Government Rolls Out Rs 17,490 Crore Scheme For Green Hydrogen

The Ministry of New and Renewable Energy has announced a Rs 17,490 crore scheme to incentivise the production of green hydrogen and the manufacturing of electrolysers between FY26 and FY30.

The ministry has outlayed Rs 13,050 crore in incentives for green hydrogen production and Rs 4,440 crore for the manufacturing of electrolysers in two separate announcements.

The bids will be allotted based on the least average incentive quoted by the bidders, the ministry notifications said.

The scheme aims to maximise production of green hydrogen and its derivatives, such as green ammonia, and the manufacturing of electrolysers in the country, with plans to indigenise production by having higher local value additions, it said.

It also aims to enhance the cost competitiveness of the green fuel as compared with fossil fuels and increase its adoption, according to the notification.

The total quantity available for bidding under Tranche I Mode I of the scheme for green hydrogen production is 4,50,000 metric tonnes per annum. Bids will happen under two buckets: technology-agnostic bids for 4,10,000 MT and biomass-based pathways for 40,000 MT.

A bidder can bid for a maximum 90,000 MT or minimum 10,000 MT capacity under the technology-agnostic bids, and for biomass-based pathways, the maximum quantity available is 4,000 MT and the minimum cannot be lower than 500 MT.

An incentive of Rs 13,050 crore will be provided for three years from the commencement of production and will taper over succeeding years. In the first year, the incentive provided will be Rs 50 per kg of hydrogen produced. In the second year, it will reduce to Rs 40/kg, and in the third year, it will be Rs 30/kg. The production has to be consistent for all three years.

The total quantity available for electrolyser manufacturing will be 1,500 MW under Tranche I. Bids will be called under two buckets: manufacturing under any technology stack and manufacturing under indigenously developed technology stacks.

The quantity bid out under the 'any technology stack' bucket will be 1,200 MW, and under the indigenous stack it will be 300 MW.

Under the first bucket, the maximum capacity that can be bid out by an individual bidder will be 300 MW, with a minimum of 100 MW. Under the indigenous technology bucket, the bidder can bid for a maximum of 300 MW.

Bidders can bid in both categories simultaneously as well.

The incentives will be provided for five years from the date of commencement, and it will taper over every succeeding year. The production will have to be consistent over the five-year period.

The incentive for the first year will be Rs 4,440 per kWh. In the second year, it will be Rs 3,700/kWh; in the third year, it will drop to Rs 2,960/kWh; in the fourth year, it will further fall to Rs 2,220/kWh; and in the fifth year, it will be Rs 1,480/kWh.

To increase the indigenisation of the electrolyser value chain, the government has mandated local value addition over the five-year period to avail of the incentives.

For alkaline electrolysers, local value addition in the first year has to be 40%, in the second year 50%, in the third year 60%, in the fourth year 70%, and in the fifth year 80%.

For Proton Exchange Membrane Electrolysers, the local value addition in the first year should be 30% and in the fifth year, 70%.

State-run oil and gas companies and private power companies are expected to benefit from the scheme.

Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp., Neyvile Lignite Corp., Larsen & Toubro Ltd., JSW Energy Ltd., ReNew, ACME Group, Adani Group, and Reliance Industries Ltd. are some of the companies that have already taken steps to either manufacture electrolysers or produce green hydrogen.

Many of these companies have entered into international technology agreements for the manufacture of electrolysers and are setting up green hydrogen and green ammonia plants—not just in India but abroad as well.