Starting in June of this year, the Indian government plans to launch a $2 billion scheme that will offer green hydrogen incentives amounting to at least 10 percent of production costs to fuel producers. Producers of green hydrogen fuel will receive incentives worth Rs 30 per kg. Currently, the cost of producing green hydrogen in India is approximately Rs 300 per kg, and it is created using renewable energy sources rather than fossil fuels.

This incentive program aims to promote the use of green hydrogen, reduce carbon dioxide emissions, and establish India as a major exporter. The government will allocate a total of around Rs 17,400 crore for this incentive plan, with approximately Rs 13,000 crore being awarded to green hydrogen production and the remaining amount for manufacturing electrolysers that use electricity to split hydrogen and energy molecules.

According to Renewable Energy Secretary Bhupinder Singh Bhalla, the incentives will be granted through competitive bidding, with the amount decreasing every year. A government official revealed that bidding for firms seeking incentives will commence before the end of this quarter. The official also stated that the government will invite bids for green hydrogen supply in three tranches and for electrolysers in two tranches.

Additionally, the official noted that draft concept notes on the program have been shared with industry chambers and associations for consultations.

The auction for the supply of green hydrogen is anticipated to remain available for businesses that possess renewable energy plants capable of producing hydrogen and ammonia. Companies like Reliance Industries led by Mukesh Ambani, Adani Enterprises under Gautam Adani, ReNew Power, JSW Energy, and Acme Solar, who have publicly announced their green hydrogen plans, are expected to show interest.

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

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Source: Business Today