Govt lines up incentives for green hydrogen production, electrolyser making

Green Hydrogen

The ministry of new and renewable energy (MNRE) has rolled out incentive schemes for production of green hydrogen and manufacturing of electrolysers.

The incentives come under the government's National Green Hydrogen Mission (NGHM). Under the production sops, a direct incentive in terms of rupees-per-kilogram of green hydrogen will be provided for 3 years from the date of commencement of green hydrogen production. Beneficiaries under the scheme will be selected through a competitive selection process.

The notification on green hydrogen production stated that the incentives will be capped at Rs 50 per kg in the first year of production, Rs 40 per kg in the second year and Rs 30 per kg in the third year of production.

On April 6, Moneycontrol reported that incentives for green hydrogen production may be capped at Rs 50 per kg in the first year and will taper off in the following years.

MNRE Secretary BS Bhalla on June 28 announced that incentives on green hydrogen production will be given through two models. While the first model is the one we just explained, the second one will be the demand aggregation model, under which the implementing agency will call for bids for procurement of green hydrogen and its derivatives at the lowest cost through a competitive selection process. However, incentives for the second model are yet to be rolled out.

For electrolyser manufacturing, the incentive will be offered for the first five years, reducing in magnitude. In the first year, it will be Rs 4,440 crore, Rs 3,700 crore in the second year, Rs 2,960 crore in the third year, Rs 2,220 crore for the fourth year and Rs 1,480 crore in the fifth year. The incentives for electrolysers will be provided for five years from the date of commencement of manufacturing of electrolysers.

The electrolyser incentive will be based on a performance multiplier matrix covering aspects such as energy consumption by the electrolyser and its performance quotient.

A notification from the ministry said that out of the Rs 17,490 crore allocated for the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), Rs 13,050 crore would go for incentivising production of green hydrogen, while another Rs 4,440 crore would go for electrolyser production.

After being approved by the Union Cabinet on January 4, the government released a blueprint for its ambitious National Green Hydrogen Mission (NGHM) on January 13, with a total initial outlay of Rs 19,744 crore, including Rs 17,490 crore for incentives. The government aims to produce 5 million tonnes of green hydrogen annually and make India a global green hydrogen hub.