A Green Hydrogen Plant Feasibility Study helps investors, industrial companies, renewable-energy developers and project promoters understand whether a proposed hydrogen project is technically practical, commercially viable and financeable before major capital is committed.

Green hydrogen is produced using electricity from renewable sources to split water into hydrogen and oxygen through electrolysis. India is developing this sector under the National Green Hydrogen Mission, which targets at least 5 million metric tonnes of green hydrogen production capacity per year by 2030. The Mission has an initial outlay of ₹19,744 crore, including ₹17,490 crore for the SIGHT programme supporting electrolyser manufacturing and green hydrogen production. Ministry of New and Renewable Energy

For investors, however, policy support alone does not make a project feasible. A successful project needs the right combination of low-cost renewable power, reliable water supply, electrolyser technology, hydrogen offtake, land, infrastructure and financing.

Green Permits Consulting supports developers with Green Hydrogen feasibility studies, DPR preparation, market and offtake assessment, site selection, technology evaluation, CAPEX and OPEX modelling and project finance planning.

What is a Green Hydrogen Plant?

A green hydrogen plant uses renewable electricity to produce hydrogen without relying on fossil-fuel-based hydrogen production.

The basic process is:

Renewable Electricity → Water Treatment → Electrolyser → Hydrogen → Purification → Compression / Storage → Customer

Electricity is supplied to an electrolyser, which separates water into hydrogen and oxygen. The hydrogen can then be purified, compressed, stored or converted into products such as green ammonia or green methanol depending on the project.

Although the process appears simple, the economics are strongly influenced by the cost and availability of renewable electricity. For this reason, the feasibility study should analyse the complete energy and offtake model rather than evaluating only the electrolyser.

Start with the Hydrogen Buyer

One of the most important steps is to identify who will purchase the hydrogen.

Potential users can include refineries, fertiliser manufacturers, chemical companies, steel producers and other industrial consumers. Hydrogen can also be converted into derivatives such as ammonia or methanol where that route provides a stronger market.

The feasibility study should determine how much hydrogen the customer requires, what purity and pressure are needed, how the hydrogen will be delivered and what commercial arrangement can support the project.

The correct development sequence is:

Buyer Demand → Hydrogen Specification → Plant Capacity → Renewable Power → Technology

Building a large hydrogen plant first and searching for a buyer later can create significant investment risk.

Renewable Electricity Requirement

Electricity is one of the biggest operating inputs in green hydrogen production.

The project may use a dedicated solar plant, wind power, solar-wind hybrid generation, renewable electricity through open access or another eligible renewable-power arrangement.

A feasibility study should evaluate not only the electricity tariff but also the generation profile.

Solar energy is available mainly during daylight hours, while an electrolyser may achieve better asset utilisation if power is available for a larger number of hours. Wind or hybrid renewable configurations can therefore be evaluated where suitable.

The study should compare:

Renewable Power Cost + Availability + Transmission Cost + Electrolyser Utilisation

A low electricity tariff may not always deliver the lowest hydrogen cost if the electrolyser operates at very low annual utilisation.

Electrolyser Technology Selection

The electrolyser is the central process equipment in a green hydrogen plant.

Common technologies include alkaline electrolysers and PEM electrolysers, while other technologies continue to develop.

Technology should be selected according to plant capacity, renewable-power profile, operating flexibility, efficiency, water quality, maintenance requirement and hydrogen purity.

For example, projects with highly variable renewable input may place greater importance on the ability of the electrolyser to respond to changing power availability.

The feasibility study should compare complete lifecycle performance rather than only electrolyser purchase price.

Water Requirement and Treatment

Water is another important project input.

The electrolyser requires purified water, so raw water generally needs treatment before it enters the hydrogen-production system.

The feasibility study should identify the water source and assess availability, quality, treatment requirement and disposal of treatment rejects.

A project may use industrial water, surface water, suitably treated wastewater or another legally available source depending on location and project design.

The complete water system may involve:

Raw Water → Treatment → Demineralisation → Electrolyser Feed Water

Where water availability is constrained, the project should determine this early because it can influence both site selection and operating cost.

Site Selection for a Green Hydrogen Plant

The ideal site should balance renewable electricity, water availability, hydrogen customers and industrial infrastructure.

Transporting hydrogen over long distances can be expensive because hydrogen has relatively low volumetric energy density and requires compression, pipelines or other specialised logistics.

For many projects, locating the plant close to the industrial consumer can improve economics.

