New Delhi: The Ministry of New and Renewable Energy (MNRE) has released the framework document for the first tranche of incentive schemes for manufacturing of electrolysers and production of Green Hydrogen on Wednesday. The two incentive schemes have a total financial outlay of Rs 17,490 crore and will be implemented by the MNRE through Solar Energy Corporation of India (SECI) under the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme.
While Component I, which envisages offering incentives for electrolyser manufacturing, has a financial outlay of Rs 4,440 crore, Component-II, which seeks to provide support for Green Hydrogen production has an outlay of Rs 13,050 crore. Both the schemes will be implemented during the period FY 2025-26 and FY 2029-30.
The SIGHT programme is a major financial measure under the National Green Hydrogen Mission with an outlay of Rs 17,490 crore. The programme proposes two modes of providing financial incentive mechanisms to support domestic manufacturing of electrolysers and production of Green Hydrogen — bidding on the least incentive demanded over the three-year period through a competitive selection process and the implementing agency will aggregate demand and call for bids for procurement of Green Hydrogen and its derivatives at the lowest cost. The frameworks released by the MNRE on Wednesday are for the first mode of providing incentives for green hydrogen production and electrolyser manufacturing. MNRE Secretary Bhupinder Singh Bhalla said that the framework for inviting bids under the demand aggregation mode will be released later.
Incentive scheme for electrolyser manufacturing
The scheme will be implemented by SECI through a transparent selection process for award of incentives. Under the programme, support will be provided for electrolyser manufacturing in terms of Rs/kW corresponding to the manufacturing capacity. The base incentive will start at Rs 4,440/kW in the first year and will reduce progressively to Rs 3,700/kW in year II, Rs 2,960/kW in year III, Rs 2,220/kW in year IV and Rs 1,480/kW in year V. The incentives will be provided for five years from the date of commencement of manufacturing of electrolysers.
Highlights: Electrolyser Manufacturing
- Base incentive will start at Rs 4,440/kW in the first year
- Incentives will take into account Specific Energy Consumption (SEC), local value addition
- If chosen, the beneficiary will have to demonstrate minimum 50% of annual sales of electrolysers in India
Since the scheme aims to incentivise manufacturing of efficient and high-quality electrolysers in India, incentives will be provided to bidders on the basis of two important parameters. As Specific Energy Consumption (SEC) will directly impact the cost of production of green hydrogen, incentives will take into account SEC. Another important aspect of the incentive scheme will be local value addition, under which bidders will be required to demonstrate local value addition of between 40 percent to 80 percent (for Alkaline electrolysers) and 30 percent to 70 percent (for PEM/AEM/SO electrolysers) progressively for each year of production of electrolysers.
Bidders will be required to quote annual manufacturing capacity for which incentives are being sought, committed SEC of the electrolyser produced each year and committed LVA. To be eligible, the net worth of the company or joint venture or consortium should be equal to or greater than Rs 1 crore per MW of quoted manufacturing capacity. If chosen, the beneficiary will also have to demonstrate minimum 50 percent of annual sales of electrolysers for installation of projects in India.
In the first tranche, the MNRE will be inviting bids for 1,500 MW of electrolyser manufacturing capacity under two buckets — 1,200 MW of electrolyser manufacturing capacity based on any stack technology and 300 MW of electrolyser manufacturing capacity based on indigenously developed stack technology. Bidders can bid for either or both buckets. Bidders will have to bid for a minimum of 100 MW and will be allocated a maximum of 300 MW by SECI.
Incentive scheme for Green Hydrogen production
To be eligible for incentives under the scheme, the bidder must ensure Green Hydrogen production in accordance with detailed criteria laid down in the “National Green Hydrogen Standard” which is yet to be notified by the MNRE. In cases where the end product is a derivative of Green Hydrogen, like Green Ammonia, incentives would be made available based on the amount of Green Hydrogen utilised to produce the derivative.
Highlights: Green Hydrogen Production
- Bidder must ensure Green Hydrogen production in accordance with ‘National Green Hydrogen Standard’
- A direct incentive capped at Rs 50/kg in the first year of production, Rs 40/kg during the second year and Rs 30/kg during the third year
- Qualified bidders will be allocated capacities in the order of the Least Average Incentive
- Under the first tranche, bids will be invited for capacities under two buckets: technology agnostic pathways and biomass-based pathways
Under the scheme, a direct incentive capped at Rs 50/kg in the first year of production, Rs 40/kg during the second year and Rs 30/kg during the third year will be provided from the date of commencement of green hydrogen production. Bidders will have to quote annual production capacity for which incentive is sought, incentive demanded in Rs/kg for each of the first three years of production of green hydrogen. Qualified bidders will be allocated capacities in the order of the Least Average Incentive demanded in Rs/kg taken as a simple average of the incentive demanded for each of the three years.
Under the first tranche, bids will be invited for capacities under two buckets: technology agnostic pathways and biomass-based pathways. Under the first bucket, production capacities for 410,000 MT/annum of green hydrogen will be bid out, while 40,000 MT/annum will be bid out under the biomass-based technology bucket.
The net worth of the bidder should be equal to or greater than Rs 1.5 crore per thousand MT per annum of quoted production capacity. Under ‘technology-agnostic’ pathways, bidders will have to bid for a minimum of 10,000 MT/annum and will be awarded a maximum of 90,000 MT/annum. Under the ‘biomass-based’ pathways, bidders will have to bid for at least 500 MT/annum and will be allotted a maximum of 4,000 MT/annum. Bidders can bid for either or both of the buckets.
Scheme Monitoring Committee
A Scheme Monitoring Committee (SMC) chaired by the MNRE Secretary and comprising of representatives from the ministry, SECI and experts from other organisations will periodically review the status of implementation and performance of the capacities under the scheme. The committee will also facilitate, recommend measures to resolve difficulties, if any.
