Why the next breakthrough in green hydrogen may come from startups, not energy giants

Green hydrogen has emerged as one of the defining pillars of the global clean energy transition. Across the world, governments have announced ambitious hydrogen roadmaps, industries are investing in large-scale production facilities, and corporations are positioning hydrogen as the lever that can decarbonise hard-to-abate sectors such as steel, cement, fertilisers, refining, and heavy mobility. Yet despite this momentum, one challenge continues to overshadow the industry’s aspirations—cost.

The potential of green hydrogen across industrial sectors is well established today. The real challenge lies in making green hydrogen commercially competitive. Reducing production costs while improving efficiency will determine how quickly the technology moves from policy ambition to widespread adoption.

This next phase of innovation is will likely depend on breakthroughs that happen earlier in the value chain at the level of materials, components, manufacturing processes, and electrolysis technologies. Innovations in catalyst chemistries, membrane materials, electrode architecture, and alternative electrolysis pathways could fundamentally reshape the economics of hydrogen production. Similarly, technologies that reduce dependence on expensive precious metal catalysts or improve system efficiency could redefine the industry’s cost curve altogether.

These are precisely the kinds of innovations that demand long development cycles and repeated experimentation. Developing a new material or electrolysis process often requires years of laboratory testing before reaching commercial viability. Success is rarely immediate, and many promising concepts never make it beyond the pilot stage.

This is where startups possess a unique structural advantage.

Large energy companies have been instrumental in scaling renewable energy infrastructure and will undoubtedly remain central to the commercial deployment of green hydrogen. Their strengths lie in project execution, manufacturing scale, infrastructure development, and operational excellence. But these organisations also operate within investment frameworks that prioritise predictable returns, disciplined capital allocation, and proven technologies. High-risk research programmes with uncertain outcomes often struggle to compete internally for funding against commercially mature opportunities.

The industry’s recent trajectory illustrates this reality. Several leading global energy companies have either delayed, restructured, or withdrawn from major hydrogen initiatives after reassessing market conditions and commercial viability. These decisions reflect prudent business strategy rather than a lack of commitment to hydrogen, but they also highlight an important structural reality: organisations designed to minimise risk are rarely the ones that pioneer disruptive technological breakthroughs.

Startups, on the other hand, are built for precisely this kind of challenge.

Unlike diversified corporations, startups can devote their entire existence to solving one specific technological problem. Small, focused engineering teams iterate rapidly, test unconventional hypotheses, and refine technologies over multiple development cycles. Their success depends on creating a breakthrough rather than optimising an existing business model. This allows them to pursue innovations that may initially appear commercially uncertain but could transform the industry if successful.

The global hydrogen ecosystem already offers compelling examples of this innovation model in action.

One company has demonstrated high-temperature solid-oxide electrolysis that reshapes hydrogen production’s energy balance. Instead of relying solely on electricity, the system uses steam and industrial waste heat to supply part of the energy needed, cutting electricity use significantly. A 2.6 MW unit at Neste’s Rotterdam refinery produces over 60 kg of renewable hydrogen hourly, reaching ~85% electrical efficiency, 20%+ above conventional electrolysers, showing hydrogen production can be structurally more efficient through industrial heat integration.

Another startup has tackled the cost challenge from an entirely different perspective—not through chemistry, but through manufacturing innovation. Instead of building customised, large-scale electrolysers, it has adopted a modular manufacturing model based on standardised stacks that can be mass-produced. By replacing expensive titanium components with steel and applying manufacturing principles used in the electronics industry, it aims to significantly reduce electrolyser costs as production scales. This demonstrates that innovation does not always come from scientific discovery alone; sometimes it emerges from reimagining how technologies are manufactured and commercialised.

These examples reinforce a critical point. The most valuable innovation in green hydrogen may not be another large production facility or another announced investment. It may instead be a better catalyst, a more efficient membrane, a simplified manufacturing process, or an entirely new approach to electrolysis. Such breakthroughs typically come from organisations willing to spend years refining a single idea despite the possibility of repeated failure.

For India, this insight is particularly relevant.

The National Green Hydrogen Mission has built strong momentum for manufacturing and deployment, signalling India’s hydrogen hub ambitions. Sustaining this requires greater innovation funding alongside manufacturing incentives, especially for technologies still moving from research to commercialisation, directed strategically towards areas where India has credible capabilities and market relevance.

A dedicated Green Hydrogen Innovation Programme could combine early-stage research funding, startup capital, testing infrastructure and pilot deployment. Hydrogen Valleys could serve as demonstration environments, connecting emerging technologies to industrial users and shared infrastructure, strengthening the innovation pipeline while focusing resources on technologies with the strongest scaling potential and prospects for global competitiveness.

To build long-term global competitiveness, India will need to strengthen the earliest stages of the innovation ecosystem. Greater investment in deep-tech startups, university research, advanced materials science, pilot-scale testing facilities, and collaborative R&D programmes can help create an environment where breakthrough technologies are developed domestically rather than imported. Equally important is patient capital that recognises the long gestation periods associated with scientific innovation and supports entrepreneurs through multiple stages of technology development.

The future of green hydrogen will not be shaped by a choice between startups and energy giants. Both are indispensable, but they play fundamentally different roles within the innovation ecosystem. Startups are often the source of disruptive ideas that redefine technological possibilities, while established energy companies provide the scale, infrastructure, manufacturing capabilities, and commercial execution required to bring those innovations to market.

As the green hydrogen industry enters its next phase of growth, success will depend not only on how much capacity the world builds, but also on how effectively it supports the innovators working to solve the industry’s toughest technical challenges. The next breakthrough is unlikely to emerge from doing more of the same. It is more likely to come from a small team willing to question conventional engineering, challenge existing production methods, and persist through years of experimentation.