The site study should therefore compare:

Renewable Energy Access + Water + Buyer Distance + Grid Infrastructure + Land + Logistics

For hydrogen derivatives such as green ammonia, access to chemical infrastructure, ports or export logistics may also become important.

Cheap land alone should not decide the location.

Hydrogen Storage and Transportation

Hydrogen production and customer consumption may not always occur at exactly the same rate.

The project may therefore require buffer storage.

Hydrogen can be stored as compressed gas or handled through another suitable configuration depending on the project. Storage pressure and capacity directly influence equipment cost and safety requirements.

Transportation is also a major feasibility factor. A project supplying a nearby refinery through a dedicated system can have very different economics from a project transporting hydrogen by road.

The financial model should therefore calculate the delivered cost of hydrogen, not only the production cost at the electrolyser outlet.

Green Hydrogen Plant CAPEX

There is no single fixed investment cost for every green hydrogen plant.

CAPEX depends on electrolyser capacity, technology, renewable-energy configuration, water-treatment system, compression, storage, electrical infrastructure and site development.

The total project cost should consider:

Renewable Energy System + Electrolyser + Water Treatment + Compression + Storage + Electrical Infrastructure + Utilities + Civil Works

If the project converts hydrogen into ammonia, methanol or another derivative, a separate downstream process plant must also be included.

Investors should therefore avoid using only a quoted cost per MW of electrolyser as the complete project cost.

OPEX and Hydrogen Production Cost

The financial feasibility of a green hydrogen project depends heavily on operating cost.

Important OPEX elements include renewable electricity, water treatment, equipment maintenance, compression, replacement components, manpower and other utilities.

Electricity normally has a major influence on the cost of hydrogen.

The financial model should calculate:

Annual Electricity Consumption + Water + O&M + Compression + Other Operating Costs = Hydrogen Production Cost

This should then be compared with the expected selling price or the customer's alternative hydrogen cost.

A small increase in electricity cost can materially affect project economics over many years of operation.

Government Incentives and SIGHT Programme

The National Green Hydrogen Mission includes the Strategic Interventions for Green Hydrogen Transition - SIGHT programme. MNRE states that ₹17,490 crore has been allocated to SIGHT, including ₹4,440 crore for electrolyser manufacturing and ₹13,050 crore for green hydrogen production. National Green Highways Mission

However, these incentives are linked to specific schemes, bidding processes and eligibility requirements. They should not be treated as an automatic subsidy for every new hydrogen project.

A feasibility study should therefore maintain two views:

Base Project Economics without Assumed Incentive

and

Project Economics with Confirmed Eligible Incentive

This helps investors avoid creating a financial model that depends entirely on uncertain subsidy income.

Project Finance and Bankability

A green hydrogen project can require substantial investment, making bankability an important part of the feasibility study.

Banks and investors generally need confidence in the hydrogen buyer, renewable-power arrangement, technology provider, project cost and long-term cash flow.

The strongest commercial structure is often based on:

Reliable Renewable Power + Proven Technology + Long-Term Offtake + Competitive Hydrogen Cost

A long-term offtake arrangement can significantly improve financing visibility because it reduces uncertainty around future demand.

The DPR should also include sensitivity analysis for higher electricity prices, lower electrolyser utilisation, CAPEX escalation or changes in hydrogen selling price.

What Should a Green Hydrogen Feasibility Study Include?

A professional feasibility study should connect market demand with technical and financial planning. It should assess the proposed hydrogen application, buyer demand, renewable-energy resource, water availability, electrolyser technology, plant capacity, site and logistics.

It should also estimate CAPEX, OPEX, hydrogen production cost, delivered cost, revenue, working capital, project returns and financing requirements.

The project should be evaluated through a sequence such as:

Offtake Study → Site Assessment → Renewable Energy Study → Technology Selection → Financial Model → DPR → Approvals → Project Finance

This provides a much stronger investment basis than beginning directly with an electrolyser quotation.

How Green Permits Helps with Green Hydrogen Projects

Green Permits Consulting supports investors and industrial companies with Green Hydrogen Plant feasibility studies, market and offtake assessment, DPR preparation, site selection, renewable-energy planning, technology evaluation, CAPEX and OPEX modelling and project finance documentation.

The objective is to determine whether the proposed project has the right customer, energy source, technology and financial structure before significant investment is committed.

Learn More About Green Hydrogen Plant Feasibility Study

If you are planning a green hydrogen project, the first stage should evaluate buyer demand, renewable electricity, water, electrolyser technology, site, storage and project economics before equipment procurement begins.

Read more about project feasibility and DPR consulting services here:

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