Green hydrogen policy brings simplified clearances, waivers

India intends to achieve the production target of 5 million tonnes of green hydrogen by 2030 and the related
development of renewable energy capacity.

By FORTUNEINDIA.COM,  Feb 17, 2022

4 min read

Image: Getty Images

     

Union power ministry has notified the policy for production of green hydrogen and green
ammonia, in line with Centre’s environmental protection targets by substituting fossil
fuels with cleaner alternatives. The policy follows the National Hydrogen Mission initiative
announced by prime minister Narendra Modi during his Independence Day speech last
year, meant to develop India into a green hydrogen hub.

India is looking at environment friendly hydrogen and ammonia to replace fossil fuels in
future. Termed green hydrogen and green ammonia, these future fuels will be produced
using renewable energy, as mandated in the green hydrogen policy.
“Government of India is taking various measures to facilitate the transition from fossil fuel
/ fossil fuel based feed stocks to green hydrogen / green ammonia. The notification of this
policy is one of the major steps in this endeavour,” the Ministry of Power noted in a
statement announcing the green hydrogen policy.

The policy defines ‘green hydrogen’ and ‘green ammonia’ as hydrogen and ammonia
produced via electrolysis of water using renewable energy or from biomass. Projects to
make green hydrogen and green ammonia set up before June 30, 2025 will not have to pay
inter-state transmission charges for 25 years, the policy states.

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The renewable energy to produce green hydrogen or green ammonia can be sourced from
co-located or remotely located renewable energy plants. The remote plants can be set up
by the same developer or a third party, or the renewable energy can be procured from the
power exchange.

The policy mandates that green hydrogen and green ammonia plants will be granted open
access for sourcing renewable energy within 15 days of receipt of a completed application.
Open access allows heavy users to buy cheaper energy from the open market, which can
supplement the cost effectiveness of green hydrogen and ammonia.

The policy also lays down that renewable energy can be banked for 30 days, for used in
making green hydrogen and green ammonia. Energy banking refers to the practice of
sending surplus power to a grid and receiving it back later, when the need arises.

The energy banking charges shall be fixed by the state commission, the policy states,
“which shall not be more than the cost differential between the average tariff of renewable
energy bought by the distribution licensee during the previous year and the average
market clearing price (MCP) in the day ahead market (DAM) during the month in which
the renewable energy has been banked.”

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Connectivity, at the generation end and the green hydrogen and green ammonia
manufacturing end, to the inter-state transmission system (ISTS) for renewable energy
capacity set up for the purpose of manufacturing green hydrogen/ green ammonia shall be
prioritised under the Electricity Rules 2021, the policy says.

Manufacturing units for green hydrogen/ green ammonia can be allotted land in
renewable energy parks. The central government has also proposed to set up
manufacturing zones where production plants can be established.

Manufacturers shall be allowed to set up bunkers near ports to store green ammonia for
export or use by shipping. The land for this purpose shall be provided by the respective
port authorities at applicable charges.

Renewable energy consumed for the production of green hydrogen and green ammonia
shall count towards RPO compliance of the consuming entity. The renewable energy
consumed beyond the obligation of the producer shall count towards renewable purchase
obligation (RPO) compliance of the distribution company under which the project is
located.

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Distribution licensees may also procure and supply renewable energy to the manufacturers
of green hydrogen and green ammonia in their states. In such cases, the distribution
licensee shall only charge the cost of procurement as well as the wheeling charges and a
small margin, as determined by the state commission.

Ministry of New and Renewable Energy (MNRE) will establish a single portal for all
statutory clearances and permissions required for manufacture, transportation, storage
and distribution of green hydrogen and green ammonia. The concerned agencies and
authorities will be requested to provide the clearances and permissions in a time-bound
manner, preferably within a period of 30 days from the date of application.

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

India intends to achieve the production target of 5 million tonnes of green hydrogen by
2030 and the related development of renewable energy capacity.

“The implementation of this 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,” the
power ministry says.

“The policy promotes renewable energy (RE) generation as RE will be the basic ingredient
in making green hydrogen. This in turn will help in meeting the international
commitments for clean energy,” it adds.