Green hydrogen policy brings simplified clearances, waivers

Union power ministry has notified the policy for production of green hydrogen and green ammonia, in line with Centre’s environmental protection targets by substituting fossil fuels with cleaner alternatives. The policy follows the National Hydrogen Mission initiative announced by prime minister Narendra Modi during his Independence Day speech last year, meant to develop India into a green hydrogen hub.

India is looking at environment friendly hydrogen and ammonia to replace fossil fuels in future. Termed green hydrogen and green ammonia, these future fuels will be produced using renewable energy, as mandated in the green hydrogen policy.

“Government of India is taking various measures to facilitate the transition from fossil fuel / fossil fuel based feed stocks to green hydrogen / green ammonia. The notification of this policy is one of the major steps in this endeavour,” the Ministry of Power noted in a statement announcing the green hydrogen policy.

The policy defines ‘green hydrogen’ and ‘green ammonia’ as hydrogen and ammonia produced via electrolysis of water using renewable energy or from biomass. Projects to make green hydrogen and green ammonia set up before June 30, 2025 will not have to pay inter-state transmission charges for 25 years, the policy states.

The renewable energy to produce green hydrogen or green ammonia can be sourced from co-located or remotely located renewable energy plants. The remote plants can be set up by the same developer or a third party, or the renewable energy can be procured from the power exchange.

The policy mandates that green hydrogen and green ammonia plants will be granted open access for sourcing renewable energy within 15 days of receipt of a completed application. Open access allows heavy users to buy cheaper energy from the open market, which can supplement the cost effectiveness of green hydrogen and ammonia.

The policy also lays down that renewable energy can be banked for 30 days, for used in making green hydrogen and green ammonia. Energy banking refers to the practice of sending surplus power to a grid and receiving it back later, when the need arises.

The energy banking charges shall be fixed by the state commission, the policy states, “which shall not be more than the cost differential between the average tariff of renewable energy bought by the distribution licensee during the previous year and the average market clearing price (MCP) in the day ahead market (DAM) during the month in which the renewable energy has been banked.”

Connectivity, at the generation end and the green hydrogen and green ammonia manufacturing end, to the inter-state transmission system (ISTS) for renewable energy capacity set up for the purpose of manufacturing green hydrogen/ green ammonia shall be prioritised under the Electricity Rules 2021, the policy says.

Manufacturing units for green hydrogen/ green ammonia can be allotted land in renewable energy parks. The central government has also proposed to set up manufacturing zones where production plants can be established.

Manufacturers shall be allowed to set up bunkers near ports to store green ammonia for export or use by shipping. The land for this purpose shall be provided by the respective port authorities at applicable charges.

Renewable energy consumed for the production of green hydrogen and green ammonia shall count towards RPO compliance of the consuming entity. The renewable energy consumed beyond the obligation of the producer shall count towards renewable purchase obligation (RPO) compliance of the distribution company under which the project is located.

Distribution licensees may also procure and supply renewable energy to the manufacturers of green hydrogen and green ammonia in their states. In such cases, the distribution licensee shall only charge the cost of procurement as well as the wheeling charges and a small margin, as determined by the state commission.

Ministry of New and Renewable Energy (MNRE) will establish a single portal for all statutory clearances and permissions required for manufacture, transportation, storage and distribution of green hydrogen and green ammonia. The concerned agencies and authorities will be requested to provide the clearances and permissions in a time-bound manner, preferably within a period of 30 days from the date of application.

In order to achieve competitive prices, MNRE may aggregate demand from different sectors and have consolidated bids conducted for procurement of green hydrogen and ammonia through any of the designated implementing agencies.

India intends to achieve the production target of 5 million tonnes of green hydrogen by 2030 and the related development of renewable energy capacity.

“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 power ministry says.

“The policy promotes renewable energy (RE) generation as RE will be the basic ingredient in making green hydrogen. This in turn will help in meeting the international commitments for clean energy,” it adds.