Govt to include demand aggregation model in National Green Hydrogen Mission scheme

Incentives for green hydrogen production will be rolled out in two buckets.

The Union Ministry of New and Renewable Energy (MNRE) on June 28 announced that it has decided to include a component of demand aggregation to the incentive scheme under the government's National Green Hydrogen Mission.

Bhupinder Singh Bhalla, Secretary, MNRE formally announced the decision. He, however, added that incentives under this model will be rolled out later. On May 24, Moneycontrol was the first to report on the government's proposal of including demand aggregation in its green hydrogen incentive scheme.

"It has been decided to include a second component in the green hydrogen production incentive scheme, which will be a demand aggregation model. The incentive scheme for electrolyser manufacturing and a part of the incentive scheme for the production of green hydrogen have been finalised and will be rolled out soon. But, the incentive on the demand aggregation model will be rolled out separately a little later as we are still doing consultations with industry stakeholders," said Bhalla.

Incentives for green hydrogen production will be rolled out in two buckets. One, bidders who quote the lowest cost of the incentive and second, those who quote the lowest price for the green hydrogen produced, he said.

As the government aims to produce about 1.2 million metric tonnes (MMT) of green hydrogen annually initially, a section of industry stakeholders has been skeptical about mass production despite the incentives as they feel it won’t be easy to find buyers considering the costs.

To resolve this, the government plans to get into long-term tie-ups with off-takers, say, fertiliser companies, for the sale of green ammonia/hydrogen.

Bhalla said the National Green Hydrogen Mission would require approximately Rs 8 lakh crore of investment and added that the government is talking with banking and financial systems, private sector and other stakeholders for financing green hydrogen projects. He said that the government would be handholding the industry in order to attract funding for the sector.

The secretary said about 48 projects (private and public sector) on green hydrogen/green ammonia have been formally announced in India so far. “A lot of them are talking about green ammonia, which totals to the production of around 3.5 million metric tonnes per annum of green hydrogen. There is a lot of traction from the industry, as far as green hydrogen opportunity is concerned," said Bhalla said.

After being approved by the Union Cabinet on January 4, the government released a blueprint for its ambitious National Green Hydrogen Mission on January 13, with a total initial outlay of Rs 19,744 crore, of which Rs 17,490 crore has been kept for the production-linked incentives (PLIs) for producing green hydrogen and manufacturing electrolysers.

The proposal on green hydrogen production states that the proposed incentive outlay will be Rs 13,050 crore spread over three years. An amount of Rs 4,440 crore has been allotted for incentives for electrolyser manufacturing.