Govt May Offer 5-Year PLI for Electrolyzer Manufacturers : Daily Current Affairs

Relevance: GS-3 : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Key Phrases: Production-Linked Incentive Scheme, Green Hydrogen Hub, Clean Energy, National Hydrogen Mission , New Green Hydrogen Policy , Net Zero carbon Emissions

Why in News ?

India plans to introduce a production-linked incentive (PLI) scheme to encourage the manufacturing of electrolyzers used to extract hydrogen from water.
The power ministry and the government’s policy think tank NITI Aayog are working on the specifics of the scheme.

Context:

Hydrogen and Ammonia are envisaged to be the future fuels to replace fossil fuels.
Production of these fuels by using power from renewable energy, termed as green hydrogen and green ammonia, is one of the major requirements towards environmentally sustainable energy security of the nation.
Government of India is taking various measures to facilitate the transition from fossil fuel / fossil fuel based feed stocks to green hydrogen / green ammonia.
The initiative will promote Renewable Energy (RE) generation as RE will be the basic ingredient in making green hydrogen.
This in turn will help in meeting the international commitments for clean energy.

Importance of the Electrolyzers:

A favourable policy to encourage the manufacturing of electrolyzers is crucial for India to bring down the cost of green hydrogen
Various Private players have already announced mega plans to make India a green hydrogen hub.
State-run Indian Oil Corp Ltd, the country’s largest oil refiner, had earlier agreed to partner with clean energy producer ReNew Power and Larsen & Toubro Ltd to produce green hydrogen.
With the plan to boost domestic manufacturing of electrolyzers, the government wants to make India a hub for green hydrogen produced by splitting water into hydrogen and oxygen in an electrolyzer using power from renewable sources.
The government aims to reduce the cost of green hydrogen to as low as $1 per kg by 2030.

Benefits of Domestic Electrolyzer Manufacturing:

The plan to boost local electrolyzer manufacturing also comes on the back of surging global demand and concerns over adequate supplies of electrolyzers
The European Union plans to quadruple its green hydrogen supply by 2030 to reduce demand for Russian gas.
This would push worldwide demand for electrolyzers to more than 400GW, while global supply would only reach 70GW .
The PLI scheme for electrolyzers and rules regulating offtake of green hydrogen would be key for the adoption of green hydrogen and the growth of the sector.
He said the cost competitiveness of green hydrogen would remain contingent upon the reduction in capital cost and an improvement in the energy efficiency level of electrolyzers, besides the cost of renewable energy procurement.

What is New Green Hydrogen Policy ?

Following the National Hydrogen Mission the power ministry unveiled the first part of the new green hydrogen policy .
The policy promises cheaper renewable power, a fee waiver for inter-state power transmission for 25 years for projects commissioned before June 2025, land in renewable energy parks, and mega manufacturing zones to help local industries wean themselves off fossil fuels.
According to a report by Icra, the bulk of India’s hydrogen demand pertains to the industrial segment comprising refining, fertilizers and chemicals at about 6 million tonnes (mt) in FY20, which is projected to grow to 7.3 mt by FY25.
Even in a scenario of 30% of hydrogen demand being met through green hydrogen by 2030, incremental renewable (RE) capacity requirements are estimated to remain significant at about 60GW.
This is over and above the RE addition to meet all-India energy requirements.
India aims to attain net-zero carbon emissions by 2070at the COP26 summit in Glasgow.

Do you know about the National Hydrogen Mission ?

The Mission aims to aid the government in meeting its climate targets and making India a green hydrogen hub. This will help in meeting the target of production of 5 million tonnes of Green hydrogen by 2030 and the related development of renewable energy capacity.

Features of Mission :

The Green Hydrogen / Ammonia manufacturer can bank his unconsumed renewable power, up to 30 days, with distribution company and take it back when required.
Distribution licensees can also procure and supply Renewable Energy to the manufacturers of Green Hydrogen / Green Ammonia in their States at concessional prices which will only include the cost of procurement, wheeling charges and a small margin as determined by the State Commission.
Waiver of inter-state transmission charges for a period of 25 years will be allowed to the manufacturers of Green Hydrogen and Green Ammonia for the projects commissioned before 30th June 2025.
The manufacturers of Green Hydrogen / Ammonia and the renewable energy plant shall be given connectivity to the grid on priority basis to avoid any procedural delays.
The benefit of Renewable Purchase Obligation (RPO) will be granted as incentive to the hydrogen/Ammonia manufacturer and the Distribution licensee for consumption of renewable power.
To ensure ease of doing business a single portal for carrying out all the activities including statutory clearances in a time bound manner will be set up by MNRE.

Conclusion:

This would be the 14th PLI for the government as it pursues its vision to make the country self-reliant and a global manufacturing hub.
Recent PLI schemes in which applicants have been chosen this year include those for automobile and auto components, advanced chemistry cell (ACC) battery storage and textiles.
The implementation of this Policy will provide clean fuel to the common people of the country. This will reduce dependence on fossil fuel and also reduce crude oil imports.

Source: Live-Mint

Mains Question:

Q. India plans to introduce a production-linked incentive (PLI) scheme to encourage the manufacturing of electrolyzers used to extract hydrogen from water . Discuss the importance and benefits of domestic manufacturing of electrolyzers and its role in furthering India's goal of net zero emissions by 2070. (250 words).