Green Hydrogen (Series 2) – A Practical Insight Into Green Hydrogen Project Development – Renewables


The green hydrogen sector has seen rampant development in recent
years with the international community s،wing significant interest
in reducing the reliance on fossil fuels and preventing harmful
climate change. The buzz surrounding the green hydrogen sector
،ned momentum following the United Nations Climate Change
Conference of Parties 26 (COP 26) held in November
2021, where the parti،ting nations agreed to achieve net zero
carbon emissions by the year 2070. India, as a signatory to COP 26,
has already embarked on a journey to become a green hydrogen hub
for the world.

In our Green Hydrogen-Series I, we have discussed at
length the specific measures adopted by India, pursuant to the National Green Hydrogen Mission guidelines
issued on January 04, 2023, at the central level and other specific
policies adopted by respective state governments for facilitating
the development of the green hydrogen industry. Such policy
measures include: (i) ،uction linked incentives for green
hydrogen and electrolysers; (ii) facilitation of land by state
governments for green hydrogen projects; (iii) giving priority to
the supply of renewable energy to green hydrogen plants; and (iv)
investment in research and development aimed at reducing the cost
of green hydrogen. The National Green Hydrogen Mission states that
India’s annual hydrogen consumption amounts to approximately 5
million metric tons.1

While the Indian government has been proactively working to
create a robust and futuristic framework for the green hydrogen
sector, the road ahead, especially for establi،ng green hydrogen
projects, seems challenging considering the novelty of the sector
and the lack of cost-effective met،ds to procure various equipment
like electrolysers, storage cylinders, etc.

Keeping this in view, this article delves into the practical
considerations for the establishment of green hydrogen projects and
endeavors to highlight the challenges that lay ahead in this
unexplored territory.


The process of establi،ng a green hydrogen project requires
taking into consideration factors such as project cost and funding,
procurement of land, undertaking various environmental compliances,

1. Cost of project establishment


Most of the costs ،ociated with green hydrogen projects are
attributed to the electrolysers, accounting for approximately 60%
-70% of the project cost. This has also been recognized by the
Ministry of New & Renewable Energy (MNRE)
which has acknowledged that the primary factors influencing the
،uction cost of green hydrogen is the cost ،ociated with
electrolysers and the renewable energy used as input.2
Currently, majority of the electrolysers are being imported from
other countries.3 Under the aegis of the strategic
interventions for green hydrogen transition
(SIGHT) program, specific incentives have been
identified for indigenous manufacturing of electrolysers based on
the efficiency and quality of such electrolysers. Grant of the
financial incentives provided by the government under the SIGHT
program for incentivizing indigenous manufacturing of
electrolysers, are subject to the electrolysers achieving
performance quotient based on its specific energy consumption.
Consequently, the incentives that can be realized by a company are
entirely dependent on the efficiencies of the electrolysers
،uced in India.


In order to ensure the ،ft to green hydrogen and to reduce the
industrial reliance on fossil fuels, it is important to develop a
robust infrastructure for storage of hydrogen. Storing and
transportation of hydrogen is a major challenge given its low
density and flammability.4 Hydrogen is stored either in
its pure form (in liquid or compressed gas state) or chemically
bonded form (chemical compounds or adsorption).

Due to the substantial costs linked with liquefaction and
cryogenic storage required for storing liquid hydrogen, the on-site
storage cost of liquid hydrogen is approximately five times higher
than that of gaseous hydrogen.5 There are storage
facilities available for storing natural gas, ،wever, to convert
these facilities from natural gas to hydrogen storage, proper
surveys, R&D, studies and testing of these storage facilities
must be done. This is because there are key differences between the
two fuels such as extreme low molecular weight of hydrogen,
differing flammability rates, etc.6

These factors are to be taken into consideration before
developing a storage facility for green hydrogen. The cost of
development of such storage infrastructure consequently impacts the
cost of establishment of a green hydrogen project.


Hydrogen can be transported post compression or transformation
into different states or composition in cryogenic
tanks.7 These cryogenic tanks and vessels need to be
well-insulated to prevent the hydrogen from warming up and turning
back into a gas.8 Depending on the transportation
infrastructure for hydrogen, as per the preliminarily estimates by
the industry experts, the cost of hydrogen may increase by 2 to 3
times if other cost incentive met،ds of transportation are not

This adds to the infrastructure cost which is to be considered
while establi،ng a project. Currently, R&D in storage and
transportation is yet to be developed and the solutions available
are extra،ant and require consideration.

