World Bank approves additional $1.5 billion to boost India’s green hydrogen and renewable energy sector

The World Bank’s Board of Executive Directors has sanctioned $1.5 billion to support India’s efforts to develop low-carbon energy. This funding is the second phase of a series aimed at supporting a robust green hydrogen market, developing renewable energy sources and encouraging investment in low-carbon energy projects.

India, considered the fastest growing large economy in the world, is expected to maintain its rapid economic development. To ensure that this growth does not increase greenhouse gas emissions, a significant increase in the use of renewable energy is needed, particularly in demanding industrial sectors. Achieving this goal requires increasing the production and consumption of green hydrogen, as well as accelerating climate finance to boost low-carbon investments.

The Low Carbon Energy Development Policy’s second Policy Action is the latest in a series of similar initiatives. It aims to implement reforms that will increase green hydrogen production and the electrolysers needed to produce green hydrogen. It will also promote the integration of renewable energy by encouraging the use of battery storage solutions and updating India’s electricity grid code to better accommodate renewables.

This builds on the success of the $1.5 billion first transaction approved by the World Bank in June 2023, which facilitated renewable transmission fee waivers for green hydrogen projects, set the course for 50 GW of annual renewable energy tenders and established the legal framework for a domestic carbon credit market.

“The World Bank is delighted to continue supporting India’s low-carbon development strategy, which aims to achieve net-zero emissions while creating clean energy jobs in the private sector,” said Auguste Tano Kouame, World Bank India Director. Both operations are key to boosting private investment in green hydrogen and renewable energy.”

The expected results of these reforms include the production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers per year from FY25/26. In addition, the initiative is expected to significantly increase renewable energy generation capacity and reduce emissions by 50 million tons per year. It will also support the further development of a domestic carbon credit market.

“India has made significant progress in developing a domestic green hydrogen market, supported by expanding renewable energy capacity,” noted Aurélien Kruse, Xiaodong Wang and Surbhi Goyal, Operations Team Leaders. “This operation is key to scaling up investments in green hydrogen and renewable energy infrastructure, contributing to India’s domestic contribution targets.”

This operation is in line with India’s energy security objectives and the World Bank’s Hydrogen for Development (H4D) Partnership. The financing includes a $1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $31.5 million credit from the International Development Association (IDA).