The Ministry of New and Renewable Energy (MNRE) has set aside ₹44.4 billion (~$535.6 million) to incentivize manufacturing of electrolyzers to reduce costs for hydrogen production in the country, as part of the National Green Hydrogen Mission (NGHM).

NGHM has an outlay of ₹197.44 billion (~$2.3 billion) up to 2029-30. The mission seeks to promote the development of a green hydrogen production capacity of 5 million tons per year and, in the process, envisages an investment of over ₹8 trillion (~$96.5 billion) and the creation of over 600,000 jobs by 2030.

The incentives for spurring indigenous manufacturing, under the “Strategic Interventions for Green Hydrogen Transition (SIGHT) Program – Component I: Incentive Scheme for Electrolyzer Manufacturing Tranche – II,” will run from the financial year 2025-26 to 2029-30.

The program aims to make domestically made electrolyzers – a key component for green hydrogen production, internationally competitive in performance and quality and to build out its supply chains. It also intends to support both established and new electrolyzer technologies.

The incentive program will be implemented through the Solar Energy Corporation of India (SECI) as the nodal agency, according to the MNRE document. SECI will conduct a competitive bidding process to select manufacturers based on criteria like specific energy consumption of the electrolyzer produced each year for the five-year period, committed local value addition targets, and a performance-linked incentive structure.

The incentives have been designed in a declining structure – with the base incentive starting at ₹4,440 (~$54)/kW in the first year and tapering down annually over the five years. Actual payouts to manufacturers will be linked to performance multipliers based on the specific energy consumption achieved and the extent of domestic value addition accomplished.

The guidelines also stipulate that the Specific Energy Consumption (SEC) for hydrogen production should not exceed 56 kWh per kg, measured at 100% rated capacity on the DC side of the stack, with demonstration required before electrolyzer commissioning. Additionally, the electrolyzer should have a guaranteed lifespan of at least 60,000 hours, and there should be a minimum of 40% Local Value Addition (LVA) for alkaline electrolyzers and 30% for other technologies during the first year of production.

In a move to nurture indigenous stack technologies, the program also demarcates separate capacity buckets for established (Bucket 1 – 1,100 MW), indigenously developed (Bucket 2A – 300 MW), and smaller indigenous (Bucket 2B – 100 MW) electrolyzer manufacturing capacities. However, to ensure scale, no single bidder can be allocated more than 300 MW across tranches under this program.

In order to bid, the manufacturer, which can be a single company or a joint venture, must have a net worth of more than ₹10 million (~$120,000) per MW of quoted capacity for the previous financial year for Bucket 1, and ₹3 million (~$36,000) for Bucket 2.

The available capacity for bidding in the second tranche is 1,500 MW, with minimum bid capacities of 100 MW for Bucket 1 and 2A. In Bucket 2B, bids can range from 10 MW to 30 MW.

Earlier, SECI issued a request for the selection of electrolyzer manufacturers to set up 1.5 GW of electrolyzer manufacturing capacities in India under the SIGHT program (Tranche- II).

Early this year, SECI announced the winners of the auction to set up 1.5 GW electrolyzer manufacturing capacities across India under Tranche 1 of the SIGHT program.