The Uttar Pradesh Green Hydrogen Policy 2023 aims to reduce hydrogen costs to $2/kg within the next five years and to $1/kg in the long run.
Furthermore, the state intends to achieve 20% green hydrogen blending in total hydrogen consumption for existing fertiliser and refinery units by 2028, with the goal of increasing to 100% green hydrogen by 2035.
In 2024, the draught policy proposes a capital expenditure subsidy of 60% of the cost of the electrolyzer. The minimum capacity to qualify for the subsidy must be greater than 50 MW. By 2027, the state government’s monetary incentive will be reduced to 20%.
The primary impediment to green hydrogen adoption is its high cost. Green hydrogen prices in the state range from $2.8/kg to $7/kg.
The policy emphasises the importance of encouraging innovation in order to reduce costs over time. The state’s current hydrogen demand is around 0.9 million tonnes per year, which is primarily used in the production of nitrogenous fertilisers.
The policy aims to start the state’s journey towards becoming a green hydrogen economy by focusing on the chemical, fertiliser, and refinery sectors.
These industries account for nearly 55% of the state’s industrial emissions. Promoting green hydrogen will help states address a significant portion of their emissions.
The policy will be in effect for the next five years.
A state-level committee will be formed to carry out all activities, including policy monitoring and evaluation, under the chairmanship of the additional chief secretary or principal secretary of the Department of Additional Sources of Energy.
Incentives provided by the state government
Beyond the 10% blending share in total production, an additional subsidy of ₹3500 per tonne of green urea produced in the state will be applicable.
The policy also proposes a 30% one-time grant support for technology acquisition up to a maximum of ₹50 million for R&D centres and industries.
Green hydrogen and ammonia projects that use water to produce green hydrogen will be exempt from paying land tax, land use conversion charges, stamp duty, and industrial water consumption charges.
The entire state Goods and Services Tax (SGST) paid for the production of green hydrogen and ammonia will be reimbursed.
Electricity used to generate green hydrogen and ammonia will only be charged 50% of wheeling and intrastate transmission fees. There will be no distribution or cross-subsidy surcharges.
The policy encourages the establishment of a centre of excellence with various academic and research institutions, as well as industries, to aid in the development of a sustainable green hydrogen/ammonia ecosystem.
The centre will also promote a skill development programme to prepare the state’s workforce for the green hydrogen and ammonia transition.
The Ministry of Power announced a ‘Green Hydrogen Policy’ in February to assist India in meeting its production target of 5 million tonnes of green hydrogen by 2030, as well as the related development of renewable energy capacity.