Factbox: India's green hydrogen push and challenges

NEW DELHI, July 10 (Reuters) - India wants to become a global hub for the production of green hydrogen, manufactured by splitting water molecules using renewable energy. It is an ambitious plan for a country whose hydrogen consumed currently is produced mostly with fossil fuels.

Although first production is expected only in 2026, India has been negotiating bilateral agreements with the European Union, Japan and other countries to start exporting the fuel.

Below are some details about Indias green hydrogen push and challenges.

PRODUCTION TARGET

India aims for annual production of 5 million metric tons of green hydrogen by 2030, which would cut about 50 million metric tons of carbon emissions and save more than $12 billion on fossil fuel imports.

Indian companies including Reliance Industries (RELI.NS), Indian Oil (IOC.NS), NTPC (NTPC.NS), Adani Enterprises (ADEL.NS), JSW Energy (JSWE.NS), ReNew Power (RENE.BO) and Acme Solar (ACMO.NS) have made announcements for setting up a cumulative annual green hydrogen manufacturing capacity of 3.5 million metric tons.

As of now, most of the 5 million metric tons of hydrogen consumed in the country is produced with fossil fuels.

GOVERNMENT SUPPORT

In January, India approved an incentive plan of 174.9 billion rupees ($2.11 billion) to promote green hydrogen. This would be atleast 10% of the cost to produce green hydrogen.

New Delhi has also extended a waiver of transmission fees for renewable power to hydrogen manufacturing plants commissioned before January 2031.

AUCTIONS

The government has kicked off auctions under its incentive programme for manufacturing electrolysers used to make green hydrogen. Bidding for support for green hydrogen production has yet to start.

Five states including industrialised ones like Maharashtra and Gujarat have announced benefits like concessional electricity and duty-reimbursements on production of green hydrogen and its derivatives.

CHALLENGES

Green hydrogen is currently more expensive to produce than hydrogen made using fossil fuels, costing about $2 more per kilogram.

The other issue is that renewable energy is not available round-the-clock and battery storage is still not economical.

The country expects a requirement of 125 gigawatts of renewable energy by 2030 for production linked only to the incentive programme. Indias current installed renewable base is 127 gigawatts.

Europe, Korea and Japan, being renewable resource-deficient, are likely to be the key markets for green hydrogen but trade barriers are a major worry.

India has raised its concerns with Germany on barriers imposed in a global green hydrogen tender called by that country last December.

India also faces competition from heavily subsidised markets like China and the United States.

($1 = 82.6250 Indian rupees)

Reporting by Sarita Chaganti Singh; Editing by Devika Syamnath

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