Larsen & Toubro (L&T) plans to hive off its electrolyser manufacturing business into a separate entity and offload a stake to Indian Oil Corporation Limited (IOCL). The company will start manufacturing electrolysers from a unit in Hazira by the end of the year, a top company official told businessline. Electrolysers are used to produce green hydrogen, and L&T has already licenced the technology from France-based McPhy Energy.
“In the hydrogen journey, the electrolyser is an important component. We have started building a factory in Gujarat, where we are already well entrenched in manufacturing critical and sophisticated equipment. Our idea is to use renewable energy, package it with our electrolyzer, and supply the plant on an EPC basis to end customers,” Shankar Raman, Whole-Time Director and CFO, L&T, told businessline.
“At the moment, we are putting up the plant as part of L&T. Once the arrangement with Indian Oil Corporation gets finalised, we might have to possibly create a separate entity in which there could be shareholding from them and carve out whatever we have done in L&T to put it under this entity,” Raman added.
In April 2022, Indian Oil Corporation Limited and L&T signed a binding term sheet to form a joint venture with participation to manufacture and sell electrolysers used in the production of green hydrogen. Further, IOCL, Larsen & Toubro, and ReNew Power had agreed on forming a joint venture to develop the nascent hydrogen sector in India.
The Mumbai-headquartered company has also signed an agreement with France’s McPhy for electrolyser manufacturing that would give L&T access to pressurised alkaline electrolyser technology.
“We should be able to roll out products for electrolysers before the end of the year. Thanks to the technology tie-up with McPhy, it will not be complex. The other part is about IOCL’s preparedness to receive these into their plant and set up the facility. I expect them to start making specific announcements towards the second half of the current year. Since they’re going to be a large off-taker, they will possibly provide a take-or-pay arrangement. The electrolyzer that we manufacture on the back of renewable power may translate into a plant in one of those IOCL facilities. It is scalable because what you can do in one plant, we can duplicate elsewhere,” said Raman.