Monday, Nov 28, 2022

New Hydrogen Policy By The Government Sounds Promising: Experts

Experts welcomed the new green hydrogen policy unveiled by the government offering open access and waiver of inter-state transmission charges for a period of 25 years to the manufacturers of green hydrogen

 Green hydrogen
Green hydrogen is produced by using electricity from renewable energy sources

In accordance with its commitment to Net-Zero targets, the Government unveiled its green hydrogen policy on Friday which seeks to promote green hydrogen and ammonia. 

The new policy provides several incentives for manufacturers, consumers of green hydrogen and green ammonia, including cheaper renewable power, fee waiver for inter-state power transmission for 25 years for projects commissioned before June 2025, land in renewable energy parks, and mega manufacturing zones to help local industries wean themselves off fossil fuels.

Experts hailed the new green hydrogen policy and termed it as a "good step in the right direction."

ReNew Power welcomed Phase 1 of India’s green hydrogen policy. 

"It’s a very good step in the right direction as India looks to become a net-zero economy by 2070 and will add to the momentum to that crucial goal,” said Mayank Bansal, Chairman, and CEO of ReNew Power. 

Expressing her thoughts on the move Parul Soni, Global Managing Partner, Thinkthrough Consulting, said, "Time and again Indian government have emphasised the fact that India can meet the global demand of the green hydrogen production by mass-producing at an economical cost. As per the current situation, India is at a stage where the government creates demand through policies that mandate green hydrogen and developing technologies to produce and store through its research institutions."

Bansal feels the waiver of inter-state transmission charges for a period of 25 years is a much-needed step.

“Currently, manufacturing green hydrogen is a costly proposition and in cognizance of this, the government has correctly waived off ISTS charges for a period of 25 years, which will help in bringing down the cost of Green Hydrogen," she said. 

The Government has also allowed banking of power for 30 days, which will help improve the utilization of capital-intensive Electrolyser assets, she said, adding "we believe that more clarity is needed on the application of cross-subsidy surcharge and additional cross-subsidy surcharge since the policy allows production at different locations by different parties. Further, the decision to include biomass as a fuel for the generation of green hydrogen is a step in the right direction." 

According to the policy, green hydrogen/ammonia manufacturers "may purchase renewable power from the power exchange or set up renewable energy capacity themselves or through any other developer, anywhere." 

The policy also features renewable energy parks, mega manufacturing zones, building bunkers near ports to store green ammonia for exports. 

It also says that distribution licensees can procure and supply renewable energy to the manufacturers of green hydrogen/green ammonia in their states at "concessional prices which will only include the cost of procurement, wheeling charges and a small margin as determined by the State Commission."

The policy also grants open access to Green Hydrogen and Ammonia plants within 15 days of receipt of the application. 

The statement notes that connectivity, at the generation end and manufacturing end, to the ISTS for Renewable Energy capacity set up for the purpose of manufacturing green hydrogen/green ammonia shall be granted on priority. 

The manufacturers can also bank their unconsumed renewable power for up to 30 days with the distribution company and take it back when required. 

According to Deepesh Nanda, CEO, GE Gas Power South Asia, the policy is a step in the right direction to support and promote the Green Hydrogen ecosystem. 

"A combination of hydrogen and natural gas will be a potential pathway to accelerate the energy transition and provide a clean, reliable, and sustainable power supply," he said.

Eventually, we may have to further segregate our policy, as different sectors may require varying models and policy frameworks – and hydrogen comes with the complementing versatility to play an equally important role in diverse sectors such as transport, residential, industrial, power, etc. 

"As we move ahead with the policy, we must also spread greater awareness on the safe use of hydrogen and make way for the most advanced technology solutions," he added.

Davinder Sandhu, Co-founder & Chairman, of Primus Partners says that the long-term vision of the government reflects in the provisions of the just-released policy.

"The major application of green hydrogen in industrial processes will be seen in metal and steel industries. These are hard to abate sectors because the technology process is baked into the industry over the life of the assets," he said.

The policy looks promising, and next announcements will be keenly awaited, he said.

"Considering the scale involved, there is an opportunity for India to become a world leader in Green Hydrogen manufacturing while catalysing its decarbonisation journey," Sanshu added.