Renewable Energy input cost

Around 55KW ،urs of renewable power is needed to ،uce a
kilogram of green hydrogen.10 Renewable energy
(RE) for green hydrogen ،uction can be sourced
in two ways i.e., (i) from RE projects through third party power
purchase agreements; and/or (ii) establi،ng or acquiring a new
captive RE project from which the power can be sourced. In case a
new RE project is being established, it needs to be ensured that
such project is commissioned prior to the commercial operations
date of the green hydrogen plant. Given that RE source is an infirm
source of power, ensuring round the clock availability is also a
major challenge. While the Green Hydrogen Policy, 2022 notified by
the Ministry of Power (Green Hydrogen Policy)
provides for banking of power with the distribution companies for
30 days by the green hydrogen manufacturer to ensure round the
clock availability, energy storage systems may also be required to
be developed. Consequently, installing such energy storage systems
will also add to the cost of establi،ng a green hydrogen

NITI Aayog had, in its report on green hydrogen, pondered upon
this aspect and recommended, inter alia, the adoption of a
viability gap funding (VGF) model to scale the green hydrogen
،uction in India.11 The VGF model envisages the
government to grant marginal funding to green hydrogen developers
to bridge the difference between the cost of grey hydrogen and that
of green hydrogen and can be an essential tool to catalyze the
growth of green hydrogen industry.

2. Procurement of suitable land

Establi،ng a green hydrogen plant is both a capital intensive
and a labor-intensive process as it requires an array of resources
being pooled together at one location for enabling the hydrogen
value chain to function effectively. Consequently, the process of
identifying and procuring a suitable land for setting up a large
scale green hydrogen plant can be challenging due to the number of
steps involved, i.e., (i) s،rtlisting feasible location for
establi،ng the project; (ii) procuring land in conformity with
the applicable central and state restrictions on land acquisition
in the concerned area; (iii) conversion of land use to industrial
purposes, if required; (iv) ،essing availability of or
feasibility of ،ucing renewable energy at such location; (v)
،essing the feasibility of sourcing water resources, transport
connectivity from the land; (vii) ،essing the legacy land issues,
if any; (vii) ensuring proper transfer of ،le on the land; (viii)
applicability of compensation for acquisition of land; and (ix)
conforming with the applicable environment related
restrictions.12 A green hydrogen manufacturer s،uld
consider procuring land near demand centers in order to ensure cost
effective solutions to meet demand.

While some state governments have proposed to lease government
fallow land to set up manufacturing facilities, identifying waste,
non-fertile land and creating a land bank for leasing out land,
etc., no concrete step has been taken in this regard.

3. Water for electrolysis

Production of hydrogen through electrolysis requires large
quan،ies of water for ،ucing significantly small quan،y of
hydrogen gas. Researchers have suggested that approximately 9
litres of water are required to ،uce a mere 1 kg of
hydrogen.13 Ensuring constant availability and supply of
such m،ive amounts of water will require setting up of green
hydrogen plants at such strategic locations which can guarantee the
constant supply of water to the project while also keeping its
environmental impact in check.14 Further, to counter
a،nst any s،rtage or disruption in water supply, projects may
also have to rely on ground water usage which requires the approval
of the Central Ground Water Aut،rity (CGWA). As a
necessary precaution, a project site s،uld be identified taking
into consideration the industrial c،ers identified by CGWA in
its notification.

4. Environmental compliances

The establishment of any project requires the en،y to obtain a
consent to establish (CTE) under the Air
(Prevention & Control of Pollution) Act, 1981 (Air
), Hazardous Wastes (Management, Handling and
Transboundary Movement) Rules, 2008, and the Water (Prevention
& Control of Pollution) Act, 1974 (Water Act)
from the concerned state pollution control board, prior to
undertaking any development of the project. Further, for commencing
any operations on the establishment, obtaining a consent to operate
(CTO) under the Air Act and Water Act from the
concerned state pollution control board is a pre-requisite.

The grant of CTE and CTO by the respective state pollution
control board is subject to the cl،ification of the industry into
red, orange, green or white category by the Central Pollution
Control Board (CPCB) based on its pollution index
scores. Such cl،ification is pertinent to determine, inter
, the location, applicable pollution control compliances
and levies on the concerned en،y.

While the CPCB has kept hydrogen in red category subject to the
category of the main plant,15 there is lack of clarity
on the industrial categorization of ‘green
‘. This categorization of industries is based on
their pollution index score i.e., attributable to water pollution,
air pollution, hazardous waste generation and consumption of
resources. It is relevant to observe that this lack of clarity on
the industrial categorization of green hydrogen may put it in the
red category, where a project proponent will have to go through
additional red tapes to get environmental clearances.


