Green Hydrogen: Regulatory & Policy Framework In India

• India's pursuit of sustainable energy takes a significant step forward with its ambitious agenda to embrace green hydrogen. With a dual aim of reducing dependence on fossil fuels and establishing itself as a global green hydrogen exporter, the government has thrown its weight behind initiatives like the Green Hydrogen Policy and the National Green Hydrogen Mission. These efforts come with substantial financial backing, totaling nearly Rs. 19,800 crores, alongside a dedicated Rs. 400 crore investment in research and development to foster innovation and commercialization in the green hydrogen sector.
• India sets stringent standards for green hydrogen production, underscoring its commitment to environmental sustainability. The country's green hydrogen standard mandates that the emissions from producing one kilogram of green hydrogen must not exceed two kilograms of carbon dioxide. To incentivize compliance and drive growth in the sector, the government has announced production-linked incentive (PLI) schemes tailored for green hydrogen production and electrolyzer manufacturing. Projections indicate a promising future for India's electrolyzer manufacturing sector, with estimates suggesting the establishment of six factories boasting a combined capacity of over 8GW by 2025.
• While state-level initiatives are beginning to emerge to facilitate green hydrogen production, there is a pressing need to attract investments across the entire value chain. Moreover, addressing the demand side of the equation is crucial, necessitating incentives or mandates to encourage end-users, particularly in key sectors such as fertilizers, steel, oil, and gas, to transition to green hydrogen.
• Despite the immense potential, green hydrogen production poses significant entry barriers, including challenges related to land acquisition, high production costs, and the need for a reliable supply of electricity and water. These barriers, however, present an attractive investment opportunity for established players in the energy sector, with industry giants like Reliance Industries Limited, Adani, and Larsen & Toubro already making strategic investments in green hydrogen initiatives.
• On the flip side, there are ample opportunities for startups to innovate and drive progress in the green hydrogen space. Companies like Hygenco and Newtrace are pioneering solutions aimed at enhancing hydrogen storage efficiency and reducing the costs associated with electrolyzer technology, thereby contributing to the growth and sustainability of the green hydrogen ecosystem.

The Green Hydrogen Policy provides as under:

• The Green Hydrogen Policy, introduced in February 2022, offers a comprehensive set of incentives to encourage green hydrogen production. These incentives include streamlined processes for statutory clearances, access to power markets, and waivers on inter-state transmission charges, all aimed at achieving a production target of?5 million tonnes per year by 2030.
• Green Hydrogen / Green Ammonia shall be defined as Hydrogen /Ammonia produced by way of electrolysis of water using Renewable Energy; including Renewable Energy which has been banked and the Hydrogen/Ammonia produced from biomass.
• The waiver of inter-state transmission charges shall be granted for a period of 25 years to the producer of Green Hydrogen and Green Ammonia from the projects commissioned before 30th June 2025.
• Green Hydrogen / Green Ammonia can be manufactured by a developer by using Renewable Energy from a co-located Renewable Energy plant, or sourced from a remotely located Renewable Energy plants, whether set up by the same developer, or a third party or procured renewable energy from the Power Exchange. Green Hydrogen/Green Ammonia plants will be granted Open Access for sourcing of Renewable Energy within 15 days of receipt of application complete in all respects. The Open Access charges shall be in accordance with Rules as laid down.
• Banking shall be permitted for a period of 30 days for Renewable Energy used for making Green Hydrogen /Green Ammonia.
• The charges for banking shall be as fixed by the State Commission which shall not be more than the cost differential between the average tariff of renewable energy bought by the distribution licensee during the previous year and the average market clearing price (MCP) in the Day Ahead Market (DAM) during the month in which the Renewable Energy has been banked.
• Connectivity, at the generation end and the Green Hydrogen / Green Ammonia manufacturing end, to the ISTS for Renewable Energy capacity set up for the purpose of manufacturing Green Hydrogen / Green Ammonia shall be granted on priority under the Electricity (Transmission system planning, development and recovery of Inter State Transmission charges) Rules 2021.
• Land in Renewable Energy Parks can be allotted for the manufacture of Green Hydrogen / Green Ammonia .
• The Government of India proposes to set up Manufacturing Zones. Green Hydrogen / Green Ammonia production plant can be set up in any of the Manufacturing Zones.
• Manufacturers of Green Hydrogen / Green Ammonia shall be allowed to set up bunkers near Ports for storage of Green Ammonia for export / use by shipping. The land for the storage purpose shall be provided by the respective Port Authorities at applicable charges.
• Renewable Energy consumed for the production of Green Hydrogen / Green Ammonia shall count towards RPO compliance of the consuming entity. The renewable energy consumed beyond obligation of the producer shall count towards RPO compliance of the DISCOM in whose area the project is located.
• Distribution licensees may also procure and supply Renewable Energy to the manufacturers of Green Hydrogen / Green Ammonia in their States. In such cases, the Distribution licensee shall only charge the cost of procurement as well as the wheeling charges and a small margin as determined by the State Commission.
• Ministry of New and Renewable Energy (MNRE) will establish a single ?portal for all statutory clearances and permissions required for manufacture, transportation, storage and distribution of Green ?Hydrogen /Green Ammonia. ?The concerned ?agencies/authorities ?will be requested to provide the clearances and permissions in a time-bound manner, preferably within a period of 30 days from the date of application.
• In order to achieve competitive prices, MNRE may aggregate demand from different sectors and have consolidated bids conducted for procurement of Green Hydrogen/Green Ammonia through any of the designated implementing agencies.

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