Under the previous government policy, an ISTS charge waiver was granted for 8 years until June 30th, 2025, with the cut-off date for commissioning the green hydrogen or green ammonia unit. As a result, if a green hydrogen production unit was ready by June 30th, 2025, it would be exempt from paying ISTS charges until June 2033. The government has now extended the cut-off date for the commissioning of green hydrogen units and that of its derivatives by 5.5 years, with the post-commissioning waived-off period being extended from 8 to 25 years. This change could significantly enhance the economic viability of green hydrogen plants and their derivatives.
It is worth noting that the operational lifespan of a green hydrogen/green ammonia project would be a co-terminus with the RE facility, which is 25 years. Therefore, the reason for the extension is until 25 years post-commissioning of the project. The government's decision to extend the ISTS charge waiver could play a crucial role in India's ambitious target of setting up 500 GW of renewable energy capacity by 2030 and achieving net zero by 2070. The National Green Hydrogen Mission (NGHM) is also expected to play a crucial role in the years to come, with companies such as Reliance Industries, Indian Oil, NTPC, GAIL, and BPCL having already committed to green hydrogen production in India.
The ISTS charge is a transmission charge for moving electricity from one state to another, and it is estimated by the government that the ISTS charge to transmit RE from the generating units to such green hydrogen units would range from Rs.1 -2 per kWh, depending on the location. This would increase the cost of the delivered RE at the site. It takes 55-60 kWh of renewable energy to produce 1 kilogram of green hydrogen, meaning that an increase of Rs 1 in the delivered cost of RE would raise the cost of producing green hydrogen by around Rs 60 per kilogram (or USD 0.75/kg).
The government anticipates that green hydrogen/green ammonia facilities will be set up near export terminals and end-use industries based on feedback from the industry. However, to maximize the cost and capacity utilization factor (CUF) of generating, renewable energy (RE) production is likely to be situated in RE-rich states. The MNRE's revised strategy may assist India in decreasing its carbon footprint and achieving its renewable energy targets in the future.
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