- The government of India recently notified the national green hydrogen policy to achieve the production of five million tonnes of green hydrogen by 2030.
- The policy announced measures such as waiver of charges for manufacturers of green hydrogen and green ammonia, a single-window portal for clearances, connectivity to the grid on a priority basis and land in renewable energy parks among other things.
- Green hydrogen is hydrogen gas produced by electrolysis of water, using renewable power and is expected to reduce dependence on fossil fuel. The government is also pushing for India to be an export hub for green hydrogen/ammonia.
The government of India recently notified its national green hydrogen policy announcing a series of measures to promote the use of hydrogen produced through lower emission techniques, including a waiver of interstate transmission charges for 25 years to the manufacturers of green hydrogen and green ammonia. This waiver would be for projects commissioned before 30 June 2025.
Green hydrogen refers to the hydrogen gas produced by electrolysis of water, using renewable power. Hydrogen and ammonia are “envisaged to be the future fuels to replace fossil fuels”, noted a recent government statement, which added that “production of these fuels by using renewable energy (RE) is one of the major requirements towards environmentally sustainable energy security of the nation.”
Earlier, in August 2021, India’s Prime Minister Narendra Modi had announced a National Hydrogen Mission which aims to add to the central government’s efforts in meeting its climate targets. India has a target of production of five million tonnes of green hydrogen by 2030.
India has a target of installation capacity of 500 gigawatts (GW) of renewable energy by 2030 which includes about 280 GW from solar and 140 GW from wind power. It is also increasingly focusing on other technologies such as green hydrogen and off-shore wind.
The green hydrogen policy, notified of said that transition to green hydrogen and green ammonia is “one of the major requirements for reduction of emissions, especially in the hard to abate sectors.” According to the policy, the green hydrogen/ammonia manufacturers are allowed to purchase renewable power from the “power exchange or set up renewable energy capacity themselves or through any other, developer, anywhere.”
To encourage the green hydrogen/ammonia manufacturers, the policy clarified that they can bank the “unconsumed renewable power, up to 30 days, with distribution company and take it back when required.”
It also highlighted that the manufacturers of green hydrogen/ammonia and the renewable energy plant “shall be given connectivity to the grid on priority basis to avoid any procedural delays.”
The policy explained that the renewable energy consumed for the production of green hydrogen/ammonia shall count towards “Renewable Purchase Obligation (RPO) compliance of the consuming entity” and the renewable energy consumed beyond the obligation of the producer shall count towards RPO compliance of the distribution companies that are in the area the project is located.
Kashish Shah, a research analyst with the Institute for Energy Economics and Financial Analysis, while talking about the importance of the measures announced, told Mongabay-India that the “power cost is roughly one-fourth of the overall cost of green hydrogen production.”
“Low-cost renewable power will be key to bringing down the production cost of green hydrogen below US$2/kgH2 by the end of this decade to undercut the cost of producing hydrogen from fossil fuels,” he said.
Shah, however, noted that currently, in India, only a handful of states dominate the share of the total installed capacity of renewables, and thus “states with better renewable energy potential such as Tamil Nadu, Karnataka, Gujarat, and Rajasthan are the top choices for RE developers to commission RE capacity, leaving other states dry of growth in RE capacity.”
“In the near term, this waiver would incentivise investment into green hydrogen production facilities even in states with relatively lower renewable energy potential or capacity. These facilities could contract long-term PPAs (Power Purchase Agreements) to buy cheaper renewable power from other states, allowing these states to decarbonise their local industries,” Shah suggested.
Single-window clearance for green hydrogen projects
The government, in the announcement of the policy, also said that to ensure ease of doing business a “single portal” will be set up by the Union Ministry of New and Renewable Energy for all statutory clearances and permissions required for manufacture, transportation, storage and distribution of green hydrogen/ammonia. The policy said the agencies and authorities will be requested to provide clearances and permission in a time-bound manner preferably within 30 days from the date of the application.
According to the policy, land in renewable energy parks can be allotted for the manufacture of green hydrogen/ammonia while adding that the Indian government proposes to set up manufacturing zones where production plants for green hydrogen/ammonia can be set up. It highlighted that the manufacturers shall be allowed to “set up bunkers near ports for storage of green ammonia for export/use by shipping” and the land for such storage purposes shall be provided to the respective port authorities.
The policy held that to achieve “competitive prices”, the MNRE may “aggregate demand from different sectors and have consolidated bids conducted” for procuring green hydrogen/ammonia.
The government of India also said that it believes that the implementation of the green hydrogen policy will “provide clean fuel to the common people of the country” and will reduce dependence on fossil fuel and reduce crude oil imports. The objective, it said, is also for India to emerge as an export hub for green hydrogen/ammonia.
Asked if there is enough excitement in the Indian market for green hydrogen considering the central government has been pushing for it, Shah said the policy “is a key first building block for creating a green hydrogen economy in India.”
“In a way, this answers the industry’s call for a policy framework that would allow India to join the global race for green hydrogen. The corporate developments and announcements in the past few months are indicative of the industry’s intent in the sector,” he said.
For instance, he said, Mukesh Ambani-led Reliance Industries is one of the most notable industrial houses to announce mega plans for green hydrogen. “RIL aims to bring down the production cost of green hydrogen below US$1/kg by the end of this decade. RIL has announced a capital outlay of Rs. 75,000 crore (about USD 10 billion) in the next three years to develop manufacturing capacity for clean energy technologies which includes electrolysers to produce green hydrogen. The NTPC (an energy conglomerate) aims to bring down the production cost below US$2/kg by 2025-2026, much faster than global projections. Being a government-owned entity, NTPC’s bullish targets are in fact reflective of the government of India’s plans for the sector,” he said.
ACME, a renewable energy developer, has already commissioned a semi-commercial green hydrogen production capacity in Bikaner, Rajasthan.
“Many developers plan to take advantage of the synergy between RE and green hydrogen to expand their business portfolios. The implementation of this policy will provide clean fuel to the common people of the country. This will reduce dependence on fossil fuels, reduce crude oil imports and aid the government in meeting its climate targets,” Shah said.
But is green hydrogen promising enough for the Indian market, considering factors such as cost? Murali R. Ananthakumar, a research scientist and group head of hydrogen studies at Center for Study of Science, Technology and Policy (CSTEP), said there have been several hydrogen hype cycles over the past years but this time around, “key stakeholders are playing definitive roles with ‘assigned targets’ as anchor points.”
“Private players are forecasting hydrogen prices to reach a dollar for every kilogram between 2025 and 2030. Solar panel prices reduced more than 80 percent in the last decade, primarily due to the government’s vision and innovative market mechanisms. Such interests in the hydrogen sector could drive costs down in a similar manner, which would then make it cost-competitive with other chief fuels. A thorough examination is needed to assess the actual impact of waiving transmission charges and its effect on the grid,” Ananthakumar told Mongabay-India.
Banner image: There are many applications of green hydrogen including its use in the transport sector. Photo by Mirkone/Wikimedia Commons.