An agreement to purchase green hydrogen may last 15 years

23 Aug 2022 CW Team

For interested procures, the government is also likely to allow the option of e-reverse bidding. The regulations also call for the establishment of intermediaries between green hydrogen and ammonia procurers and suppliers who can aggregate demand from multiple consumers. The option of traders pooling tariffs is also being considered.

“Procurers can avoid the risk of getting locked into higher tariffs as there are improvements in technologoy. The center is mulling providing options that intermediaries can consider to pool tariff for green hydrogen and ammonia. The pool tariff will be a weigheted average of tariff arrived through each competitive bid,” the official said.

The power ministry is recommending the same thing for renewable energy projects.

“Long term contract is a necessary condition for this market to take off in the absence of which these capital intensive projects will not be viable. We would prefer it if is closer to 25 years,” said ACME Group CEO Rajat Sekasria.

According to him, the provision allowing pooled tariffs lowers the risk for both producers and buyers. “That’s a very mature decision, “ he said.

In addition to announcing plans to produce 5 million tonnes of green hydrogen by 2030, India also unveiled a policy on February 17 that will allow businesses to use renewable energy sources to produce hydrogen or ammonia without being charged transmission fees for 25 years. The goal is to require fertilizer plants, oil refineries, and city gas distribution networks to use green hydrogen.

The majority of domestic oil refiners have made significant commitments to the production of green hydrogen, and some of them have already started the process of establishing modest facilities based on captive renewable power plants.

In order to enable cost recovery, the government is considering requiring longer green hydrogen and green ammonia purchase agreements of at least 15 years.. “The green hydrogen and green ammonia projects are likely to involve higher upfront capital investment. Hence, the purchase agreement period should not be less than 15 years. There would also be provisions for further extension of the contract period on terms and conditions mutually agreed between the parties,” a senior government official said. An electronic technical and price bids-based auction for the purchase of green hydrogen and green ammonia is proposed for purchases of over 4,000 metric tonnes per year (mtpa) of green hydrogen and 20,000 mtpa of green ammonia, in accordance with bidding guidelines being developed by the renewable energy ministry. For interested procures, the government is also likely to allow the option of e-reverse bidding. The regulations also call for the establishment of intermediaries between green hydrogen and ammonia procurers and suppliers who can aggregate demand from multiple consumers. The option of traders pooling tariffs is also being considered. “Procurers can avoid the risk of getting locked into higher tariffs as there are improvements in technologoy. The center is mulling providing options that intermediaries can consider to pool tariff for green hydrogen and ammonia. The pool tariff will be a weigheted average of tariff arrived through each competitive bid,” the official said. The power ministry is recommending the same thing for renewable energy projects. “Long term contract is a necessary condition for this market to take off in the absence of which these capital intensive projects will not be viable. We would prefer it if is closer to 25 years,” said ACME Group CEO Rajat Sekasria. According to him, the provision allowing pooled tariffs lowers the risk for both producers and buyers. “That’s a very mature decision, “ he said. In addition to announcing plans to produce 5 million tonnes of green hydrogen by 2030, India also unveiled a policy on February 17 that will allow businesses to use renewable energy sources to produce hydrogen or ammonia without being charged transmission fees for 25 years. The goal is to require fertilizer plants, oil refineries, and city gas distribution networks to use green hydrogen. The majority of domestic oil refiners have made significant commitments to the production of green hydrogen, and some of them have already started the process of establishing modest facilities based on captive renewable power plants. See also: ACME Cleantech, Karnataka govt inks MoU for green hydrogen plant ACME Solar develops 300 MW solar project for MSEDCL in Rajasthan

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