(Bloomberg) -- India’s largest engineering and construction company Larsen & Toubro Ltd. plans to invest as much as $12 billion over the next five years, a third of which will go toward expanding its clean energy business.

The company intends to build 2-3 million tonnes of green hydrogen and ammonia capacity with an investment of close to $4 billion. L&T has approached some coastal states in India to acquire 500-1,000 acres of land for hydrogen facilities, Chief Executive Officer SN Subrahmanyan said in an interview in Mumbai. He will take charge as group chairman in October when veteran AM Naik retires.

The hydrogen foray begins with the manufacture of electrolyzers in December that will be powered using renewable energy from ReNew Power Private Ltd. to produce green hydrogen at the Indian Oil Corp. refinery in Panipat. The project will expand to more IOC refineries and other L&T customers.

The Mumbai-based firm joins big Indian groups including Reliance Industries Ltd. and Adani Enterprises Ltd. with green hydrogen bets as the world races to cut carbon emissions. However, large-scale green hydrogen production isn’t viable at current prices, and cheaper electrolyzer and renewable energy prices are key to controlling costs.

“You can’t keep on building capacity if tariffs don’t come down,” Subrahmanyan said, adding that L&T would speed up its investments if tariffs drop.

L&T Energy Green Tech, a unit of the conglomerate, will execute the clean energy strategy and over time may expand into fuel cells, grid batteries and hydrogen vending. The company will consider options to monetize the unit, Subrahmanyan said. 

Meanwhile, L&T’s realty business is developing nearly 28 million square feet in new facilities. That and expansion of the main engineering and construction business will cost as much as $8 billion over five years, Subrahmanyan said. That’s nearly twice the average annual investment. The group reported $23 billion in revenue in the year ended March and its shares have gained 26% in 2023, beating an 8% gain in the benchmark index. 

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