatives
The initiation of L&T’s hydrogen journey involves the manufacture of electrolyzers, a foundational component in green hydrogen production. Collaborating with ReNew Power Private Ltd., L&T plans to power these electrolyzers using renewable energy. The initial phase of this project will see the production of green hydrogen at the Indian Oil Corp. refinery in Panipat. Expanding its scope, the project aims to encompass more IOC refineries and other L&T clients.
Industry’s Green Hydrogen Push
L&T joins the league of major Indian conglomerates, such as Reliance Industries Ltd. and Adani Enterprises Ltd., in embracing green hydrogen as a sustainable solution. However, the challenge remains the current viability of large-scale green hydrogen production, which hinges on affordable electrolyzer and renewable energy costs.
Cost-Sensitivity and Expansion
SN Subrahmanyan, CEO of L&T, emphasizes the importance of tariff reduction to stimulate investments. Subrahmanyan highlights that the company’s investment pace could accelerate if tariffs decrease. This reflects L&T’s commitment to cost-efficient and sustainable ventures.
Holistic Clean Energy Vision
L&T Energy Green Tech, a subsidiary of the conglomerate, is tasked with executing the clean energy strategy. In addition to green hydrogen and ammonia, the unit’s scope could expand to encompass fuel cells, grid batteries, and hydrogen vending. Subrahmanyan notes that the company is open to exploring options to monetize this unit, demonstrating a comprehensive approach to sustainable energy growth.
Diversified Investment Landscape
While the clean energy endeavor takes center stage, L&T’s realty division is concurrently developing nearly 28 million square feet of new facilities. Alongside the expansion of its core engineering and construction business, these endeavors collectively amount to a potential investment of $8 billion over five years.
As L&T charts a course towards a greener future, its comprehensive investment strategy underscores its commitment to both sustainable energy and diversified growth. With a successful track record and a robust market performance, the company is poised to play a significant role in shaping India’s clean energy landscape.
