With the focus on hydrogen as a fuel for mobility gaining momentum worldwide, the production capacity of electrolysis to make hydrogen has accelerated for some years. Back home, the Government of India is actively looking at hydrogen as another option for greener mobility in the country. This evolution led to paying more attention to electrolysers, which play a pivotal role in producing low-emission hydrogen from renewable or nuclear electricity.
Recently, the Government of India has come out with an incentive scheme for the production of electrolysers. An electrolysis plant separates water (H2O) into hydrogen (H2) and oxygen (O2) with the help of electricity. Basically, it produces hydrogen, with water and electricity as inputs. The process is clean with zero GHG (greenhouse gas) emissions.
The incentive scheme forms a crucial component of the National Green Hydrogen Mission approved by the Union Cabinet. The Cabinet has approved an overall outlay of INR 19,444 crore for the Mission for up to 2029-30.
The Strategic Interventions for the Green Hydrogen Transition Programme is a major financial incentive under the National Green Hydrogen Mission with an outlay of INR 17,490 crore. Green Hydrogen Transition Programme proposes a couple of distinct incentive mechanisms to support the local production of electrolysers and green hydrogen.
The financial sops are primarily intended to “rapidly scale-up” products. Simultaneously, they are aimed at technology development. Further, these are expected to trigger cost reduction.
Inviting Bids
Solar Energy Corporation will invite bids on behalf of the Ministry from aspiring makers of electrolysers. According to the notification, “any single company, or a joint venture/consortium,” can bid for the incentives.
“The net worth of the bidder, as on the last date of the financial year as specified in the tender document should be equal to or greater than INR1 crore per MW of the quoted manufacturing capacity,” the notification said. A bidder could seek qualification based on the financial strength of its affiliates, it further said.
The capacity available for bidding under the first tranche is 1,500 MW and will be called in two buckets – electrolyser production based on any stack technology (Mode I) and electrolyser production based on native stack technology (Mode II).
A single bidder will be allotted a maximum of 300 MW. The floor capacity for allotment is 100 MW. A bidder can bid for both Mode I and Mode II capacities, and any unallotted capacity would be carried for the next tranche.
The incentive scheme for electrolysers, especially, will involve an outlay of INR 4,400 crore. The scheme has a five-fold objective:
1. Maximising local production
2. Enabling lower cost of hydrogen production
3. Beefing up the quality of performance to global levels
4. Improving value addition
5. Promoting technology development
In a notification, the Ministry of New and Renewable Energy (MNRE) (Hydrogen Division) said the scheme would be implemented through a selection process to award incentives.
MNRE has chosen Solar Energy Corporation of India to implement the incentive scheme; it will be responsible for a host of activities as mandated by the Ministry. Solar Energy will be paid a fee (0.5% of the incentive disbursed) for its administrative and other works.
The scheme provides incentives to the electrolyser manufacturer, and the base incentive will start at INR 4,400/KW in the first year. The incentive will progressively taper down annually and will be available for five years from the commencement of production.
Ostensibly, the scheme is intended to encourage the production of efficient and high-quality electrolysers. The incentives will be based on set parameters since the specific energy consumption of electrolysers has consequences for Green Hydrogen.
A principal objective of the scheme is to encourage indigenous production. Not surprisingly, the scheme has prescribed minimum local value addition for each year. From 40% in the first year, the local value addition (LVA) is sought to be progressively increased every year. By the end of the fifth year, any incentive-given electrolyser producer must notch up a local value addition of 80%. The scheme prescribes different levels of annual LVA for alkaline electrolysers and proton exchange membrane /solid oxide electrolysers, and others.
Under the scheme, the sale value of the electrolyser is as per the GST invoice, excluding net domestic indirect taxes and returns.
Computing Value Of Imports
The value of imports is computed based on the direct import and indirect imported materials and services (including Custom Duty) as per the Bill of Entry filed with the Customs department. Under the chairmanship of the Secretary of MNRE, a panel would periodically review the progress in implementing the scheme.
NB: Pix 2 is representational; courtesy: Ashok Leyland
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