India will encourage companies to produce more green hydrogen by offering them money equal to 10% of the total operating costs, according to a government official.
According to Reuters, this forms part of a $2bn scheme to cut emissions and become a major exporter in the field.
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The cost of manufacturing green hydrogen in India is currently $3.6 (INR 300) per kilogram. Incentives will be awarded through a competitive bidding process, gradually tapering the amount every year.
India aims to attain net-zero carbon emissions by 2070 and produce half of its installed electricity capacity from non-fossil fuel sources by 2030.
Of the total funds allocated to the project, the government will award $1.6bn for producing green hydrogen, and the rest will be channelled to the manufacturing of electrolysers. Electrolysers are used for splitting hydrogen and oxygen molecules using electricity.
The government expects to support 3.3 million tonnes of hydrogen production capacity in the next three years. The bidding for firms seeking incentives will begin at the end of this quarter.
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By GlobalDataEligibility for incentives
The government will invite bids in three rounds for green hydrogen and in two rounds for the electrolysers, increasing cost efficiency and helping absorb newer technologies.
According to Reuters, each round of manufacturing of electrolysers is expected to be for 1.5GW with an incentive fixed at $54 per kilowatt. The government seeks to support 3GW of annual capacity for the first five years.
The auction will be open to companies that have renewable energy plants or produce hydrogen and ammonia. For the production capacity, applicants need prior experience developing at least 500MW of renewable energy capacity over the past four years. Having a minimum capacity of around 453,592 tonnes of ammonia and methanol, or 90,718 tonnes of hydrogen over the last four years, is also a criteria for eligibility.
Companies like Indian Oil, Reliance Industries, Adani Enterprises, ReNew Power and Acme Solar have already announced their plans to manufacture green hydrogen and are expected to be interested in the contracts.
