Green hydrogen policy of Indian Government
Frequently Asked Questions on green hydrogen policy
Most frequent questions and answers
What is green hydrogen policy?
- Under the policy, 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.
- This means that a green hydrogen producer will be able to set up a solar power plant in Rajasthan to supply renewable energy to a green hydrogen plant in Assam and would not be required to pay any inter-state transmission charges.
- Besides, producers will be allowed to set up bunkers near ports for storage of green ammonia for export by shipping.
- Manufacturers of Green hydrogen and ammonia are allowed to purchase renewable power from the power exchange or set up Renewable Energy (RE) capacity themselves or through any other developer, anywhere.
What are the challanges in implementation ?
- Charges on Transmission: Producing 1kg of green hydrogen takes about 50kWh of electricity (with electrolyser efficiency of 70%).
- While India boasts one of the world’s lowest average costs of RE generation, it levies a plethora of charges on wheeling and transmission of electricity between the points of generation and consumption.
- Lesser Cost-Effective than Green Hydrogen: In cases where the green hydrogen is produced from a remotely-located RE plant, the landed cost of power determines the cost of output which ranges from ₹3.70 to ₹7.14 per kWh.
- At this rate, green hydrogen will be made at a cost of about ₹500 per kg, which is nearly 3.5 times the cost of grey hydrogen.
- So the landed cost of RE from a distant source will need to at least be halved to make green hydrogen competitive vis-a-vis grey.
- Reluctance of States: Many public sector electricity utilities are unwilling to let go of their monopoly in power distribution. The RE-rich states are either moving away from allowing RE banking or introducing regulations to restrict this facility.
- Gujarat allows settlement for banked solar power only between 7am and 6pm and levies ₹1.5 per unit as its banking charges for ‘high-tension’ consumers.
- Rajasthan permits banking of up to 25% of RE generation and settlement on an annual basis, but levies a 10% charge, among the highest in India.
- Tamil Nadu and Andhra Pradesh do not allow RE banking.
- Also, most states do not permit banked energy to be drawn during the peak hours.
Significance of green hydrogen policy ?
- India’s largest oil refiner, Indian Oil Corp (IOC) estimates that GHP measures will reduce the cost of green hydrogen production by 40-50%.
- Fuels like Green Hydrogen and Green Ammonia are vital for any nation’s environmentally sustainable energy security.
- India has already committed to achieving net-zero carbon emissions by 2070, and green hydrogen will play a significant role as a disruptive feedstock in India’s transition from oil and coal.
- The GHP lays a solid foundation for developing a competitive green hydrogen sector in India.
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