Government of India has unveiled a series of incentives and subsidy auctions to propel the use and production of green hydrogen. The move, announced by the Ministry of New and Renewable Energy, aims to stimulate green hydrogen adoption in critical sectors such as oil refining and ammonia production.
On Wednesday, the Ministry disclosed plans for two subsidy auctions designed to boost the green hydrogen ecosystem. The first auction focuses on subsidizing producers supplying oil refineries, while the second targets companies engaged in green ammonia production, provided the hydrogen is produced in-house. This dual-pronged strategy underscores the government’s commitment to diversifying applications for green hydrogen.
Under the subsidy framework, hydrogen producers supplying oil refineries stand to receive a maximum payout per kilogram, starting at 50 rupees (USD$0.60) in the first year, followed by 40 rupees in the second year and 30 rupees in the third year. In parallel, producers of green ammonia will receive 8.82 rupees per kilogram in the first year, reducing to 7.06 rupees in the second year and 5.30 rupees in the third year.
An intriguing aspect is the disqualification of the purchase or trading of gas in markets, a stipulation that may pose challenges for ammonia producers relying on external sources.
Both auctions, anchored on the principle of awarding the lowest-price bids, enforce a prohibition on previous green hydrogen auction winners from stacking subsidies. The ammonia auction, capped at 550,000 tonnes of annual NH3 production, and the oil refining auction, with a maximum of 200,000 tonnes of annual hydrogen production, signify the government’s strategic approach to managing capacities.
The Solar Energy Corporation of India, a state-owned entity, will oversee the ammonia auction, while the Ministry of Petroleum and Natural Gas will manage the oil refining tender. This move follows the recent announcement of the first ten winners of India’s inaugural green hydrogen auction, where two participants bid for zero subsidies, signaling a significant stride in cost-competitiveness.
Despite earlier hints at a potential mandate for industrial hydrogen users to consume a specific proportion of green hydrogen, no such policy has been introduced yet. The government’s ambitious push toward green hydrogen aligns with its broader vision of a sustainable and environmentally conscious energy landscape.
