Ministry Unveils ₹175 Billion Program for Electrolyzers, Green Hydrogen Production
The programs are scheduled to be implemented between FY 2025-26 and FY 2029-30
The Ministry of New and Renewable Energy (MNRE) has released a framework document outlining incentive programs for the manufacturing of electrolyzers and the production of green hydrogen within the country, with a combined financial outlay of ₹174.9 billion (~$2.1 billion).
The framework document outlines two components of the incentive programs. Component I focuses on providing electrolyzer manufacturing incentives, with a financial outlay of ₹44.4 billion (~$541.2 million), and Component II aims to support Green Hydrogen production, with a substantial outlay of ₹130.5 billion (~$1.6 billion).
The programs will be implemented by the MNRE through the Solar Energy Corporation of India (SECI) as part of the Strategic Interventions for Green Hydrogen Transition (SIGHT) Program between financial year (FY) 2025-26 and FY 2029-30.
The SIGHT program is a significant financial measure under the National Green Hydrogen Mission. It proposes two modes of providing financial incentive mechanisms to support the domestic manufacturing of electrolyzers and the production of Green Hydrogen. The first one is bidding on the least incentive demanded over the three years through a competitive selection process, and the second is where the implementing agency will aggregate demand and call for bids for procurement of Green Hydrogen and its derivatives at the lowest cost.
Program Monitoring Committee
A Program Monitoring Committee (SMC) has been established to monitor and facilitate program implementation, which will be chaired by the MNRE Secretary and includes representatives from the ministry, SECI, and experts from other organizations.
The SMC will periodically review the implementation status and performance of capacities under the program and recommend measures to resolve any difficulties.
Under the first component for electrolyzer manufacturing, SECI will implement the program to incentivize it through a transparent selection process. Support will be provided to manufacturers based on the capacity calculated per kW.
The base incentive will start at ₹4,440 (~$54)/kW in the first year and progressively reduce to ₹3,700 (~$45)/kW in the second year, ₹2,960 (~$36)/kW in the third year, ₹2,220 (~$27)/kW in the fourth year, and ₹1,480 (~$18)/kW in the fifth year.
The incentives will be applicable for five years from the commencement of electrolyzer manufacturing.
Bidders will be evaluated based on two crucial parameters to encourage efficient and high-quality electrolyzers in India.
The first parameter is the Specific Energy Consumption (SEC), which directly impacts the cost of green hydrogen production. The incentives will consider SEC as a determining factor. The second parameter is local value addition (LVA), where bidders must demonstrate a progressive increase in local value addition ranging from 40% to 80% for Alkaline electrolyzers and 30% to 70% for PEM/AEM/SO electrolyzers, year by year.
Bidders must specify their annual manufacturing capacity, committed SEC for each year, and committed local value addition.
To be eligible, the net worth of the company, joint venture, or consortium should be equal to or greater than ₹10 million (~$121,874)/MW of the quoted manufacturing capacity. If selected, the beneficiary will also need to demonstrate a minimum of 50% of annual electrolyzer sales for installation projects in India.
In the first phase, MNRE will invite bids for 1,500 MW of electrolyzer manufacturing capacity, which will be categorized into two buckets.
The first bucket consists of 1,200 MW of electrolyzer manufacturing capacity based on any stack technology.
The second bucket comprises 300 MW of electrolyzer manufacturing capacity based on indigenously developed stack technology. Bidders can submit their proposals for either one or both buckets, with a minimum bid requirement of 100 MW and a maximum allocation of 300 MW by SECI.
To be eligible for incentives under the program, bidders must ensure compliance with the detailed criteria specified in the forthcoming “National Green Hydrogen Standard” to facilitate Green Hydrogen production.
In cases where the end product is a derivative of green hydrogen, such as green ammonia, incentives will be provided based on the quantity of green hydrogen utilized for producing the derivative.
Under the program, a direct incentive will be offered, with a maximum limit of ₹50 (~$0.61)/kg in the first year of production, ₹40 (~$0.49)/kg in the second year, and ₹30 (~$0.37)/kg in the third year, starting from the date of commencement of green hydrogen production.
Bidders will need to specify the annual production capacity for which they seek incentives, along with the amount demanded in ₹/kg for each of the first three years of green hydrogen production.
Qualified bidders will be allocated capacities based on the Least Average Incentive demanded in ₹/kg, which will be calculated as a simple average of the incentive demanded over the three years.
In the initial phase, bids will be invited for production capacities under two categories: technology-agnostic pathways and biomass-based pathways. The technology-agnostic pathways will involve bidding to produce 410,000 MT/annum of green hydrogen, while the biomass-based technology pathway will involve bidding for 40,000 MT/annum.
For eligibility, bidders should have a net worth equal to or greater than ₹15 million (~$1,82,807)/ 1000 MT/ annum of the quoted production capacity. Under the technology-agnostic pathways, bidders must bid for a minimum of 10,000 MT/annum and can be awarded a maximum of 90,000 MT/annum.
Under the biomass-based pathways, bidders must bid for a minimum of 500 MT/annum and can be allotted a maximum of 4,000 MT/annum. Bidders have the option to bid for either or both categories.
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