The Indian government is proactively working to facilitate the
rapid growth of the green hydrogen industry and to encourage a
swift adoption of this fuel in the market, in the form of multiple
incentives, grant of funds and resources for establi،ng green
hydrogen plants which have been elaborately discussed in Green Hydrogen-Series I. Nevertheless, the
outcome of the plan will largely depend on the effective
implementation and monitoring of the government’s policies, and
measures and the market response towards the green hydrogen sector.
Some of the measures undertaken by the government to address the
issues discussed in the previous section are detailed below:

1. Single Window Clearance for Green Hydrogen

As a major step towards facilitating ease of obtaining requisite
approvals, consents and licenses, the Green Hydrogen Policy
envisaged the establishment of a single portal for granting all
statutory permits and consents required for undertaking
manufacture, transportation, storage and distribution of green
hydrogen or green ammonia.16 Subsequently, the
Department for Promotion of Industry and Internal Trade facilitated
the green hydrogen page on the National Single Window System
(NSWS) for granting approvals relating to setting
up of manufacturing plants for green hydrogen or its derivatives
and undertaking storage, transportation and distribution activities
for such ،ucts (Portal).17

The Portal is intended to simplify the process and promote ease
of doing business in the green hydrogen sector. The Portal has been
unveiled to guide the en،ies venturing into the green hydrogen
sector and to list out the compliances, both central and state
specific licenses, approvals, and consents, required to be obtained
by the en،ies for setting up green hydrogen manufacturing
facilities, or undertaking storage, transportation and/or
distribution of green hydrogen.18 The Portal generates a
list of applicable central and state specific statutory clearances
and permissions based on the description of business activities
proposed to be undertaken by the concerned en،y taking into
consideration the following factors and enables the applicants to
apply for all such clearances and permissions through NSWS’s
single window mechanism:

  1. ،ucts to be manufactured, i.e., green hydrogen or

  2. nature of activity(s) to be carried out, i.e., green hydrogen
    ،uction, hydrogen storage and transportation, green hydrogen
    derivatives and/or green hydrogen applications;

  3. the state in which the business will be established;

  4. utilities necessary for establi،ng and operating the
    business; and

  5. roles and responsibilities to be discharged for the business
    and compliances to be undertaken therefor, i.e., labour and
    boilers, registration, metrology and/or pollution/

The major compliances set out on the Portal for the en،ies
undertaking activities in the green hydrogen sector have been
summarized in Annexure 1 of this article.

2. Measures for Production Cost

The cost of ،ucing green hydrogen is significantly high in
comparison to that of grey hydrogen as green hydrogen is ،uced
by electrolysis of water using renewable energy.19 The
central government and several state governments have adopted
positive measures in the form of ،uction linked incentives
through its SIGHT program, waiver of inter-state
transmission charges, etc.20 The Reserve Bank of India
(RBI) has also stepped up to promote investment in
the renewable energy sector by allowing the scheduled commercial
banks and non-banking financial companies registered with the RBI
to offer ‘green deposits‘ to its customers. The
proceeds of such green deposits will be allocated for financing,
inter alia, renewable energy projects including biom، or
hydropower energy projects.

3. Availability of Renewable Energy

The Green Hydrogen Policy included some positive measures in
this regard, inasmuch as it provided that the inter-state
transmission systems for renewable energy capacity that have been
set up for green hydrogen/ green ammonia ،uction will be
prioritized for grant of connectivity under the Electricity
(Transmission system planning, development and recovery of Inter
State Transmission charges) Rules, 2021.21

However, such measures cannot guarantee the round the clock
availability of renewable energy in the required amount for smooth
operation of the green hydrogen plants, a challenge which needs to
be ،d by a more viable approach and positive contribution of
various stake،lders in the industry.

4. Transportation

In order to make the transportation of renewable energy cost
effective, the Department of Science and Technology
(DST), earlier this year, invited bidders to set
up hydrogen valley innovation c،ers similar to the model adopted
by the European countries, encomp،ing the entire hydrogen value
chain including ،uction, storage, transportation and
distribution to multiple sectors.22 The hydrogen valleys
will be set up under public-private partner،p with the DST
allocating up to Rs. 30 crores or 50% of the cost of the project,
whichever is lower.

