Green Hydrogen Policy and its impact to boos the Indian RE capacity
The Indian government’s recent introduction of the green hydrogen policy has garnered a lot of attention in the country’s energy sector. This policy is in line with the National Hydrogen Mission launched in 2021, which aims to boost domestic green hydrogen production to 5 million tonnes per annum (MTPA) by 2030 and make India a global hub for green hydrogen exports. The policy has several key aspects, the foremost of which is to reduce the cost of green hydrogen by providing free and easy access to the inter-state transmission system for capacity installed by June 2025 for green hydrogen and ammonia production. The policy also provides a single-window clearance for setting up green hydrogen production and allows producers to bank surplus renewable energy for up to 30 days and use it as required by paying relevant banking charges.
Moreover, renewable energy source (RES) plants set up for green hydrogen projects will be given priority for grid connectivity, and discoms may also procure green power to facilitate supply to green hydrogen projects. Green hydrogen manufacturers can buy renewable power from power exchanges or set up renewable energy capacity themselves, or through any other developer. Green hydrogen manufacturers will be allowed to set up bunkers near ports for storage of green ammonia for export/use by shipping, and the land for storage purpose shall be provided by respective port authorities at applicable charges. RES consumed for the production of green hydrogen/ammonia shall count towards RPO compliance of the consuming entity, and the RE consumed beyond the obligation of the producer shall count towards RPO compliance of the discom in whose area the project is located.
These measures/incentives are largely on the supply side and would help in lowering green hydrogen prices by 10%-15% (~US$0.5/kg). However, the need of the hour is to have a strong long-term market for green hydrogen, which would make these projects bankable. This can be achieved by implementing consumption mandates for fertilizer production and petroleum refineries. Additionally, the government should extend the PLI scheme for the manufacture of electrolysers, which would help reduce their cost, thereby making green hydrogen competitive with fossil fuels in the long run.
The green hydrogen policy is a major step in India’s energy transition towards cleaner and sustainable energy. The policy’s focus on reducing costs and facilitating ease of setting up green hydrogen projects through various incentives is expected to attract more investment and spur domestic production of green hydrogen, which will not only reduce India’s carbon footprint but also create employment opportunities in the country.
Here is a table summarizing the key features of the Indian Government’s Green Hydrogen Policy:
| Key Feature | Description |
|---|---|
| Reduced Transmission Charges | Free and easy access to the inter-state transmission system (ISTS) for 25 years for capacity installed by June 2025 for green hydrogen/ammonia production. |
| Ease of Setting Projects | Single window clearance for setting up green hydrogen production and surplus renewable energy banking for up to 30 days. |
| Priority towards Grid Connectivity | RES plants set up for green hydrogen projects would be given priority for grid connectivity, and discoms may also procure green power to facilitate supply to green hydrogen projects. |
| Access to RES Capacity | Green hydrogen manufacturers can buy renewable power from power exchanges or set up renewable energy capacity themselves, or through any other developer. |
| Storage Facility at Ports for Export Purpose | Manufacturers of green hydrogen/green ammonia shall be allowed to set up bunkers near ports for storage of green ammonia for export/use by shipping. |
| Facilitation for RPO Obligation | RES consumed for the production of green hydrogen/ammonia shall count towards RPO compliance of the consuming entity. |
These measures aim to reduce the cost of green hydrogen and facilitate ease of setting up green hydrogen projects, which is expected to attract more investment and spur domestic production of green hydrogen. It is hoped that the policy will help India achieve its goal of producing 5 million tonnes per annum of green hydrogen by 2030 and make India a global hub for green hydrogen exports.