Discuss how demand-side instruments such as long-term offtake agreements and reverse auctions under SIGHT help reduce the cost of Green Hydrogen in India.

In 2025, green hydrogen cost about USD 3–6/kg. Grey hydrogen cost USD 1.5–3/kg [5]. Much of this gap comes from risk: lenders charge more when it is unclear who will buy the output. India's demand-side tools reduce that risk. Under the National Green Hydrogen Mission (NGHM), Indian firms have signed 5,55,610 MTPA of offtake commitments, the largest in the world [1].

Long-term offtake agreements

• Assured demand makes projects bankable: 23 contracts are expected to bring in about ₹90,000 crore of investment [1]. When sales are guaranteed, banks lend more cheaply, and finance is a large part of the final price.
• Export premiums pay for the first plants: over 70% of contracts are for export, mainly to Japan and Germany. For example, AM Green won the Asian lot of Germany's H2Global auction [1].
• Tradable derivatives: most contracts are for green ammonia or methanol, which avoids the high cost of storing and transporting pure hydrogen [1].

Reverse auctions under SIGHT

• Viability support: SIGHT gets ₹17,490 crore of the Mission's ₹19,744 crore outlay [2].
• Pooled buying: in one tender, SECI combined 7.24 lakh MT/yr of green ammonia demand from 13 fertiliser plants [4]. Bulk buying gives developers economies of scale.
• Competitive price discovery: SECI's first green ammonia auction found a price of ₹55.75/kg for 75,000 TPA supplied to Paradeep Phosphates [3]. This is now a cost benchmark.
• Room to grow: strong demand led the government to raise the Mode 2A fertiliser allocation from 5.5 to 7.5 lakh TPA [6].

Limitations

• Prices depend on subsidy: auction prices include SIGHT incentives, which end in FY 2029-30 [2].
• Not all deals are firm: some are only at the "head of agreement" stage, and total commitments cover just about 11% of the 5 MMTPA target [1].
• Equipment is getting dearer: electrolyser prices have risen, not fallen [5].
• Exports dominate: because most output goes abroad, Indian fertiliser plants and refineries are cleaned up more slowly.

These tools are working: assured demand lowers the cost of finance, and competition lowers prices. Next, SECI could act as an H2Global-style middleman, buying long-term from producers and selling at affordable prices. It could also run pooled tenders for refineries, steel and shipping fuel. Both steps would help green hydrogen compete without subsidy, in line with SDG 7, SDG 13 and Net Zero 2070.