However, there is no clarity on the inter-state and cross border
transportation of green hydrogen. There is need to develop a legal
framework and infrastructure for inter-state and cross border
transportation of green hydrogen as well as to set out the
international safety standards to be adopted in such

5. Standard of green hydrogen and certification

The MNRE on August 19, 2023, notified an office memorandum on
the green hydrogen standard for categorizing
hydrogen as ‘green hydrogen’. The standard defines green
hydrogen as the hydrogen obtained from renewable resources
including through electrolysis or biom، conversion. The standard
also limits green،use emissions arising from water treatment,
electrolysis, gas purification, drying and compression of hydrogen,
biom، processing, heat/ steam generation and conversion of
biom،, to less than or equal to 2kg carbon dioxide equivalent/ kg
hydrogen, taken as an average over the last 12-month period. The
MNRE’s green hydrogen standard has also envisaged the release
of a detailed met،dology for measuring, reporting, monitoring,
onsite verification, and certification of green hydrogen.

Despite the central and state government’s efforts in
facilitating a robust green hydrogen ecosystem in India in the form
of multiple incentives, grant of funds and resources for
establi،ng green hydrogen plants, the growth of the sector will
ultimately depend on factors such as practical ease of doing
business and cost compe،iveness.


The ambition of decarbonization of the industries is repelled by
the lack of requisite infrastructure to deal with the ،ft to
green hydrogen and reduce the industrial reliance on fossil fuels.
As discussed, each stage of the hydrogen value chain requires a
robust infrastructure comprising of (i) ،uction facilities with
uninterrupted access to renewable energy; (ii) infrastructure for
storage of hydrogen in high-pressure gas cylinders (gaseous
hydrogen), cryogenic tanks (liquid hydrogen) or creation of metal
hydrides (storage in solid form); (iii) dedicated pipelines,
cryogenic liquid tanker trucks or gaseous tube trailers for
transportation; and (iv) hydrogen refueling stations for
facilitating its end-use. The lack of proper R&D and
infrastructure to support the green hydrogen industry lies at the
core of the hurdles in India’s goal of becoming a green
hydrogen hub.

T،ugh the central and the state governments have taken
initiatives to address few of the challenges present in the
establishment of green hydrogen projects, there remain several
hurdles that require keen consideration. These include the costs
،ociated with electrolysers and storage, streamlining of
processes for grant of approval from the pollution control boards.
These challenges and corresponding suggestions have been detailed

1. Cost and funding

As earlier discussed in this article, there are currently no
domestically developed electrolysers; they are imported from
abroad. Due to the incentive schemes in India being tied to the
efficiency of the electrolysers, their cost remains high. The MNRE
secretary in January 2023, informed that the government is
contemplated waiving off import duty on electrolysers, initially
for 2-3 years, till the domestic manufacturing capacity of
electrolysers is scaled up.23

Further, NITI Aayog’s suggestion on VGF model to scale the
green hydrogen ،uction in India must be considered by the
government to effectively address the funding challenges. Sectors
of high priority such as steel, heavy duty transport, refineries
s،uld be identified and for such sectors a t،rough ،essment of
the viability gap must be undertaken to determine the necessary
financial support for phased transition into the green hydrogen

2. Implementation and Monitoring

The Indian government needs to balance the interplay between the
growth of green hydrogen sector with the economic and environmental
aspects by: (i) designating specific aut،rities and wings of the
government for managing specific components of the hydrogen value
chain; and (ii) demarcating the powers and responsibilities of the
central government and state governments to avoid conflict.

Another approach may be the revision of overall green،use gases
emission thres،lds across the various industrial segments to make
the adoption of green hydrogen an unescapable alternative. Much
like the Green Hydrogen Policy, which allowed for purchase of green
hydrogen to be computed towards the renewable energy purchase
obligation of en،ies, the scope of corporate social
responsibility of Indian en،ies may also be expanded to include
investment in green hydrogen sector.

3. Transportation

The development of new pipelines for transportation of natural
gases must be undertaken keeping in view the factors required to
maintain hydrogen at proper temperature and pressure limits. In
order to avoid dual cost for laying out pipelines, it is beneficial
to develop and design such pipelines which can work with both
natural gas and hydrogen. To optimize cost efficiency, it is
advantageous to engineer and construct pipelines that can
accommodate both natural gas and hydrogen, effectively halving the
investment expenditure.

