Ministry of New and Renewable Energy ("MNRE") has issued the Memorandum on waiver of Inter-State Transmission System Charges for Green Hydrogen and its derivatives on April 5, 2023 ("2023 Memorandum"), in order to amend and clarify with regards green hydrogen, the Order No. 23/12/2016- R&R dated November 23, 2021 ("2021 Order") passed by Ministry of Power. The key changes owing to the 2023 Memorandum have been captured below:
- Extension of exemption to green hydrogen: Inter-state transmission charges shall not be levied on renewable energy used for production of green hydrogen and its derivates such as green ammonia. This exemption is limited for those green hydrogen units which are commissioned until December 31, 2030, which is an extension of 5 (Five) years and 6 (Six) months over the 2021 Order which only exempted units commissioned until June 30, 2025.
- Modified Term limit: The waiver shall apply for a period of 25 (Twenty-Five) years from the commissioning of the green hydrogen plant as against 8 (Eight) years that was mandated under 2021 Order.
- Eligible power generators: The waiver of the charges shall be provided to electricity generated from solar, wind, pumped storage hydropower, battery energy storage system or any hybrid combination of these different technologies.
However, the waiver for hydro power project applies only for such projects which were commissioned prior to March 2019.
The 2023 Memorandum is in addition and not in derogation to the 2021 Order and consequently, the provisions of the 2021 Order shall continue to apply to the extent not modified by the 2023 Memorandum.
These changes are expected to have far-reaching impact on ensuring India emerges as a global hub for green hydrogen production by reducing cost. This waiver is a significant step in ensuring viability of green hydrogen production plants and thereby contributing to vision of producing 5 million metric tonnes of green hydrogen per year.
Please find a copy of the 2021 Order, here.
Originally published 11 April 2023
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