Government has introduced an incentive scheme through the demand aggregation mode to promote the production of green hydrogen and green ammonia. The initiative, known as the National Green Hydrogen Mission (NGHM), employs two modes of incentives – Mode 1, launched in June 2023, and the latest Mode 2, announced by the Ministry of New and Renewable Energy (MNRE) on January 16.
Under Mode 2, there are two parts: Mode 2A for green ammonia production and Mode 2B for green hydrogen production. The MNRE has specified that the funds for this scheme will be allocated from the budget provisions under the NGHM.
For green hydrogen production (Mode 2B), the implementing agencies will be oil and gas companies nominated by the Ministry of Petroleum and Natural Gas (MoPNG). Each nominated company will aggregate demand and call for bids for the production and supply of green hydrogen at the lowest cost for its refinery or multiple refineries. The total capacity available for bidding in Tranche I of Mode 2B is 2,00,000 metric tons per annum of green hydrogen.
Bidders quoting the least price will be allocated capacity in descending order until the total available capacity is filled. The incentive pay-out will be determined by the incentive for that year (in Rs/kg of green hydrogen) multiplied by the allocated capacity or actual production and supply in that year, whichever is lower.
For green ammonia production (Mode 2A), direct incentives will be granted over three years from the commencement date. The Solar Energy Corporation of India (SECI) will be the implementing agency for green ammonia production, managing demand aggregation and incentive disbursal. The available capacity for bidding under Tranche I of Mode 2A is 5,50,000 metric tons per annum of green ammonia. The incentives for green ammonia production will be ₹8.82/kg in the first year, ₹7.06/kg in the second year, and ₹5.30/kg in the third year.
As reported by moneycontrol, the NGHM has an initial outlay of ₹19,744 crore, with ₹17,490 crore allocated for production-linked incentives (PLIs) for green hydrogen production and electrolyser manufacturing. Of this, ₹13,050 crore is designated for green hydrogen and its derivatives production, while ₹4,440 crore is allotted for electrolyser manufacturing incentives.
