According to a top government official, India intends to provide Incentives for Green Hydrogen fuel producers worth at least 10% of their expenses as part of a $2 billion program that will start before the end of June.
To reduce carbon dioxide emissions and establish itself as a significant green hydrogen exporter, New Delhi this year authorised a 174.9 billion rupee incentive program to promote the fuel.
The official, who is directly involved but wished to remain anonymous because the talks are private, told Reuters that the government will provide incentives worth at least 30 Indian rupees per kg for the production of green hydrogen fuel.
In India, the price of producing green hydrogen, which is produced using renewable energy rather than electricity derived from fossil fuels, is presently around 300 rupees per kg.
Bhupinder Singh Bhalla, India’s Secretary for Renewable Energy, said the incentives will be given out through an open bidding process, and the incentive amount will decrease yearly.
Industry chambers and associations have been sent draught concept notes for the project for input, he said.
The government will award roughly 130 billion rupees of the total incentive package for the industry for the production of green hydrogen, with the remaining funds going towards the production of electrolysers, which are used to electrically split hydrogen and oxygen molecules.
By 2030, India wants to have half of its installed power come from non-fossil fuel sources, and by 2070, it wants to have net-zero carbon emissions.
The source added that the government anticipates supporting 3.6 million tonnes of hydrogen production capacity under the program over the next three years and that the government will begin the bidding process for businesses wanting incentives before the end of this quarter.
According to the official, the government will release requests for proposals in two tranches for electrolysers and three tranches for green hydrogen supply. This will enable the government to better understand the market, adopt new technologies, and achieve cost savings, the official added.
Companies that generate hydrogen and ammonia as well as have renewable energy plants should be able to participate in the green hydrogen supply auction. Contracts will be given to businesses that request the lowest incentive, the source claimed.
The contracts are anticipated to be of interest to Indian businesses that have already made plans for green hydrogen, including 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).
According to the official, each tranche for the production of electrolysers is likely to be for 1,500 MW of capacity, with the incentive set at 4,440 rupees per kilowatt.
Through the program, the government anticipates funding 3,000 megawatts of annual electrolyser capacity for five years, with the first tranches coming this quarter and the following in the third quarter of 2023.
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