India plans green hydrogen incentives of at least 10% of cost – source
A high-ranking government official stated that as part of a $2 billion program that will begin before the end of June, India intends to provide green hydrogen fuel producers with incentives equal to at least 10% of their costs.
In an effort to cut carbon dioxide emissions and become a major exporter in the sector, New Delhi approved this year a 174.9 billion rupee incentive plan to promote green hydrogen.
The official, who is directly involved but did not wish to be identified due to the private nature of the discussions, told Reuters that the government will provide incentives for the production of green hydrogen fuel that are at least 30 Indian rupees per kilogram.
In India, the cost of producing green hydrogen, which is produced with renewable energy rather than power from fossil fuels, is currently approximately 300 rupees per kilogram.
India’s Renewable Energy Secretary, Bhupinder Singh Bhalla, told Reuters that the incentives will be given out through a competitive bidding process, and that the amount of the incentives will go down each year. “Draft concept notes on the programme have been given to industry chambers and associations for consultations,” he said.
The manufacturing of electrolysers, which are used to split the molecules of hydrogen and oxygen using electricity, will receive the remaining 130 billion rupees from the government’s incentive plan for the sector.
By 2030, India wants half of its installed electricity capacity to come from non-fossil fuel sources, and by 2070, it wants to have zero carbon emissions.
According to the source, the government will begin the bidding process for firms seeking incentives before the end of this quarter. Additionally, the government anticipates supporting 3.6 million tonnes of hydrogen production capacity over the course of the scheme’s first three years.
According to the official, the government will solicit bids in three tranches for green hydrogen supply and in two tranches for electrolysers. This, in turn, will aid in the acquisition of market insights, the incorporation of new technologies, and the realization of cost reductions.
Companies that produce hydrogen and ammonia or have renewable energy plants are expected to participate in the green hydrogen supply auction. According to the source, the contracts will be awarded to businesses that seek the lowest incentive.
The contracts are likely to be of interest to Indian businesses like Reliance Industries (RELI.NS), Indian Oil (IOC.NS), NTPC (NTPC.NS), Adani Enterprises (ADEL.NS), JSW Energy (JSWE.NS), ReNew Power (RENE.BO), and Acme Solar (ACMO.NS), all of which have previously announced plans for green hydrogen.
According to the official, each tranche for the manufacturing of electrolyzers is likely to consist of 1,500 megawatts (MW) of capacity with a fixed incentive of 4,440 rupees per kilowatt.
Through the scheme, the government expects to provide support for approximately 3,000 megawatts of annual electrolyzer capacity for five years. The first tranche will be provided in this quarter, and the next will be provided in the third quarter of 2023.
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