First Green Hydrogen Policy offers sops to makers and users both

The Centre launched the country’s first policy to give push to green hydrogen and ammonia manufacturing. This is in line with the government’s plan to reduce fossil fuel usage and increase penetration of green fuels as part of its energy transition plan.

Prime Minister Narendra Modi had announced on Independence Day last year, that the country will soon have a National Hydrogen Mission.

The policy, launched by the power ministry on Thursday, provides a slew of incentives for manufacturers, consumers of green hydrogen and green ammonia.

The ministry has proposed to set up manufacturing zones for production of green hydrogen and ammonia. It has also said these manufacturers “shall be allowed to set up bunkers near Ports for storage of Green Ammonia for export / use by shipping.” The land for the storage for this purpose shall be provided by the respective Port Authorities at applicable charges, it said.

In order to make the price of these new age fuels competitive, the policy document proposed that ministry of new and renewable energy (MNRE) will issue tenders, based on the ‘demand aggregator’ model.

This paper had reported earlier, demand for green hydrogen from key sectors such as fertilizers, steel, and refineries would be aggregated and offered as a mega tender by MNRE. Read here

Green hydrogen/ammonia is produced using renewable energy and electrolysis to split water. The Centre has also included hydrogen/ammonia produced from biomass also part of the policy.

For procuring renewable energy, green hydrogen and ammonia manufacturers have been given several doles under the policy. These manufacturers may purchase renewable power from the power exchange or set up renewable energy capacity themselves or through any other, developer, anywhere, it said. Open access will be granted within 15 days of receipt of application.

To further reduce the cost of green fuels, inter-state transmission charges for a period of 25 years have been waived off for manufacturers. They will also be given connectivity to the grid on priority basis.

The benefit of Renewable Purchase Obligation (RPO) will be granted to the hydrogen/Ammonia manufacturer and the Distribution licensee for consumption of renewable power.

The policy has met with cheer from the industry, especially the existing renewable energy generation companies which would be able to utilise their existing green energy capacity to manufacture green fuels. Read more

ACME Group, which recently announced setting up green hydrogen facility in Bikaner, Rajasthan and also in Oman said, the Government addressed some of the key demands of the industry in terms of open access, grid banking and faster approvals for green hydrogen and ammonia projects.

“We specifically welcome the provisions to set up bunkers near ports for the export of green ammonia. Going forward, it will be important to build upon the first phase and the Government to subsequently come up with policy measures for initial demand creation by means of mandatory green hydrogen and ammonia purchase obligations,” said Manoj K Upadhyay, Founder & Chairman, ACME Group.

ReNew Power which recently joined hands with L&T to set up green hydrogen facilities, said more clarity is needed on application of cross-subsidy surcharge and additional cross-subsidy surcharge since the policy allows production at different locations by different parties.

Mayank Bansal, Chief Commercial Officer, ReNew Power said, “Currently, manufacturing green hydrogen is a costly proposition and in cognizance of this, the government has correctly waived off ISTS charges for a period of 25 years, which will help in bringing down the cost of Green Hydrogen. Further, the decision to include biomass as a fuel for generation of green hydrogen is a step in the right direction.”

The current policy is the first phase of the National Hydrogen Mission.

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