India's push to become the world's cheapest producer of green hydrogen has taken a significant step forward with the announcement of an extension to the waiver of transmission fees for renewable power to hydrogen manufacturing plants commissioned before January 2031. The move is expected to reduce the cost of green hydrogen, produced by splitting water using electricity from renewables, by as much as a fifth, making it a more affordable option for businesses and consumers alike.
Previously, only projects set up before July 2025 were eligible for the 25-year waiver of transmission charges. However, given that large-scale hydrogen and ammonia projects can take up to four years to build, it was unlikely that many would be commissioned by June 2025. The waiver extension will make more green hydrogen manufacturing projects eligible for the benefit, helping to increase the number of projects coming online and accelerating India's progress towards its goal of producing green hydrogen at a cost of $1-$1.50 per kilogram.
See also: India Sets Green Hydrogen Consumption Targets for Industries to Achieve Net Zero by 2070
Several prominent Indian companies have announced plans to make green hydrogen, including Reliance Industries and Adani Enterprises, which have set cost targets of $1 per kg by 2030. Other companies, such as Larsen & Toubro, Indian Oil, NTPC, JSW Energy, ReNew Power, and Acme Solar, are also exploring green hydrogen production.
Industry estimates suggest that renewable energy, including transmission, accounts for between 65% and 70% of the cost of producing green hydrogen. Inter-state transmission charges range from 1-2 rupees per unit of power transmitted. Every one rupee decrease in renewable energy costs reduces the cost of green hydrogen by 60 Indian rupees ($0.73), according to a government official. By extending the waiver of transmission fees, India hopes to encourage more companies to invest in renewable energy, thereby driving down the cost of producing green hydrogen.
India's hydrogen mission is estimated to require investments worth 8 trillion Indian rupees ($98 billion) by 2030, including 125 GW of non-fossil-based generation capacity and new transmission lines. To support this, the government plans to give green hydrogen producers incentives worth at least 10% of their costs under a $2 billion scheme set to begin before the end of June.
While some developed nations have proposed diluting the definition of green hydrogen to include fuel produced from low-carbon energy, India remains committed to producing only green hydrogen made from renewable sources. Power and Renewable Energy Minister R K Singh recently told Reuters that India opposes any efforts to expand the definition of green hydrogen, as doing so would dilute the quality of the fuel and undermine the country's efforts to transition to a cleaner, greener economy.
