Ministry of Power notifies Green Hydrogen/Green Ammonia Policy

Waiver of inter-state transmission charges for a period of 25 years to the manufacturers of Green Hydrogen and Green Ammonia for the projects commissioned before 30th June 2025.

Sanjay JogUpdated: Thursday, February 17, 2022, 11:39 PM IST
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The power ministry on Thursday notified the ‘Green Hydrogen/Green Ammonia Policy’, as a step towards the National Hydrogen Mission launched by Prime Minister Narendra Modi last year, which aims to aid the government in meeting its climate targets and making India a green hydrogen hub. This will help in meeting the production target of five million tonnes of green hydrogen by 2030 and the related development of renewable energy capacity. The policy, which charts out a hydrogen roadmap, offers incentives for investors to produce the fuel at low costs and help the nation to reduce its dependence on fossil fuels.

According to the policy, Green hydrogen / ammonia manufacturers may purchase renewable power from the power exchange or set up renewable energy capacity themselves or through any other developer. Open access will be granted within 15 days of receipt of application.

The green hydrogen / ammonia manufacturer can bank his unconsumed renewable power for up to 30 days with the distribution company and take it back when required. Distribution licencees can also procure and supply renewable energy to the manufacturers of green hydrogen / ammonia in their states at concessional prices, which will only include the cost of procurement, wheeling charges and a small margin as determined by the state commission.

The policy has proposed a 25-year waiver of inter-state transmission charges for the manufacturers of green hydrogen and ammonia for projects commissioned before June 30, 2025. The manufacturers of green hydrogen / ammonia and the renewable energy plant shall be given connectivity to the grid on priority basis to avoid procedural delays.

Further, the benefit of Renewable Purchase Obligation (RPO) will be granted as incentive to the hydrogen/ammonia manufacturer and the distribution licencee for consumption of renewable power. To ensure ease of doing business, a single portal to carry out all activities, including statutory clearances in a time-bound manner, will be set up by the Ministry of New & Renewable Energy (MNRE).

Manufacturers shall be allowed to set up bunkers near ports for storage of green ammonia for export/ use by shipping. Land for storage for this purpose shall be provided by the respective port authorities at applicable charges.

The ministry says the implementation of the policy will provide clean fuel to the common people of the country. This will reduce dependence on fossil fuel and also reduce crude oil imports.

Several Indian companies, including Reliance Industries, Adani Group, Acme Solar Holdings and Greenko have outlined their green hydrogen plans.

Vikram Kirloskar, past President, CII and Chairman, CII Task Force on Green Hydrogen, said, “The Union government’s announcement of green hydrogen and ammonia policy will go a long way in facilitating India’s transition to net-zero carbon economy. The requirement of time-bound clearances for these projects will spur investment while grid connectivity on priority will ease operational processes. The waiver of inter-state power transmission charges for a period of 25 years for those putting up projects before June 30, 2025, will also encourage early investment by manufacturers.” The policy has taken a holistic view of the sector right from the project inception stage to transport and demand aggregation, he added.

KPMG India Partner & Lead, Renewable Energy Anvesha Thakker said India could be amongst global leaders in this space, given the country’s rich RE potential, strong developer base and huge hydrogen demand. What is required is to give the right fillip to bring down costs, create demand-side measures and improve ease of implementation. In the newly announced Green Hydrogen Policy, the government has touched upon several factors to bring down costs and improve the ease of implementation of green hydrogen/ green ammonia projects, Thakker felt. “However, the policy needs to address the expectations of hydrogen producers by providing clarity on demand-side measures such as hydrogen purchase obligations. Similarly, there is no clarity as yet on measures to facilitate localization of electrolyser manufacturing. Further, there is no mention of derivatives of green hydrogen other than green ammonia, such as methanol. Additionally, the implementation of banking provisions will also require consent from state utilities, where we may see some resistance by state regulatory commissions,'' said Thakker.

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