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Green Hydrogen Policy

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                             A Green Hydrogen Policy was introduced by the Ministry of Power (MoP) (GHP). As it complements India’s budget for 2022–2023’s emphasis on climate change, industry participants have mainly welcomed it. By 2030, the strategy aims to produce 5 million tonnes per year (MTPA) of green hydrogen, or more than 80% of the nation’s current hydrogen demand. It is a turning point in India’s energy transformation, and as a result, India has released a complete Green Hydrogen Policy, making it the 18th nation to do so. The preferred fuels to replace fossil fuels in the future are hydrogen and ammonia. In accordance with the policy, if the production facility is operational before June 2025, the government will establish manufacturing zones for production, prioritise connectivity to the ISTS (Inter-State Transmission System), and provide free transmission for 25 years. This means that a green hydrogen producer won’t be needed to pay any inter-state transmission fees in order to build a solar power plant in Rajasthan to supply renewable energy to a green hydrogen plant in Assam. Additionally, producers will be permitted to construct up bunkers close to ports for the storage of green ammonia for shipping export.

Challenges associated-

Reluctance of States:

Many public sector electric utilities are reluctant to give up their control over the delivery of power. States with a high concentration of real estate either stop permitting RE banking or put restrictions in place to limit this practise.

Gujarat only permits banking of solar energy between the hours of 7am and 6pm and charges 1.5 per unit as banking fees for “high-tension” clients.

Rajasthan authorises annual banking of up to 25% of RE generation and settlement, although it imposes one of the highest fees in India: 10%.

RE banking is not permitted in Andhra Pradesh or Tamil Nadu.

Additionally, the majority of states forbid drawing on stored energy during peak times.

Lesser Margins for Producers: 

Any waiver of ISTS losses for green hydrogen and ammonia plants is not included in the GHP.

Additionally, it permits discoms to purchase and supply RE to producers of green hydrogen/ammonia at procurement costs with a very limited margin set by the SERCs.

This margin might not provide discoms with a long-term enough incentive to source and supply RE to producers of green hydrogen.

Unwillingness of Industries: 

Due to the greater related costs, industrial sectors like chemicals, fertilisers, steel, and refineries are unlikely to switch to low carbon alternatives. Without incentives to cut emissions, these industries might not be able to make the change.

Steps that can be taken-

Role of Central Government: 

In exchange for the discoms’ agreement to waive the aforementioned surcharges for open-access RE projects and cap RE-banking fees at the level outlined in the GHP, the Center may consider offering concessional financing to these states’ discoms to pay their debts to power generators. This would encourage cooperation from RE-rich states.

Role of State Governments: 

The state governments (including the allocation of land in RE parks and projected manufacturing zones) and the pertinent SERCs would need to actively cooperate in order to carry out the initiatives specified in the GHP.

The GHP’s banking requirements and uniform pricing must be implemented by the RE-rich states; otherwise, it may not be of much assistance to green hydrogen producers.

– Samiksha Shewale

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