The Government of India is providing new incentives to the use and production of green hydrogen.
On Wednesday, India’s Ministry of New and Renewable Energy announced two subsidy auctions to assist green hydrogen in both oil refining and ammonia production. Industry will aggregate demand in the two auctions and tender fixed payments for production and supply, although they have not yet published the exact mechanism of pooling demand.
One auction will specifically subsidize producers supplying oil refineries, while the other will pay companies that produce green ammonia, as long as they make the hydrogen in-house.
Hydrogen producers with offtake from refiners can receive a similar maximum payout per kilo, such as 50 rupees (USD$0.60) in the first year, 40 rupees in the second year, and 30 rupees in the third year. However, ammonia producers will receive only 8.82 rupees per kilo of green hydrogen in the first year, which falls to 7.06 rupees in the second year and 5.30 rupees in the third year—figures that essentially offer the same subsidy, given the amount of H2 (176g) in each kg of ammonia.
Both auctions also explicitly disqualify the purchase or trading of the gas in markets, which could pose a particular problem for the ammonia producers.
While green hydrogen producers supplying refineries would receive a payment regardless of how much grey or externally-purchased green H2 the refiners use to supplement their consumption, NH3 producers seeking subsidies would need to ensure that all hydrogen feeding into their processes is both green and produced in-house.
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The auctions, both of which will base their awards on the lowest-price bids, also prohibit winners of the previous green hydrogen auction from stacking subsidies.
The ammonia auction has a cap of 550,000 tonnes of annual NH3 production, while the oil refining auction will tender a maximum of 200,000 tonnes of hydrogen a year, although further guidelines on minimum and maximum capacity per bidder are yet to be decided. The ministry’s state-owned Solar Energy Corporation of India will manage the ammonia auction, while the Ministry of Petroleum and Natural Gas will oversee the oil refining tender.
Earlier this month, the government announced ten winners of its first green hydrogen auction, two of which had bid for zero subsidies, representing 412,000 tonnes of annual H2 production capacity.
Last August, the Indian power and renewable energy minister Raj Kumar Singh suggested that the government would introduce a mandate for industrial hydrogen users to consume a certain proportion of green H2, but such a policy has not yet been introduced.
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