The government is contemplating on providing an incentive in the form of lower duties on importing electrolysers for an initial period of around 2-3 years, in an effort to expand the nascent domestic ecosystem for manufacturing green hydrogen and green ammonia.
“What we are thinking is that we will announce a date until which the domestic industry will be allowed to import electrolysers at lower import duties. Let’s say, by 2025-26. We expect domestic manufacturing capacity to come up by then. Thereafter, heavy import duties will kick in and we don’t expect anybody to import electrolysers,” Power Minister RK Singh told reporters on Thursday.
Electrolysers account for around 40-55 per cent of the cost of producing green hydrogen, while the rest is on power and storage. At present, electrolysers cost around ₹4 crore per megawatt (MW). The present cost of producing green hydrogen is about $4-7 per kg.
Centre’s fillip to the domestic manufacturing ecosystem for green hydrogen and ammonia
Industry players agree that it will help kickstart the domestic manufacturing ecosystem for green hydrogen and ammonia. Higher production will lead to lower prices with economies of scale. At present, domestic industries consume around 5 tonnes of grey hydrogen and 18 tonnes of grey ammonia.
Earlier in the day, Singh interacted with industry stakeholders on the national green hydrogen mission, which was approved by the Cabinet on Wednesday. He emphasised that it will support pilot projects in hard-to-abate sectors like steel, long-range heavy-duty mobility, shipping and energy storage to replace fossil fuels with green hydrogen.
Transition aspects
WRI India Program Director (Clean Mobility & Energy Tech) Pawan Mulukutla said, “Development of the mission strategy considered various aspects of transition like economic impact of adoption in identified sectors and deriving green hydrogen mandates for specific industries. It included an in-depth analysis of domestic and global regulations applicable across the value chain and identification of additional areas like mobility, shipping, industrial and metal refining for green hydrogen adoption.”
WRI India was the knowledge partner on the mission.
“Germany has come out with bids for importing green hydrogen. I have asked the industry to analyse it and figure out whether they can participate in bidding,” Singh said.