India plans green hydrogen incentives of at least 10% of cost

India is planning to give green hydrogen fuel producers incentives of at least 10% of their costs under a US$ 2 billion scheme, which is about to begin at the end of June, as per a top Government official.

A US$ 21.2 billion (Rs. 174.9 billion) incentive plan was approved by New Delhi to promote green hydrogen in a bid to cut carbon dioxide emissions and become a major exporter in the sector.

The government will provide incentives worth at least US$ 0.36 (Rs. 30) per kg for the production of green hydrogen fuel. In India, it costs about US$ 3.63 (Rs. 300) per kilogramme to produce green hydrogen, which is produced using renewable energy rather than electricity generated from fossil fuels.

It should be noted that the incentives will be awarded through a competitive bidding process, and the incentive amount will taper down annually.

The government will award roughly US$ 1.57 billion (Rs. 130 billion) of the total incentive plan 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. India has set targets for half of its installed electricity capacity to be from non-fossil fuel sources by 2030 and for the country to attain net-zero carbon emissions by 2070.

Under the scheme, the government is expecting to support 3.6 million tonnes of hydrogen production capability over the following three years. Furthermore, 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.

The auction for green hydrogen supply is expected to be open to companies which have renewable energy plants or produce hydrogen and ammonia.

According to the official, each tranche for the production of electrolysers is expected to be for 1,500 MW of capacity, with the incentive set at US$ 53.78 (Rs. 4,440) per kilowatt. Through the program, the government anticipates funding 3,000 megawatts of annual electrolyser capability for five years, with the first tranches coming this quarter and the following in the third quarter of 2023.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.