India’s Ministry of New and Renewable Energy (MNRE) will award incentives for the production of green hydrogen and manufacture of electrolysers during the current quarter after inviting bids from interested companies, a senior official at the ministry tells Hydrogen Economist.

The MNRE is taking a leaf from China’s solar energy industry, wherein authorities were quick to incentivise the various sub-segments of solar industry and provide a head start to Chinese companies toward dominating the domestic and global supply chain.

The government announced its National Green Hydrogen Mission (NGHM) in January, with incentives of $2.16bn for the production of green hydrogen and manufacture of electrolysers. India’s NGHM aims to make the country energy independent and decarbonise critical sectors such as refining and fertiliser manufacturing. The mission will facilitate demand creation, production, utilisation and export of green hydrogen, mobilising more than $987bn of investment by 2030.

400,000t/yr – Green hydrogen production capacity available in each auction round

Under the incentive scheme, green hydrogen producers will be eligible for a maximum incentive of INR 50/kg ($0.61/kg) during the first year of production. The incentive will last for three years, although it will decrease incrementally after the first year.

For the manufacture of electrolysers, incentives are capped at $54.24/kW during the first year. Successful bidders will be able to avail the incentive for a period of five years, although it will also decrease progressively every year after the first.

The auction for green hydrogen production incentives will be carried out in three different rounds, while the auction for domestic electrolyser manufacturing incentives will be carried out in two different rounds.

Each of the three rounds for green hydrogen production will bid out 400,000t/yr of capacity, with a maximum 150,000t/yr of production capacity per awarded bidder. Bidding companies are required to quote their expected production capacity and minimum incentives.

Some of the largest entities in India’s energy sector including Reliance Industries, state-owned Oil & Natural Gas Corporation, National Thermal Power Corporation and Indian Oil Corporation, and Adani Group are expected to participate in the bidding process.

Inter-state transmission charges scrapped

In order to further incentivise the green hydrogen industry, the Indian government has decided to do away with inter-state transmission system (ISTS) charges on renewable energy used for the production of green hydrogen and its derivatives up to December 2055, according to an order issued on 5 April by the MNRE.

The decision has been taken to keep the overall cost of green hydrogen low in India as renewable energy accounts for more than 50pc of the cost of production of green hydrogen and its derivatives.

“It is proposed that no ISTS charges may be levied on renewable energy used for green hydrogen and its derivatives, for units commissioned up to 31 December 2030. This waiver may be provided for a period of 25 years from the date of commissioning of such plants for the production of green hydrogen and its derivatives,” according to a memorandum issued by the office of minister of power and renewable energy, RK Singh.

It adds that the waiver will apply to electricity generated from solar, wind and hydro energy sources, including pumped storage plants, as well as battery storage systems and hybrid combinations of these technologies.

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Author: Yogender Malik