Green energy will drive $12 billion expansion over 5 years for Larsen & Toubro

10 Aug 2023 , 11:59 AM

The largest engineering and construction firm in India, Larsen & Toubro Ltd., intends to spend up to $12 billion over the following five years, of which a third will be used to grow its renewable energy sector.

The corporation plans to invest close to $4 billion in the construction of 1-2 million tonnes of green hydrogen and ammonia capacity. According to Chief Executive Officer SN Subrahmanyan, L&T has approached various coastal states in India about purchasing 500–1,000 acres of land for hydrogen facilities. He made this statement in a Mumbai interview with ET. When veteran AM Naik retires in October, he will take over as group chairman.

In order to produce green hydrogen at the Indian Oil Corp. refinery in Panipat, electrolyzers will be made in December and fueled by renewable energy from ReNew Power Private Ltd. More IOC refineries and additional L&T clients will become involved in the project.

As the world races to reduce carbon emissions, the Mumbai-based company joins major Indian businesses like Reliance Industries Ltd. and Adani Enterprises Ltd. with green hydrogen bets. To reduce costs, it is essential to find cheaper electrolyzer and renewable energy prices as large-scale green hydrogen generation is not economically feasible at the moment’s prices.

Subrahmanyan stated, ‘You can’t keep on building capacity if tariffs don’t come down,’ adding that L&T would accelerate its investments if tariffs decreased.

The conglomerate’s L&T Energy Green Tech unit, which will carry out the clean energy strategy, might eventually grow into fuel cells, grid batteries, and hydrogen vending machines. According to Subrahmanyan, the corporation would look into ways for monetizing the unit.

In the meantime, L&T’s real estate division is building new facilities totaling approximately 28 million square feet. According to Subrahmanyan, this as well as the expansion of the primary engineering and construction sector might cost $8 billion over the course of five years. That is over two times the typical annual investment. The company earned $23 billion in sales for the fiscal year that ended in March, and in 2023, its shares increased by 26%, outpacing the benchmark index’s 8% growth.

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