India has unveiled guidelines for the second phase of its clean hydrogen production funding program, offering subsidies for a total of 450,000 tonnes of hydrogen annually.

Source: h2-view

Under Tranche-II of the Incentive Scheme for Green Hydrogen Production, producers will receive a three-year incentive with maximums set at $0.61/kg in the first year, $0.49/kg in the second year, and $0.37/kg in the third.

The program's auction will provide funding in two categories: technology-agnostic pathways for 410,000 tonnes per year and biomass-based pathways for 40,000 tonnes per year.

Applicants in Category I must present proposals for projects generating between 10,000 and 90,000 tonnes per year, while Category II projects should produce between 500 and 4,000 tonnes annually.

The Solar Energy Corporation of India (SECI) will supervise the bidding process, ranking applicants based on the average incentive cost over three years, with allocations starting from the lowest to the highest average incentive.

Following an oversubscription of approximately 100,000 tonnes per year during Tranche-I, selected projects, with a collective capacity of 450,000 tonnes per year, secured average incentives of $0.48/kg.

Part of the Indian Government's $2.1 billion Strategic Initiative for Green Hydrogen Technologies (SIGHT) program, under the broader Green Hydrogen Mission, this funding aims to assist in achieving the nation's target of producing five million tonnes of hydrogen annually by 2030.

Nevertheless, an Institute for Energy Economics and Financial Analysis (IEEFA) report cautioned that India's progress toward green hydrogen production might face challenges due to low incentive rates.

The report highlighted that the levelized cost of hydrogen (LCOH) in India ranged between $4.5-6.3/kg and suggested that the incentive rates under the SIGHT scheme might not be adequate to substantially reduce green hydrogen expenses.