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The government of India announced some incentives for potential manufacturers, generation companies (gencos), and distribution licensees (discoms) to boost large-scale indigenous production of green hydrogen in order to decarbonize the energy sector and reduce India’s heavy reliance on fossil fuels and crude oil imports in the first part of the country’s National Green Hydrogen Policy, which was released on Thursday.

Industry experts, on the other hand, urged more clarification, claiming that, under the new strategy, a lot would still depend on the rates imposed by the various states and union territories (UTs).

The electricity ministry announced the strategy on Thursday, a year after finance minister Nirmala Sitharaman announced India’s intention to harness green hydrogen in her 2021 budget statement. In his Independence Day speech in August, Prime Minister Narendra Modi unveiled the National Hydrogen Energy Mission.

 The second component of the policy, which is anticipated to mandate (refineries, fertiliser businesses, etc.) the use of green hydrogen and green ammonia in a gradual way while simultaneously providing PLIs, will require Cabinet approval and is now being reviewed by the expenditure finance committee.

According to a report published on January 30, people who invest in green hydrogen production in India will be eligible for a full waiver of inter-state transmission tariffs for a period of 25 years. If their facilities are completed by June 30, 2025, such producers of green hydrogen and green ammonia will benefit.

To avoid any administrative delays, manufacturers of green hydrogen/ammonia and the renewable energy plant will be given “priority access” to the grid. Another benefit provided by the policy is that the generation of green hydrogen/ammonia will be deducted from the manufacturer’s Renewable Purchase Obligation (RPO), which will apply to both discoms and manufacturers.

According to Power Minister RK Singh, the adoption of this programme will offer clean fuel to the country’s common people. “This will cut fossil fuel dependence as well as crude oil imports.” The goal is also for our country to become a green hydrogen and green ammonia export hub.

The legislation allows businesses to build renewable energy capacity anywhere they want, either on their own or with the help of a developer. It (the policy) encourages the generation of renewable energy because RE is a key component in the production of green hydrogen. This, in turn, will aid in reaching international clean energy commitments,” he stated.

The policy also allows manufacturers to set up their plants in any of the existing or upcoming renewable energy parks or even in any of the “manufacturing zones”, which the government is currently preparing a roadmap for. “Green hydrogen/green ammonia can be manufactured by a developer by using renewable energy from a co-located renewable energy (RE) plant, or sourced from a remotely located RE plants, whether set up by the same developer, or a third party or procured RE from the power exchange. Within 15 days of receiving an application that is comprehensive in all respects, green hydrogen/green ammonia plants will be awarded Open Access for sourcing RE. The policy stated that “the Open Access charges shall be in conformity with the Rules as given down.”

The manufacturer can also bank unutilized renewable energy with any discom for up to 30 days and then reclaim it when needed. “Discoms can also procure and supply RE to manufacturers of Green Hydrogen/Green Ammonia in their states at concessionary prices, which will only include the cost of procurement, wheeling charges, and a small margin as determined by the State Electricity Commission,” it said, adding that manufacturers can set up bunkers near ports for green ammonia storage for export or use by shipping. The land needed to construct these storage units will be granted at the rates set by the port authorities.

Electrolysis is used to create green hydrogen from renewable energy. Hydrogen and ammonia produced from biomass or a banked renewable energy source will likewise be considered “green” hydrogen and “green” ammonia, according to the regulation.

The elimination of central open access costs, according to Hemant Mallya, Senior Program Lead, Council on Energy, Environment, and Water (CEEW), is a positive first step toward permitting lower-cost distributed production of green hydrogen.