L&T puts a big expansion bet on ice as demand fades

Mumbai-based Larsen & Toubro (L&T), a major player in the energy sector, has revised its plans for expanding electrolyser manufacturing capacity, as weak demand for green hydrogen threatens investment prospects. The company's wholly-owned subsidiary, L&T Electrolysers Ltd (LTEL), had initially aimed to establish a 1 GW manufacturing facility in Hazira, Gujarat, by March 2027, with an investment ranging from Rs 450-550 crore.

However, the current capacity of LTEL stands at 400 MW. Industry sources suggest that demand for green hydrogen has not met expectations, prompting L&T to defer the expansion decision.

Derek Shah, MD and CEO of L&T Energy GreenTech, confirmed to ET that L&T's assembly line and robotic line capacity is adequate to satisfy the current domestic market demand. The company is prepared to quickly scale up the assembly and manufacturing line to reach 1 GW once the market becomes more receptive and more projects in the green hydrogen, green ammonia, and green methanol sectors are announced.

Shah added that, if all the announced domestic market and export projects from India materialize, L&T's manufacturing facility could be expanded to 1 GW within 12 to 18 months. He noted that the typical completion time for green hydrogen and green ammonia plants is 30 to 40 months, so there is no anticipated challenge in ramping up electrolyser plant manufacturing to meet industry demands.

L&T has already committed ₹293 crore to the project. LTEL specializes in producing electrolysers using pressurized alkaline technology under a licensing agreement with France-based McPhy Energy.