Using a $2 billion programme that will launch by the end of June, India intends to provide incentives to companies that make green hydrogen fuel worth at least 10% of their costs.

A 174.9 billion rupee incentive programme to promote green hydrogen was approved by New Delhi this year in an effort to reduce carbon dioxide emissions and establish itself as a significant exporter in the field. According to the person, who is directly involved but declined to be named since the conversations are secret, the government will provide incentives of at least 30 Indian rupees per kilogram (kg) for the manufacturing of green hydrogen fuel.

In India, the price of producing green hydrogen, which is produced using renewable energy instead of energy sourced from fossil fuels, is now around 300 rupees per kilogram.

Out of the whole incentive package for the industry, the government will award roughly 130 billion rupees for the production of green hydrogen, and the remaining sum will go towards the production of electrolyzers, which are used to electrically divide hydrogen and oxygen molecules.

India has set goals to achieve net-zero carbon emissions by 2070 and to have half of its installed energy capacity come from non-fossil fuel sources by 2030. When Reuters inquired about the scheme, the Indian Ministry of New and Renewable Energy and the Press Information Bureau did not react right away.

3.6 million metric tonnes of hydrogen production capacity are anticipated to be supported by the program over the next three years, according to the government, which intends to begin accepting bids from companies seeking incentives by the end of this quarter. The incentives will be reduced annually, the source added.

According to the official, the government would issue requests for proposals in two tranches for electrolyzers and three tranches for green hydrogen supply. This will enable the government to absorb new technologies, realize cost savings, and obtain market insights, the official added.

Companies that have renewable energy facilities or make hydrogen and ammonia are anticipated to be eligible to participate in the auction for green hydrogen supply. The source claimed that contracts would be given to the businesses that requested the lowest incentive.

The contracts are anticipated to be of interest to Indian firms that have already made plans to produce green hydrogen, such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy, ReNew Power, and Acme Solar.

The incentive for producing electrolyzers is set at 4,440 rupees per kilowatt, and each tranche is projected to be for 1,500 megawatts (MW) of capacity. With the first tranche coming out this quarter and the next in the third quarter of 2023, the government anticipates funding the plan for around 3,000 megawatts of annual electrolyzer capacity over a five-year period.