Govt launches fresh incentive scheme for green hydrogen

Under this model, implementing or nodal agencies will aggregate demand and call for bids for the production and supply of green hydrogen and its derivatives at the lowest cost through a competitive selection process.

The first set of incentives (termed Mode 1) under the National Green Hydrogen Mission (NGHM) was announced in June 2023, which was based on a different model. Under this, the bidding was done on the least incentive demanded over a three-year period, through a competitive bidding or auction process. Here there were no nodal or implementing agencies.

The latest set of incentives (termed Mode 2) released by the Ministry of New and Renewable Energy (MNRE) on January 16 has two parts – one for green hydrogen production (Mode 2B) and another for green ammonia production (Mode 2A). The MNRE stated that the expenditure on this scheme will be met from the Budget provisions made under the NGHM head.

For green hydrogen production (Mode 2B), the implementing agencies will be the oil and gas companies nominated by the Ministry of Petroleum and Natural Gas (MoPNG). Each oil and gas company will aggregate demand and call for bids for the production and supply of green hydrogen at the lowest cost for its single refinery or multiple refineries. The capacity available for bidding under tranche I of Mode 2B will be 2,00,000 metric tonne (MT) per annum of green hydrogen.

The bidder quoting the least price of supply will be allocated its admissible capacity first. Subsequently, the bidder quoting the next lowest price of supply will be allocated its admissible capacity, continuing until the total available capacity is exhausted, the document stated. The incentive payout in a given year will be a multiplication of the incentive for that year in Rs/kg of green hydrogen and the allocated capacity or actual production and supply in the year, in kg, whichever is lower.

Solar Energy Corporation of India (SECI) will be the implementing agency for green ammonia production and supply-demand aggregation and disbursal of incentives. The capacity available for bidding under Tranche I of Mode 2A is 5,50,000 MT per annum of green ammonia.

Under the Mode 1 incentive scheme announced last year, the incentives are 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. Reliance Industries, JSW Energy, Torrent Power and Bharat Petroleum Corp are among 14 companies that have bid for incentives under India’s green hydrogen plan.

Besides, 20 companies including Reliance Industries, Adani Group, Jindal India, Larsen & Toubro and Bharat Heavy Electricals have also submitted bids for incentives to manufacture electrolysers, SECI said in a statement.