Andhra Pradesh: green targets, incentives
The state government of Andhra Pradesh launched its new Green Hydrogen and Green Ammonia policy in June, outlining how it will encourage production projects to be developed in the southeast Indian state. Within the next five years, Andhra Pradesh will target the production of up to 2 million tonnes per year of ammonia production based on renewable energy & electrolytic or biomass-derived hydrogen. This will be supported by the creation of a full ecosystem for renewable hydrogen & ammonia: job creation, equipment manufacturing, and the required infrastructure to make Andhra Pradesh “the preferred destination for production and export” of renewable ammonia in India.
The policy paper notes Andhra Pradesh already has an existing hydrogen demand of 0.47 million tonnes per year of fossil-based hydrogen, split across the fertiliser and refinery sectors. The new policy is expected to begin displacing this fossil hydrogen with locally-produced electrolytic hydrogen, as well as stimulating growth in existing & future “hydrogen consuming” sectors.
On the incentives front, the Andhra Pradesh government has outlined a detailed set of initiatives to attract project developers:
- reimbursement of net goods & services tax revenue from the sale of hydrogen/ammonia within the state
- exemption from paying electricity duty for renewable power consumed for production
- reimbursement of 25% of any intra-state transmission charges, capped at 10 Lakhs/MW/year of installed electrolyser capacity
- complete reimbursement of the Cross-subsidy surcharge
- priority access to grid connectivity for renewable energy plants developed for the purposes of hydrogen/ammonia production
- counting of renewable Energy consumed for the production of hydrogen/ammonia towards the Renewable Purchase Obligation (RPO) of the company
- discounted lease rates for land, with capped rental increases, plus complete exemption from stamp duty and land use conversion charges
- an allowance for producers to set up bunkering infrastructure near ports for the storage of hydrogen and ammonia marine fuel
- the availability of these incentives over and above existing solar/wind/hybrid incentives as already set out in government policy
Andhra Pradesh’s New and Renewable Energy Development Corporation will be given authority to allocate land for projects, oversee all project approvals and take the necessary steps to establish a pipeline of skilled workers. To fund this, a one-time, 100,000 rupees charge for each kilotonne per year of production capacity will be paid to the agency by the producer.
The list of renewable ammonia projects in Andhra Pradesh is impressive, even before the new policy came into effect:
- Ocior Energy’s million tonne per year plant
- Greenko’s million tonne per year plant (with Uniper already confirmed as a full offtaker for phase one)
- ABC Cleantech’s 2 million tonne per year plant
- ReNew’s million tonne per year plant
- and Avaada Energy’s million tonne per plant
The last three projects were announced at the Andhra Pradesh Global Investor Summit 2023 held this March, but no further details have yet been released.
A “green hydrogen standard” for India
Also in the news this week, India’s Ministry of New and Renewable Energy has set a standard for “green” hydrogen in the country. Hydrogen must be produced by either electrolysis or biomass to qualify. For the electrolytic pathway, GHG emissions of the produced hydrogen (including water treatment for electrolysis, electrolysis itself, gas purification and compression) must be no more than 2kg CO2/kg H2. For biomass, this level becomes an average emissions intensity that must not be exceeded over a twelve month period. The Ministry will continue work on a detailed methodology for verifying this emissions intensity.
The announcement indicates that the certification approach will be well-to-gate (Scope 1 and 2 emissions at least). However, electricity consumed during electrolysis is not explicitly included in the definition, suggesting a focus only on Scope 1 emissions, and relying on the continued decarbonisation of India’s electricity grid to ensure electricity feedstock meets or betters the emissions intensity requirements. In a detailed analysis of current renewable-electricity-from-grid scenarios in India, the think tank Umagine suggests that only two of the eleven analysed pathways meet the 2kg CO2/kg H2 threshold, and both involve temporal matching of renewable energy generation to hydrogen production (all but one of the others features monthly banking of renewables). Further clarification will be needed for industry stakeholders, and to establish where India’s standard fits in the emerging landscape.