Incentivizing Green Hydrogen in India

The Indian Government recently passed the Green Hydrogen policy, which is aimed at boosting the production to 5 million tonnes by 2030. The whole policy aims at decarbonizing the energy sector and reducing the country’s reliance on fossil fuels and crude oil imports. India is expected to cut its climate emissions to net-zero by 2070. The new policy will offer 25 years of free transmission of power to renewable energy plants that will supply power for green hydrogen production before July 2025. This applies to inter-state transmission as well. The key users of hydrogen and ammonia such as the oil refining, fertilizer, and steel sectors will benefit largely from the government’s Green Hydrogen policy to produce green hydrogen for their own use.

Also, read why Green Hydrogen has become the Next Big Thing in Clean Tech

Further, any surplus renewable energy generated could be stored with discoms for up to 30 days and used later as required. The energy plants that will be set up to produce green hydrogen/ammonia would be given priority for grid connectivity to avoid any procedural delays. Concessions will also be given to power distribution companies that may procure renewable energy to supply green hydrogen producers. However, these will be limited to the cost of procurement, wheeling charges, and a small margin as determined by the state commission. The policy also allows green hydrogen manufacturers to set up their plants in any existing/ upcoming renewable energy parks or manufacturing zones. It also authorizes ports to provide land at applicable charges to green hydrogen/ ammonia producers for setting up bunkers for storage prior to export.

Green Hydrogen as the name suggests is got from using renewable energy and electrolysis of water which involves breaking down water molecules into Hydrogen and Oxygen. Green Hydrogen has been touted as one of the most effective fuels to reduce pollution and emission levels that are generated from heavy industry and transportation sectors. Going forward, the government will also mandate oil refining, fertilizer, and steel companies to procure green hydrogen/ ammonia for meeting a certain proportion of their power requirement. This policy will also support India in making it an export hub for clean fuel. Germany and Japan could be key markets for green hydrogen produced in India. The country is already producing solar and wind energy at cheaper costs when compared to thermal power, and producing hydrogen through RE will become extremely cheap in the future.