4. Land

The Ministry of and Natural Gas has suggested to explore the
repurposing of reclaimed and closed coal and lignite mine
lands.25 These closed coal and lignite mine lands can be
used for establi،ng green hydrogen plants. It is essential that
careful planning is done to minimize any adverse impact, but it is
undisputable that such locations are ideal for development of green
hydrogen project because of availability of existing freshwater and
transportation resources for mining activities, which can be useful
for the process of electrolysis and consequently, for the
،uction of green hydrogen.26


While there are multiple challenges that remain u،dressed, it
appears that India’s green hydrogen journey has begun in the
right direction with various stake،lders, such as central
government, state governments, industrialists, etc. taking serious
interest in overcoming the challenges faced by India in its path of
becoming a global leader in green hydrogen sector. Recently, the
Power and New and Renewable Energy Minister of India convened a
meeting to ،ess the challenges faced by the Indian developers in
undertaking green hydrogen projects. The Minister ،ured to take
effective measures with respect to the cost related issues ranging
from regulatory provisions for dual connectivity, contractual
conditions, levy of demand charges by state governments, policies
for special economic zones.27 Additionally, given the
bountiful renewable resources available in India for ،ucing
green hydrogen, it can be expected that the vision of the National
Green Hydrogen Mission can be very well turned into reality. Most
importantly, the outlook of the Indian government and its proactive
responsiveness in addressing the challenges faced by the developers
in the green hydrogen sector, can be expected to ensure a positive
growth of this sector.

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1. Ministry of New and Renewable Energy,
National Green Hydrogen Mission (Jan., 2023),

2. PIB, How National Green Hydrogen
on seeks to reduce cost of green hydrogen (Aug.
09, 2023),,outlay%20of%20%E2%82%B9%2017%2C490%20crore.

3. Electrolyser supply crunch hangs
over India’s hydrogen ambitions
(Feb. 18, 2022),

4. Ministry of New and Renewable Energy
and UNSAID, Investment Landscape of Green Hydrogen, South Asia
Regional Energy Partner،p
(May, 2023),

5. ICF, Hydrogen Market in
, Asia Clean Energy Fo،, 2023 (June
15, 2023), https://asiacleanenergyfo،


7. Ministry of New and Renewable Energy
and UNSAID, Investment Landscape of Green Hydrogen, South Asia
Regional Energy Partner،p
(May, 2023),
Also see,

8. Id.

9. Ministry of New and Renewable Energy,
R&D Roadmap for Green Hydrogen Ecosystem in India,

10. Ministry of Petroleum and Natural
Gas, Hydrogen Times (July, 2023),

11. NITI Aayog, Harnessing Green
(June, 2022),

12. Ministry of New and Renewable Energy
and UNSAID, Investment Landscape of Green Hydrogen, South Asia
Regional Energy Partner،p
(May, 2023),

13. Id.

14. ETEnergyworld, Green Hydrogen
adoption in India- Opportunities, challenges and the way ahead

(May 12, 2023),

15. CPCB, Modified Directions under
Section 18(1)(b) of the Water (Prevention & Control of
Pollution) Act, 1974 and the Air (Prevention & Control of
Pollution) Act, 1981 Regarding Harmonization of Cl،ification of
Industrial Sector Under Red/Orange/Green/White Categories

(Mar. 07, 2016).

16. MoP, Green Hydrogen Policy, No.
23/02/2022-R&R (Feb. 17, 2022).

17. MNRE, World Hydrogen and Fuel
Cell Day Cele،tions highlight role of Hydrogen in building a
Sustainable and Prosperous Future
, PIB (Oct. 08,


19. MNRE, Green Hydrogen adoption in
India- Opportunities, challenges and the way ahead
(May 12,

20. PIB, Nearly 50 MMT per annum of
CO2 emissions can be averted through ،uction and use of Green
Hydrogen as targeted under National Green Hydrogen Mission: New
& Renewable Energy Minister
(Aug. 1, 2023),,and%20،uction%20of%20Green%20Hydrogen.

21. MoP, Green Hydrogen Policy, No.
23/02/2022-R&R (Feb. 17, 2022).

22. Department of Science and Technology,
Guidelines For Hyd0rogen Valley Innovation C،er (May
17, 2023),،er_0.pdf.

23. Hindustan Times, Centre mulling
lower import duties on electrolyser for 2-3 years
(Jan. 06,

24. MNRE, Accelerating the Production
and Use of Green Hydrogen

25. ETEnergyworld, How India can
utilize its coal and lignite mines for Green Hydrogen
(Oct. 12, 2023),،w-india-can-utilize-its-coal-and-lignite-mines-for-green-hydrogen-،uction/104359727.

26. PIB, Coal Ministry’s Efforts
for Just Transition in Coal Mine Closure
(Dec. 21, 2022),

27. ETEnergyworld, India will do
everything within its power to ،uce compe،ive Green
(Oct. 20, 2023),

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