Green hydrogen policy: Govt grants open access of RE, storage, banking, free transmission

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According to the policy, manufacturers can purchase renewable power from the power exchange, set up RE capacity themselves, or through any other developer, anywhereNew Delhi: TheMinistry of Poweron Thursday notified thegreen hydrogenand green ammonia policy to help meet the country’s five million tonnes production target for greenhydrogenby 2030.

“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 objective also is for our country to emerge as an export hub for green hydrogen and green ammonia,” the policy document noted.

According to the policy, green hydrogen and green ammonia manufacturers can purchase renewable power from the power exchange or set up renewable energy capacity themselves or through any other developer, anywhere. It has also granted open access within 15 days of receipt of application.

“The green hydrogen or ammonia manufacturer can bank his unconsumed renewable power for up to 30 days with the distribution company and take it back when required,” the policy noted.

According to Hemant Mallya, senior programme lead, Council on Energy, Environment and Water (CEEW), the waiving-off of central open access charges is a good first step in enabling lower cost distributed production of green hydrogen.

“The waiving-off of central open access charges is a good first, however, states have their own open access charges ranging from Rs 0.27 to Rs 3.8 per unit, also depending on whether it is solar or wind. Therefore, a concerted effort is required to remove the disparity in these charges to avoid a distorted green hydrogen market,” Mallya added.

According to CEEW analysis, about 50-70 per cent of the cost of green hydrogen comes from the renewable power input costs, a substantial share being from open access charges.

The policy also said that distribution licensees can procure and supply renewable energy to the manufacturers in their states at concessional prices which would only include the cost of procurement, wheeling charges, and a small margin as determined by the state commission.

Apart from this, it also provides for waiver of inter-state transmission charges for a period of 25 years to the manufacturers for the projects commissioned before 30 June 2025.

“The manufacturers and the renewable energy plant will be given connectivity to the grid on priority basis to avoid any procedural delays. The benefit of renewable purchase obligation will be granted incentive to the manufacturer and the distribution licensee for consumption of renewable power,” it said.

According to Somesh Kumar, partner, and power and utilities leader, EY India, the policy will go a long way in enhancing production and usage in India.

“Hydrogen being quite expensive at present needed a policy push from the government to increase demand and supply to build scale for further technological evolution and ultimate cost reduction. Measures such as open access of RE, storage, banking and free transmission are very useful,” Kumar said.

He added that the second phase of the policy can also look at additional measures such as viability gap funding.

According to CEEW, banking of renewable energy will also lead to a lower production cost by up to 40 per cent if there are no banking charges.

To ensure ease of doing business, a single portal for carrying out all the activities including statutory clearances in a time bound manner will be set up by MNRE, the policy noted.

Connectivity, at the generation end and the manufacturing end, to the ISTS for renewable energy capacity set up for the purpose of manufacturing will be granted on priority.

Manufacturers will also be allowed to set up bunkers near ports for storage of green ammonia for export and use by shipping. The land for the storage for this purpose will be provided by the respective port authorities at applicable charges.

According to Manoj K Upadhyay, founder and chairman, ACME Group, this policy is the first concrete step in the direction of creating a favourable regulatory and enabling environment for the sector in India.

“We, specifically, welcome the provisions to set up bunkers near ports for the export of green ammonia,” said Upadhyay.

He added that going forward, it will be important to build upon the first phase and the government to subsequently come up with policy measures for initial demand creation by means of mandatory green hydrogen and ammonia purchase obligations and at the same time, an equivalent of PLI scheme for green ammonia to make India competitive globally.