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India to issue guidelines for green hydrogen subsidies 'very soon'


Tenders upcoming for electrolyzer manufacturers

India eyes renewable ammonia cost at $650-$750/mt

Carbon market launch hopefully in April

  • Author
  • Ruchira Singh
  • Editor
  • Manish Parashar
  • Commodity
  • Electric Power Energy Transition Oil

India is close to issuing guidelines for renewable hydrogen producers and tenders for electrolyzer manufacturers to help disburse the government's subsidy, Tarun Kapoor, energy transition adviser to Prime Minister Narendra Modi, told S&P Global Commodity Insights Feb. 27.

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The country's National Green Hydrogen Mission, released in January, is to provide Rupees 197.44 billion ($2.4 billion) in funding support for renewable hydrogen production and electrolyzer manufacturing, with a goal of delivering 5 million mt/year of green hydrogen by 2030.

"One major thing is to set up electrolyzer manufacturing in India and for that they [the Power Ministry] have a scheme, which would give some support from the government. Those tenders should come out shortly," Kapoor, also a former petroleum secretary, said.

"The other part is where government will give a little bit of financial support for anyone who manufactures green hydrogen or its derivatives, including ammonia. For that they have to issue guidelines, which will be very soon," he said.

Public sector units such as refineries and fertilizer companies may issue separate tenders for hydrogen projects too, he added.

India has around 57 renewable or low-carbon hydrogen projects with a combined forecast capacity of 2 million mt/year, S&P Global Commodity Insights data showed.

The hydrogen mission says it would build capabilities to reach 10 million mt/year of renewable hydrogen and target a 10% share of the global trade. India's growing renewable energy production could enable hydrogen production at a low cost.

"It takes three years to set up a plant, so I don't expect actual shipments before then," Kapoor said, indicating exports of renewable green ammonia could be possible by 2026.

Developers were targeting production costs for renewable ammonia around $650-$750/mt near Indian ports, he said.

Platts assessed conventional ammonia produced in the Middle East at $550/mt basis FOB Feb. 28, down 26% month on month, S&P Global data showed.

Engaging with other countries

Kapoor said demand is expected from Europe and Japan with the possibility of India signing memorandums of understanding "very specific to hydrogen."

"Our policy is already out so they will know that there is some financial support available here they can make use of," he said.

Indian renewable companies ACME Group and ReNew Power have said they are looking to have large export-oriented renewable hydrogen/ammonia projects on the east and west coasts of the country.

India's Greenko signed an agreement with Singapore's Keppel Infrastructure Holdings in October 2022 for the joint development of renewable ammonia and renewable energy opportunities. Kapoor also noted the intention of some Indian companies to participate in Germany's hydrogen tenders.

India's Department of Science and Technology signed Feb. 25 a letter of intent with Germany's Fraunhofer Institute for Solar Energy Systems for a long-term collaboration focusing on hydrogen technologies, a government statement said.

The agreement aims to work on technology development for hydrogen energy clusters being set up by the department, and identify existing technologies and potential interventions from Fraunhofer in renewable hydrogen and integrate them with indigenous technologies.

Intergovernmental carbon credits

The government's Feb. 17 issuance of a list of technology-based carbon abatement activities seeking investment in renewable hydrogen, carbon capture, utilization and storage, offshore wind, among others, would support development of a carbon market, Kapoor said.

"The most expensive technologies have been listed where you want some international money to flow in to help reduce the cost," he said. "But most of the areas where big volumes will come from we've kept for the domestic market as part of our Nationally Determined Contributions."

The government's Feb. 17 notification of credit types eligible for international trade came as the Paris Agreement Rulebook is being finalized with respect to Article 6, which focuses on carbon trading through bilateral/cooperative approaches and international market mechanisms.

The launch of a domestic carbon market could happen in April, although a firm date was pending.

Investment pull

While attractive tax breaks offered by the US' Inflation Reduction Act are being seen as a challenge to subsidy systems almost everywhere, the size of the coming global market for green hydrogen offered India comfort.

"We have enough players here so there will be enough investment," he said, noting US incentives needed to be high as costs were higher. As such, it was too early to judge if the incentives are sufficient or not.

Further, the US' renewable hydrogen sector was likely to cater primarily to its own domestic needs so in the international market, India could have a window of opportunity, Kapoor said.

"I don't think they are immediately looking for exports because the US itself wants to go green in a very big way," he added.