India’s ambitious pursuit of green hydrogen production faces a potential setback as a new report from the Institute for Energy Economics and Financial Analysis (IEEFA) highlights challenges stemming from low incentive rates.
Despite a robust response in the request for selection (RFS) process for green hydrogen production incentives, the bid surpassing available capacity underscores the urgent need for reevaluation of incentive mechanisms.
India’s push for green hydrogen aligns with its commitment to reducing carbon emissions and transitioning towards sustainable energy sources. Green hydrogen, produced through electrolysis powered by renewable energy, holds the promise of decarbonizing key sectors like transportation, industry, and power generation.
Green hydrogen production relies on renewable energy sources, primarily solar and wind, to power the electrolysis process that splits water into hydrogen and oxygen. The Indian Government’s Strategic Initiative for Green Hydrogen Technologies (SIGHT) scheme aims to incentivize green hydrogen production, fostering innovation and investment in this critical sector.
The disparity between incentive rates provided under the SIGHT scheme and international benchmarks poses a significant challenge to India’s green hydrogen aspirations. The IEEFA report highlights the inadequacy of the average incentive of Rs40/kg ($0.48/kg) over the initial three years of production, especially when compared to the prevailing levilised cost of hydrogen (LCOH) ranging between Rs380-520/kg ($4.5-6.3/kg).
