Indian government considering green hydrogen incentives

The Centre plans to offer green hydrogen incentives worth at least 10 per cent of their costs to fuel producers under a $2 billion scheme which will begin in June this year. The government will offer incentives worth at Rs 30 per kg for the production of green hydrogen fuel. The cost of manufacturing green hydrogen is currently around Rs 300 per kg in India. Green hydrogen is made using renewable energy instead of power from fossil fuels.

These incentives will be granted an incentive plan worth around Rs 17,400 crore to promote green hydrogen and cut carbon dioxide emissions and become a major exporter. Of the total incentive plan, the government will award around Rs 13,000 crore for producing green hydrogen and the rest will be for manufacturing electrolysers used to split hydrogen and energy molecules using electricity.

Renewable Energy Secretary Bhupinder Singh Bhalla told that these incentives will be awarded via competitive bidding and the amount will taper down annually. Another government official said that the government will start bidding for firms seeking incentives before the end of this quarter. He further noted that the government will invite bids in three tranches for green hydrogen supply and for electrolysers in two tranches.

The auction for green hydrogen supply is likely to remain open for companies having renewable energy plants that produce hydrogen and ammonia. Companies such as Mukesh Ambani’s Reliance Industries, Gautam Adani-led Adani Enterprises, JSW Energy, ReNew Power, and Acme Solar which have already made their green hydrogen plans public are likely to be interested.

Furthermore, each tranche for manufacturing electrolyzers may be for 1,500 megawatts of capacity with an incentive fixed at Rs 4,400 per kilowatt. The government expects to support 3.6 million tonnes of hydrogen production capacity in the next three years under the scheme. In the case of electrolysers, the government expects to support around 3,000 megawatts of annual electrolyser capacity for a period of 5 years through the scheme with the first tranches in this quarter and the next in the Q3 of 2023.