MNRE Outlines Incentives for 200,000 MT of Green Hydrogen Production

Oil and gas companies will be the implementing agencies under the program

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The Ministry of New and Renewable Energy (MNRE) has released an implementation framework to incentivize the production of 200,000 MT of green hydrogen annually.

Additional capacity, if any, may be decided by MNRE for subsequent tranches.

The incentives will be granted over three years.

The incentives for the production and supply of green hydrogen at the lowest cost for refineries through a competitive selection process come under Mode 2B of the Strategic Interventions for Green Hydrogen Transition (SIGHT) program. The program has a total outlay of ₹130.5 billion (~$1.57 billion) under all modes.

MNRE recently unveiled its framework of incentives to produce 550,000 MT of green ammonia.

In the first year, the incentive for green hydrogen will be ₹50 (~$0.60) /kg, ₹40 (~$0.48)/kg in the second year, and ₹30 (~$0.36)/kg in the third year. However, the incentives will not be available under two different modes of the SIGHT Program.

Incentive payout will be calculated in ₹/kg of green hydrogen into allocated capacity or actual production and supply in the year, whichever is lower. Allocated capacity will remain constant for the period of the purchase agreement.

To qualify for incentives, bidders must adhere to the ‘National Green Hydrogen Standard’ set by MNRE for the production and supply of green hydrogen.

The Ministry of Petroleum and Natural Gas (MoPNG), one of the implementing agencies, may specify a minimum capacity below which bids will not be accepted. It may also specify a cap or maximum capacity that can be allocated to a single bidder.

Any unallocated capacity during the tranche could be carried over to the subsequent tranche.

Oil and gas companies, selected by MoPNG and the Centre for High Technology (CHT), will act as the implementing agencies, providing support and carrying out various tasks assigned by MNRE and MoPNG.

Responsibilities for oil and gas firms include aggregating demand and calling for bids for the production and supply of green hydrogen, receiving and assessing applications, and issuing acknowledgments and awards.

CHT will examine incentive claims from beneficiaries, verify claims with prescribed documents, and submit quarterly progress reports to MNRE through MoPNG.

Oil and gas firms and CHT will be eligible to receive 0.5% of the disbursed incentive amount annually as administrative charges.

CHT will inspect an applicant’s production plants physically. It can seek assistance from third-party agencies to verify technical parameters. If necessary, MNRE or MoPNG may designate accredited labs like the National Accreditation Board for Testing and Calibration Laboratories or other third-party certification agencies for this verification.

Eligibility

Bidders must have a net worth equal to or greater than ₹150 million (~$1.8 million) per 1,000 MT per annum of quoted production and supply capacity as of the last date of the previous financial year.

They can be a single company, a joint venture, or a consortium of more than one company.

Bidders must submit an earnest money deposit (EMD)  during bid submission, with provisions detailing EMD forfeiture if the selected bidder refuses to submit required documents, performance bank guarantees (PBG), or similar instruments or if eligibility criteria are not met.

Successful bidders must submit PBGs or other performance guarantee instruments upon accepting the award, with potential forfeiture in case of default or delayed commissioning.

They must sign a Hydrogen Purchase Agreement (HPA) with procurers, and adherence to the HPA terms is linked to the disbursement of incentives.

A program monitoring committee, co-chaired by the Secretary of MoPNG and MNRE, with the Mission Director of the National Green Hydrogen Mission and other experts as members, will assess the progress and performance of green hydrogen production and supply capacities established under the program.

Last June, MNRE released a framework document outlining incentive programs for the manufacturing of electrolyzers and the production of green hydrogen, with a combined financial outlay of ₹174.9 billion (~$2.1 billion).

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