The Government of Andhra Pradesh has notified the Green Hydrogen and Green Ammonia Policy-2023, targeting a production capacity of 0.5 million tons per annum (MTPA) of green hydrogen and 2 MTPA of green ammonia over the next five years.

The policy would also help create 12,000 jobs per MTPA of green hydrogen produced and promote the setting up of green hydrogen and green ammonia-related equipment manufacturing facilities.

The policy will be applicable for five years or remain in force until a new policy is issued.

The developers who wish to produce green hydrogen or green ammonia by electrolysis of water using renewable energy in the state or from biomass will come under the purview of this policy.

The New and Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP) will act as the nodal agency under this policy.

Currently, the green hydrogen demand in the state stands at around 0.34 MTPA, which is primarily used in nitrogenous fertilizers, and a demand of 0.13 MTPA in the refinery sector.

Under the new policy, the state will produce green hydrogen or green ammonia by using renewable energy sources or biomass in any one of the following ways:

• Through open access from co-located or non-co-located renewable energy projects
• Through captive route from co-located or non-co-located renewable energy projects
• Third-party sale or power exchange
• Procuring from the state distribution companies (DISCOMs) with the applicable green power charges as determined by the state commission
• A mix of the above, provided the source of power is certified by the state load despatch center.

Developers will have to pay ₹100,000 (~$1,221) per kilo-tons per annum (KTPA) of green hydrogen or green ammonia production capacity as facilitation charges to the nodal agency.

Incentives

The policy has mentioned a slew of incentives for the green hydrogen and green ammonia projects to be set up during the operative period.

• Developers will receive a 100% reimbursement of net State Goods and Services Tax (SGST) on the sale of green hydrogen and green ammonia for five years from the project’s commissioning date.
• Renewable energy used to produce green hydrogen/green ammonia will receive a 100% waiver on the electricity duty for five years from the project’s commercial operation date.
• The policy provides for a 25% reimbursement of intrastate transmission charges for five years from the commissioning date for the power procured from renewable energy sources (with or without storage) located in the state, subject to a maximum of ₹1 million (~$12,201)/MW/year of installed electrolyzer capacity.
• The cross-subsidy surcharge will be reimbursed for the energy drawn from renewable projects located within the state to produce green hydrogen and green ammonia for five years from the commissioning date.
• Grid connectivity to the intrastate transmission system at the generation and production end of renewable projects will be granted on priority.
• The renewable energy consumed to produce green hydrogen and ammonia will count toward the renewable purchase obligation of the consuming entity.
• The nodal agency will allocate government land for the development of both renewable energy projects and green hydrogen/green ammonia plants at a lease rate of ₹31,000 (~$378.22)/acre/year with an escalation of 5% every two years during the project period. Alternatively, the plants can be developed in any proposed industrial zones or parks per the existing policies.
• Green hydrogen and green ammonia producers will be granted a 100% exemption from land-use conversion charges and stamp duty payment.
• Green hydrogen or green ammonia production units, fuel cell production units using green hydrogen, and green hydrogen equipment manufacturing facilities related to green hydrogen production equipment will be considered eligible under the programs administered by the Industries Department. Any incentive available to industrial units under such programs will be made available.

The incentives for solar, wind, or wind-solar hybrid projects will also be available for similar projects established to produce green hydrogen or green ammonia.

Also, any other incentive, as provided by the central government, to produce green hydrogen and green ammonia will be extended by the nodal agency to the developer without any financial commitment by the state government.

Recently, the Ministry of Power waived interstate transmission charges for offshore wind, green hydrogen, and green ammonia projects as a significant step to facilitate the implementation and expansion of these projects. The green hydrogen and ammonia projects covered under the new scope must utilize renewable energy sources for production.

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