Commodities

Govt notifies green hydrogen & ammonia policy; targets 5 million tonnes output by 2030

Our Bureau | Updated on: Feb 17, 2022

FILE PHOTO: Giant wind turbines dot the sky at sunset near Albacete, central Spain, in this November 16, 2003 file picture. REUTERS/Paul Hanna/File Photo | Photo Credit: Reuters Photographer

Policy offers free transmission for 25 years, ISTS connectivity on priority & plans to set up manufacturing zones for green hydrogen & ammonia

The Ministry of Power on Thursday notified the green hydrogen and ammonia policy under which the government is offering to set up manufacturing zones for production, connectivity to the ISTS (inter-state transmission system) on priority basis, and free transmission for 25 years if the production facility is commissioned before June 2025.

The government has raised its production target by five times from 1 million tonnes (m) to 5 mt by 2030. In October last year, Minister of State for New and Renewable Energy Bhagwanth Khuba had said that India is targeting initially around1 million tonnes annual green hydrogen production by 2030.

The policy offers that green hydrogen and ammonia manufacturers may purchase renewable power from the power exchange or set up renewable energy (RE) capacity themselves or through any other, developer, anywhere. The government will provide open access within 15 days of receipt of application and manufacturers can bank (store) their unconsumed renewable power, up to 30 days, with the Discom and take it back when required, Power Ministry said in a statement.

“Waiver of inter-State transmission charges for 25 years will be allowed to the manufacturers of green hydrogen/ ammonia for projects commissioned before June 30, 2025. The manufacturers of green hydrogen/ ammonia and the RE plant shall be given connectivity to the grid on priority basis to avoid any procedural delays. The benefit of Renewable Purchase Obligation (RPO) will be granted incentive to the hydrogen/Ammonia manufacturer and the Distribution licensee for consumption of renewable power,” it added.

Manufacturing zones

The government has also proposed to set up manufacturing zones and green hydrogen/ ammonia plants can be set up in any of the manufacturing zones. Besides, producers will be allowed to set up bunkers near ports for storage of green ammonia for export by shipping. The land for storasge will be provided by the respective port authorities at applicable rates.

“In order to achieve competitive prices, MNRE may aggregate demand from different sectors and have consolidated bids conducted for procurement of green hydrogen/ ammonia through any of the designated implementing agencies,” the ministry said.

EY India Power & Utilities Leader Somesh Kumar said, “The much-awaited recently announced green hydrogen/ green ammonia policy will go a long way in enhancing their production and usage in India. Hydrogen being quite expensive at present and needed a policy push from government to increase demand and supply to build scale for further technological evolution and ultimate cost reduction. Measures such as open access of RE, storage, banking and free transmission are very useful.”

As per analysts, the production cost green hydrogen from RE sources is in the range of $3-6.50 per KG (around Rs 225-490 per KG). The government’s intention is to bring down the costs to below $2 per KG (around Rs 150 per KG). Last year at the International Climate Summit 2021, Reliance Industries Chairman Mukesh Ambani said that while efforts are on to bring down the cost of producing green hydrogen to below $2 per KG, India can set an even more aggressive target of achieving under $1 per KG within a decade.

Published on February 17, 2022
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