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India continues to waive transmission costs for green hydrogen plants

2023-04-12

According to a government official, India has extended a waiver of transmission fees for renewable energy to hydrogen production plants that start up before January 2031 in order to become the world's cheapest producer of the fuel.

The move is intended to lower the cost of green hydrogen - hydrogen produced by splitting water with renewable electricity - by one-fifth.

The shift will make more green hydrogen production facilities eligible for the 25-year remission of transmission rates, which was previously accessible for plants established before July 2025.

Large-scale hydrogen and ammonia projects take three to four years to build, and many are unlikely to be operational by June 2025, according to a government official.

The country's goal is to manufacture green hydrogen at the world's lowest cost, at $1-$1.50 per kilogram, down from $4-$5 per kilogram now.

Reliance Industries and Adani Enterprises have established $1 per kg cost targets by 2030.

Other significant Indian corporations that have declared intentions to produce green hydrogen include Larsen & Toubro, Indian Oil, NTPC, JSW Energy, ReNew Power, and Acme Solar.

According to industry estimates, renewable energy, including transmission, accounts for 65%-70% of the cost of manufacturing green hydrogen.

Inter-state transmission costs between 1-2 rupees every unit of power transmitted. According to the official, every rupee reduction in renewable energy costs reduces the cost of green hydrogen by 60 Indian rupees ($0.73).

The hydrogen mission in India is anticipated to require 8 trillion Indian rupees ($98 billion) in investments by 2030, including 125 gigatonnes of non-fossil-based generation capacity and new transmission lines.

India also intends to provide green hydrogen producers with incentives worth at least 10% of their costs as part of a $2 billion initiative that will commence before the end of the year.

The government opposes broadening the concept of green hydrogen to include fuel derived from low-carbon energy sources, as some industrialized countries have requested at G20 meetings.