The Ministry of New and Renewable Energy in India has recently issued an office memorandum, dated May 27, that exempts solar and wind energy plants from the Approved List of Models and Manufacturers (ALMM) and the Revised List of Models and Manufacturers (RLMM) requirements, provided these plants are dedicated to green hydrogen production.
This exemption is contingent upon the plants being located in Special Economic Zones (SEZs) or set up as Export Oriented Units (EOUs) for green hydrogen and its derivatives. This policy change is designed to foster the development of green hydrogen in India, aiming for a production target of 5 million metric tonnes annually by 2030.
The primary challenge in making green hydrogen viable is its cost. The ALMM and RLMM requirements have been perceived as significant non-tariff barriers that protect Indian manufacturers from foreign competition. By exempting solar and wind plants dedicated to green hydrogen production from these lists, the government aims to reduce costs and make green hydrogen more economically feasible.
The exemption is applicable for all plants established until December 2030. This timeline aligns with India’s ambitious goal of achieving a substantial reduction in green hydrogen production costs, aiming for a target price of $1 per kilogram by 2030. This is a critical target, given the existing costs associated with electrolyser efficiencies and power consumption.
This policy change could potentially pave the way for the installation of over 25 GW of solar and wind capacities, necessary to produce 5 million tonnes of green hydrogen annually. Major Indian corporates, including the Reliance Group, Adani, and various oil and gas majors, have committed to significant investments in this sector. Their involvement is crucial for driving down costs through economies of scale and technological advancements.
When comparing this initiative with global benchmarks, India’s target of $1 per kilogram of green hydrogen by 2030 is ambitious but not unprecedented. Countries like Germany, Japan, and Australia have set similar targets, with substantial governmental support and funding. For instance, Germany’s National Hydrogen Strategy, backed by €9 billion, aims to make the country a global leader in hydrogen technologies.
India’s approach, focusing on removing regulatory barriers, contrasts with the more direct financial subsidies seen in other countries. While this could stimulate private investment and innovation, it also places the onus on Indian companies to achieve cost reductions without the same level of direct financial support seen elsewhere.
