L&T acquires land at Kandla port, eyes more in Odisha for export-oriented green power projects

L&T director, Subramanian Sarma

Infrastructure major Larsen & Toubro (L&T) has acquired nearly 600 acres at Kandla port in Gujarat, and is now scouting for land in Odisha to set up export-oriented green hydrogen and ammonia  projects, Subramanian Sarma,  the company's President, Energy, and Wholetime Director, told Moneycontrol in an exclusive interview.

"In order to get into the export or even domestic market as a (green energy project) developer, we need land. So we are positioning ourselves to acquire  land parcels, so that whenever the opportunity arises, we are not searching for land then,” Sarma said.

The company plans to develop greenfield projects at ports for easy access to the export market, to capitalise on the global shift towards renewable energy and sustainable practices.

“We have been allocated around 500-600 acres at Kandla port for 99 years. Port land can be used for both domestic as well as export markets. We are also looking for land in Odisha," Sarma added.

The conglomerate's plans to acquire land on both the eastern and western coasts of India signals a move to ensure good connectivity for its operations, logistical efficiency, and market access across India and beyond.

L&T’s strategy for green hydrogen and ammonia focusses on establishing a state-of-the-art electrolyser manufacturing facility, and executing engineering, procurement and construction (EPC) projects. The company, which has been focussed on its asset-light engineering business, is also looking to invest in green hydrogen and ammonia manufacturing as a project developer for the  Indian and  export markets.

Clean, green hydrogen, ammonia 

The group has invested about Rs 500 crore in electrolyser manufacturing, with the first sale expected to commence in September.

"We've already booked the first order. It came from a very different industry — pharmaceuticals. We (have) identified  more users and opportunities," Sarma said, adding that the electrolyser manufacturing facility will be  up in the next few months.

While  the company is looking at export markets for green ammonia, it will set up a facility only if there are offtake agreements.

"We will not set up or invest until we have an offtake agreement. We are speaking to end-users in Korea, Japan, and Europe. Hopefully, we will have an agreement in place soon," Sarma said.

"We want to invest. Most of the offtake agreements are for export, so we may have to spend maybe 10-15 percent (of the project cost) , because the balance will come from the end-user themselves," he explained. Sarma said the company is considering an investment of Rs 1,000 to Rs 2,000 crore  to establish a strong market position.

In March, L&T commissioned its first indigenously manufactured hydrogen electrolyser at A M Naik Heavy Engineering Complex in Hazira, Gujarat. L&T Electrolysers Limited, a newly incorporated entity of L&T, is focussed on manufacturing pressurised alkaline electrolysers using technology from McPhy Energy, France.

Green strategy

L&T is looking  at undertaking  EPC projects to tap the opportunity riding from energy transition globally, and leveraging its core competence. Sarma said that revenue from green projects already comprises 40 percent of the firm's revenues, and will touch 50 percent soon.

On January 4, 2024, the union cabinet approved the National Green Hydrogen Mission with a total initial outlay of Rs 19,744 crore. The country wants to develop manufacturing capacity in clean energy and emerge as a global hub for the same.

Amid the global push towards energy transition, countries are looking at ways to make green hydrogen lucrative and atract private sector investment. India’s success in this space hinges on how government incentives are planned and executed, and how the country manages to create demand locally.