Govt releases incentive guidelines for green hydrogen, electrolyzer production

India’s Ministry of New and Renewable Energy (MNRE) has notified the guidelines for implementing its incentive schemes for green hydrogen and electrolyzer production. The two schemes will provide incentives totaling INR 17,490 crore (INR 13,050 crore for green hydrogen and INR 4,440 crore for electrolyzers). This expenditure will be met from the budgetary provisions under the Nation Green Hydrogen Mission approved by the union cabinet for the five-year period from FY 2024-25 to FY 2029-30. 

MNRE has appointed Solar Energy Corp. of India Ltd (SECI) as the implementing agency for these schemes. 

MNRE stated the incentives for green hydrogen production may be offered through several models, including competitive bidding based on incentives demanded. 

Under incentive-based bidding, the bidders will be required to quote the annual production capacity of green hydrogen and/or its derivatives for which the incentive is sought and the incentive demanded (in INR/kg) for each of the first three years of production. 

A direct incentive in terms of INR/kg of green hydrogen production will be provided for three years from the date of commencement of green hydrogen production.

The incentives will be capped at INR 50/kg in the first year of production, INR 40/kg during the second year of production, and INR 30/kg during the third year of production.

In the first round, green hydrogen capacity of 450,000 MT per annum will be available for bidding. The maximum capacity that can be allotted to a single bidder will be 90,000 MT per annum. The minimum bid capacity will be 10,000 MT per annum.

For electrolyzer manufacturing, incentives will be provided in INR/kW for five years from the commencement of electrolyzer manufacturing. Base Incentive will start at INR 4,440/kW in the first year and will gradually taper down annually to INR 1,480/kW in the fifth year.

The selection of beneficiaries will be based on the domestic value addition and performance quotient (specific energy consumption of the electrolyzer produced). To qualify for bidding, specific energy consumption should not be more than 56 kWh per kg of hydrogen production. Also, the bidder must commit minimum 40% local value addition during the first year of production for alkaline electrolyzers and min. 30% for other technologies.

In the first round, bids will be launched for 1.5 GW of electrolyzer capacity. The minimum bid capacity is 100 MW and the maximum is 300 MW.

Sandeep Agarwal, founder and managing director at Greenzo, said the MNRE’s initiative will encourage many more investments in the production of electrolyzers in the Indian market.

Agarwal said Greenzo Energy is setting up an alkaline electrolyzer manufacturing factory with an annual capacity of 250 MW in Sanand, Gujarat, and will benefit from the incentives scheme.

“As an MSME we appreciate this initiative, which will not only support the growth of the green hydrogen industry but also encourage the production of electrolyzers within the country. This step aligns with the larger goal of achieving Net Zero emissions by 2070,” he added.