The Indian government gives nod for $2.11 billion incentives under the Green Hydrogen Mission

The Government of India (GoI) has given the green signal to a $2.11 billion incentive plan to promote green hydrogen. The plan, which was approved on January 4, 2023, is intended to help the industry attract an investment of up to eight lakh crore rupees to create the green hydrogen chain. Additionally, the plan intends to target 10 percent of the world’s green hydrogen market.

The incentives will help reduce the cost of green hydrogen which is between Rs 320 and Rs 330 currently to between Rs 160 and Rs 170 per kilo by 2030. This will bring in on par with grey hydrogen and other fossil fuels, KPMG has said as per its latest study report.

Green Hydrogen is made by splitting water with an electrical process called electrolysis. When electrolysers are powered by renewable energy, the product is called green hydrogen.

Big plans in place
Cummins India, which is leading the hydrogen drive in the country, has announced that it will build one of India’s largest proton exchange membrane (PEM) electrolysers for GAIL at Vijaipur, Madhya Pradesh. The company is planning to leverage its proprietary PEM electrolysis technology to manufacture electrolysers for the GAIL project which will produce 4.3 tonnes of green hydrogen per day equivalent to ~10 MW of electrical power input.

As India's renewable energy capacity is expected to go up to 125 GW, the country, as part of its green hydrogen rollout plan will also focus on building an electrolyser capacity of 60 gigawatts to 100 gigawatts to help produce green hydrogen.

While giving the nod, the government has tasked the Ministry of New and Renewable Energy to take the responsibility for coordination and implementation of the mission.

Through the National Hydrogen Mission (NGM) that was launched on August 15, 2021, the GoI aims for an annual production of five million tonnes of green hydrogen by 2030, which will help save one trillion rupees on fossil fuel imports and cut about 50 MTs of carbon emissionsThe Mission which has a total outlay of  Rs 19,744 crore has allocated Rs 17,490 crore for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, Rs 400 crore for R&D, and Rs 388 crores towards other mission components. NGM has allocated close to Rs 1,466 crores for the upcoming pilot projects.

NGM is also expected to attract an investment of eight lakh crore rupees to create the green hydrogen chain which will also focus on the development of indigenous manufacturing capabilities and state-of-the-art technologies according to an official statement issued by the environment ministry.

The government is also looking to set up the right policy framework to support the establishment of the green hydrogen ecosystem with appropriate standards and regulations which will come into play.

Furthermore, a public-private partnership framework for R&D (Strategic Hydrogen Innovation Partnership — SHIP) will be facilitated under the mission of goal-oriented R&D projects. A coordinated skill development programme will also be undertaken, the statement has said.

Understanding the incentives structure
Through its strategic interventions, the GoI is offering two kinds of incentives.

The first targets domestic manufacturing of electrolysers and the second is for production of green hydrogen. The Mission will support pilot projects in end-use sectors and production pathways.

Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as green hydrogen hubs (GHUs).

The government also expects the mission to attract Rs 8 lakh crore in investments and create six lakh jobs in the next seven years. Among other outcomes, the programme will also increase opportunities for green hydrogen, decarbonising industrial and energy sectors and reduce India's dependence on the import of fossil fuels.