Expect Budget To Provide Export Incentives For Green Hydrogen And Ammonia: Vineet Mittal, Avaada Group
"The biggest game changer for the industry will be the National Hydrogen Mission, formalised in February 2022. The industry is waiting for more details, but setting up the target for 5 million tonnes of green hydrogen by 2030 and creating that marketplace through renewable hydrogen purchase obligation will aid the decarbonisation of the economy”
Q.1 Give us a sense of your outlook for the energy sector in 2022. Given the commodity price escalation, how have the developments panned out in the sector?
2022 was a very challenging year for the industry. We started with the Covid-19 challenge on the supply side, where all the projects awarded last year had to be commissioned this year, having multiple challenges in terms of the huge commodity price cycle.
Cost escalation and enormous challenges around supply chain disruption from China and big companies not being able to honour the contract because of the escalation in copper and steel prices and, on top of that, coal-related changes made 2022 a perfect storm for the industry.
There is also a reality that has sunk in the market regarding bidding for projects. Hopefully, in the future, suppliers will be competitive and, at the same time, prudent in their bidding strategy and execution of the project.
From my perspective, it was a great learning year, despite all the challenges. We commissioned almost two gigawatts of projects in the last 12 to 18 months and took contract execution with utmost responsibility by delivering on commitments.
Q.2 Which sector-specific policy initiatives, from the government side, do you think were ground-breaking and have the potential to shape the year ahead for the sector?
From the policy perspective, the Revamped Distribution Sector Scheme (RDSS) has benefited power-generating companies. We have seen a significant reduction in outstanding debt of power distribution companies to power generating companies. For the solar sector, the Production Linked Incentive (PLI) scheme of the government approved last year was very good. The latest allocation of Rs 19,500 crore will ensure that India has a vibrant solar manufacturing base.
In addition, the Energy Conservation Bill, which both Houses of the Parliament have passed, will put in place a carbon credit trading system, which was a long pending demand of the industry to bring about more sustainable development in the country.
But the biggest game changer for the industry will be the National Hydrogen Mission, formalised in February 2022. The industry is waiting for more details, but setting up the target for 5 million tonnes of green hydrogen by 2030 and creating that marketplace through renewable hydrogen purchase obligation will aid the decarbonisation of the economy.
Q. What are your expectations from the upcoming budget?
We expect the budget to have clear announcements around green hydrogen and enabling green hydrogen purchase obligations. We also expect a Production Linked Incentive (PLI) scheme for electrolyser and export incentives for green hydrogen and ammonia. GST is not a budget topic, but a direction towards reducing GST on renewable energy products from 12 per cent to 5 per cent can be a good start.
As the host country for G20, India has an opportunity to negotiate with world leaders. If the developed world is not able to provide the funds agreed upon at Paris and Glasgow COPs, they should at least set a quota of purchasing 10-20 million tonnes of green hydrogen from emerging countries so that they can benefit from the global energy transition.
Q. How do you see the potential of India becoming an electrolyser manufacturing hub?
India has tremendous potential to become a low-cost producer of green hydrogen. The country is blessed with the abundance of both sun and wind, and we have a great opportunity in the pumped hydro space. India can exploit its potential by bringing a comparable policy to the rest of the world.
Electrolyser will be an enabler; there will likely be multiple startups and large corporates who will get into this space. So, among the developing nations, India has a unique opportunity, and the government has announced at various forums that it will bring out a large PLI scheme. The industry is waiting for that scheme to formalise its business plan.
The key is to have clarity around the implementation of this policy. The industry has also been seeking a waiver on the Inter-State Transmission System (ISTS) charges which are restricted till 2025 and should be extended till 2030. The government should align all their policies for the sector to 2030 so that everyone works on a single date and target.
Q. How far do you think the momentum from COP26 was carried forward at COP27?
The ground for both summits was radically different. COP 26 summit was in the middle of Covid-19 when the whole world had a chance to introspect, and people did not have the Russia-Ukraine war in the background.
Given how things have unfolded this year for the global economy, energy security and energy transition have become important focus areas. If COP26 presented the vision plan, then this year, Sharm-el-Sheikh was about implementation.
This year, they could achieve additional loss and damage funding for smaller countries, and the mitigation work programme was also actively worked upon.
Q. Talk us through Avaada Energy’s portfolio and capacity addition plans.
We already have almost four gigawatts of operating premium energy plants, and we have another five-six gigawatt in the pipeline at different implementation stages. Our internal target is to become an 11-gigawatt company by December 2025, and our long-term goal is to become a 30-gigawatt company by 2030 in terms of our energy portfolio. In addition, we are in the advanced stage of implementing our first solar cell module manufacturing capacity in India.
(With inputs from Sangeet Kumar Sanu)
