Power Ministry Notifies First Phase Of Green Hydrogen Policy

The Power Ministry on Thursday notified the first phase of the Green Hydrogen/Green Ammonia Policy to boost production of Green Hydrogen using renewable sources of energy in line with the National Hydrogen Mission. Prime Minister Narendra Modi had announced the National Hydrogen Mission last year from the ramparts of Red Fort in his Independence Day speech and said the mission envisages making India a global hub for Green Hydrogen exports.

“Hydrogen and Ammonia are envisaged to be the future fuels to replace fossil fuels. Production of these fuels by using power from renewable energy, termed as green hydrogen and green ammonia, is one of the major requirements towards environmentally sustainable energy security of the nation,” the policy notification read.

Addressing a conference on 'India’s Leadership in Energy Transition' on Wednesday, Union Minister for Power RK Singh had said that the first part of the policy would include components which would be implemented by the government immediately and the second part is currently with the Expenditure Finance Committee.

After missing the Finance Minister’s Budget Speech this year, the industry expected a standalone comprehensive policy rollout for the sector. Deepesh Nanda, CEO, GE Gas Power South Asia, while speaking to BW Businessworld, said, “We welcome the unveiling of the much-anticipated National Green Hydrogen Policy by the Power ministry. Conversations on making the move towards green hydrogen have been gaining pace, and India has great potential to emerge as a global player here.”

Gautam Mohanka, Managing Director, Gautam Solar, also welcomed the policy and said, “Boosting the production of green hydrogen in India will eventually help the industrial, commercial, and residential sectors alike. Given that we currently import more than 80 per cent of our national oil requirements, green hydrogen along with solar and wind could be the answer to the future.”

Key Highlights 

The policy provides for Green Hydrogen manufacturers to purchase renewable power from the power exchange, or they will be allowed to set up renewable energy capacity themselves through any other developer. 

The manufacturers will be able to bank unconsumed renewable power for up to 30 days with a distribution company and take it back when required.

There is also a provision for manufacturers to get renewable energy at concessional prices from Distribution licensees, including the cost of procurement, wheeling charges and a small margin as determined by the State Commission.

In a significant relief for manufacturers, the policy provides for a waiver of inter-state transmission charges for 25 years. However, this will only apply to Green Hydrogen/Ammonia projects commissioned before 30th June 2025.

To ensure ease of doing business, a single portal for carrying out all activities, including statutory clearances in a time-bound manner, will be set up by the Ministry of New and Renewable Energy. “A single portal project clearance with a 30-day timeline will further attract fresh investors who can bring new technology to the country,” said Nanda.

To facilitate storage, manufacturers shall be allowed to set up bunkers near ports to store Green Ammonia for export or use by shipping. The respective Port authorities shall provide the land for storage for this purpose at applicable charges. The benefit of Renewable Purchase Obligation (RPO) will also be granted incentive to the Hydrogen/Ammonia manufacturer and the Distribution licensee for renewable power consumption.

“The new policy has correctly adopted a panoramic perspective to ease green hydrogen manufacturing, transportation, storage and distribution. This policy is a step in the right direction to support and promote the Green Hydrogen ecosystem,” said Nanda.

However, in the long-term, Nanda emphasised a combination of hydrogen and natural gas to be a potential pathway to accelerate the energy transition. “Eventually, we may have to segregate our policy further, as different sectors may require varying models and policy frameworks, and hydrogen comes with the complementing versatility to play an equally important role in diverse sectors such as transport, residential, industrial, power, etc. As we move ahead with the policy, we must also spread greater awareness on the safe use of hydrogen and make way for the most advanced technology solutions. This policy has added great promise to India’s energy transition journey, and we remain extremely optimistic," added Nanda.

Prime Minister Modi had laid the roadmap for India’s commitment to tackle the climate emergency at the COP26 Climate Summit in Glasgow last November. He announced that India would reach net zero by 2070 and increased its installed renewable power generation capacity to 500 GW (up from the previous target of 450 GW). With this policy framework, India will now seek to use its renewable energy basket to boost green hydrogen’s production in an affordable manner.

NITI Aayog CEO Amitabh Kant, while speaking at an industry forum last month, highlighted India’s ambitious climate targets and emphasised the production of Green Hydrogen to move away from fossil fuels. He said India would have to deploy its vast solar power capacity to crack water and create green hydrogen.

“The production of green hydrogen can rely on electricity generated by solar plants, and in a way, this is a boost to the renewable sector. We look forward to empowering local players and businesses in using solar power for green hydrogen production and usage. We hope that the government will eventually make it mandatory for select industries to use green hydrogen and solar power to reduce the reliance on fossil fuels. We also see this as a prospect for the indigenous production of power components, panels, and parts,” said Mohanka.

Vibha Dhawan, Director General, TERI stressed on Hydrogen’s enormous potential to boost India’s energy transition drive and welcomed the policy but highlighted that India needs to collaborate with other like-minded countries to embrace the latest technology. “As a country, India still has to build infrastructure and thus has a scope to embrace the latest technology. It can collaborate with other like-minded states to invest in technology innovation, vis-à-vis alternative energy fuel and carriers. The litmus test for this initiative will be the implementation of the policy and the success rate of technology usage and absorption,” said Dhawan.