Export-oriented green hydrogen projects may get govt's fiscal support
- The Indian government is considering amendments to Special Economic Zone (SEZ) rules to accommodate renewable energy plants for captive consumption in SEZs specifically for green hydrogen projects.
- This potential change, currently under review by the Ministry of Commerce, aims to allow fiscal benefits for export-oriented green hydrogen initiatives.
Key Points
- Green hydrogen developers seek an amendment to the rule issued by the commerce ministry’s SEZ Division
- Which currently restricts tax and duty benefits for non-conventional power plants set up for captive consumption in SEZ units.
Multi-Locational SEZs
- Developers propose the notification of SEZs that can be spread across multiple locations, especially for green hydrogen projects.
- This adjustment would facilitate the use of wind energy, as turbines can be located at a considerable distance from each other
- Overcoming the current requirement for contiguous land area.
Relaxation of Land Area Requirement
- The commerce ministry is open to relaxing the contiguous land area requirement of 50 hectares for SEZs, specifically for green hydrogen projects.
- This relaxation is crucial for export-oriented green hydrogen projects utilising wind energy, as it allows discontiguous patches of land for wind turbine installations.
Amendment Impact on Fiscal Benefits
- The suggested amendment aims to make renewable energy plants for captive consumption eligible for fiscal benefits, aligning them with plants meant for selling power outside of SEZs.
Government's Response and Further Directions
- The Ministry of New and Renewable Energy (MNRE) directs the Ministry of Power and the Ministry of Ports, Shipping and Waterways to address transmission and logistics issues faced by green hydrogen developers.
Reduced Bank Guarantees
- MNRE urges the power ministry to reduce bank guarantees required for grid connectivity of renewable energy plants from Rs 10 lakh per megawatt to Rs 5 lakh per megawatt.
Dual Connectivity
- MNRE requests the power ministry to provide dual connectivity for green hydrogen projects through both central and state transmission systems.
Upcoming Meetings and Proposals
- MNRE proposes a separate meeting with MoPSW to discuss land allocation near ports for green hydrogen projects.
- MoPSW is urged to set up common infrastructure for bunkering of green ammonia at ports, supporting the derivatives of green hydrogen.
Prelims Takeaway
- Renewable Energy