Incentives under SIGHT programme will enhance cost-competitiveness

However, as these incentives are only valid for three years for a green hydrogen production plant that will run for over 30 years, a consistent supply of low-cost RE to hydrogen manufacturing projects can bring real impact, said Sharad Pungalia, managing director and chief executive officer, Amplus Solar.

“The SIGHT programme for green hydrogen production and electrolyser manufacturing are essential strides in the right direction. However, we cannot create a globally cost-competitive product until we minimise the input cost of associated RE,” said Pungalia.

Renewable energy accounts for 70 per cent to 80 per cent of the total input cost in green hydrogen production.

He said removing existing tariff and non-tariff barriers on the associated RE for green hydrogen plants can cut the cost of the final product by up to 30 per cent.

“Since the SIGHT incentives are only valid for three years for a green hydrogen production plant that will run for over 30 years, a consistent supply of low-cost RE to hydrogen manufacturing projects can bring real impact,” said Pungalia.

He added that a simultaneous focus on the decentralised production of green hydrogen can be a game changer. “Besides fertilisers and refineries, where hydrogen consumption accounts for 48 per cent and 46 per cent, respectively, encouraging and incentivising distributed green hydrogen production for the remaining 6 per cent can lead to broader acceptability, particularly among India’s C&I customers,” he said.

The SIGHT scheme is a part of India’s National Green Hydrogen Mission launched in January. Its guidelines were issued by the Ministry of New and Renewable Energy for green hydrogen and electrolysers on 28 June 2023.

“The guidelines and incentive schemes issued under the SIGHT programme will promote the large-scale utilisation of green hydrogen and its derivatives, and enhance their cost-competitiveness,” said Hitesh Doshi, chairman and managing director, Waaree Group. He added that the provision in the electrolyser production incentive scheme, requiring bidders to demonstrate a minimum annual level of local value addition, will give an added impetus to indigenous manufacturing and lead to a globally competitive product quality and performance.

Base incentive available for electrolysers under the SIGHT guidelines is at Rs 4,440 per kW for the first year, Rs 3,700 per kW for the second year, Rs 2,960 per kW for the third year, Rs 2,220 per kW for the fourth year, and Rs 1,480 per kW for the fifth year.

On 7 July, the government invited bids for setting up electrolyser manufacturing capacities of 1,500 MW under the first tranche of the SIGHT programme with a target to develop electrolyser technologies domestically.

The National Green Hydrogen Mission targets a production capacity of at least 5 MMT of green hydrogen annually with 125 GW of renewable energy capacity addition. The Mission has a total outlay of Rs 19,744 crore up to FY30.