Strategic Intervention For Green Hydrogen Transition (SIGHT) Programme

Policy Update
Shubhika Rathi

On January 4, 2023, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved the National Green Hydrogen Mission. This mission is integral to India’s ambition to achieve energy independence by 2047 and to meet its climate goals, which include reaching net zero emissions by 2070, reducing the emissions intensity of its GDP by 45% by 2030 from 2005 levels, and ensuring that 50% of its total installed capacity is based on non-fossil-fuel energy resources by 2030.

The Strategic Intervention for Green Hydrogen Transition (SIGHT) Programme is designed to incentivize the supply side of green hydrogen production through financial incentives aimed at the domestic manufacturing of electrolyzers and green hydrogen production. The Ministry of New and Renewable Energy (MNRE), through the Solar Energy Corporation of India Limited (SECI), is tasked with implementing this scheme.

Objectives of SIGHT

Maximizing the Indigenous electrolyzer manufacturing capacity
Achieving lower levelised cost of hydrogen production
Ensuring global competitive performance and quality of products
Progressively enhancing the domestic value addition
Supporting established and promising technologies

Functioning

The SIGHT Programme is structured to stimulate the growth of the green hydrogen value chain in India through two main components. The first component is the Incentive Scheme for Electrolyser Manufacturing. This initiative seeks to boost local electrolyzer manufacturing, reduce the overall cost of hydrogen production, overlook that products meet international standards for performance and quality, steadily increase domestic value addition, and support both established and new electrolyzer technologies.The scheme is scheduled to be implemented from FY 2025-26 to FY 2029-30 with a total financial outlay of INR 4,440 crore.

The second component is the Incentive Scheme for Green Hydrogen Production. This part of the program focuses on maximizing the production of green hydrogen and its derivatives, enhancing the cost-competitiveness of green hydrogen in comparison to fossil-based alternatives, and encouraging the large-scale utilization of green hydrogen and its derivatives. It is also set to run from FY 2025-26 to FY 2029-30, with a total outlay of INR 13,050 crore.

Performance

The Request for Selection (RfS) issued in July 2023 and March 2024 resulted in significant industry interest, with 21 companies bidding for a combined electrolyzer manufacturing capacity of 3.4 GW. On 12th January 2024, 1,500 MW capacity was awarded to 8 companies, including Reliance Electrolyser Manufacturing Limited and L&T Electrolyser Limited, highlighting a substantial step towards reducing import dependency and promoting technological diversity.

In parallel, the green hydrogen production initiative, with a proposed budget of Rs. 13050 crores, was equally robust. Notified on 28th June 2023, the scheme invited bids for 450,000 tonnes of green hydrogen production in July 2023. The response was overwhelming, with 14 companies proposing a total capacity of 553,730 metric tons per annum. By January 2024, 412,000 tons per annum capacity was awarded to 10 companies, including major players like Adani New Industries Limited, positioning India as a competitive player in the global green hydrogen market. This assertive and data-driven approach underlines the SIGHT Scheme’s success in catalyzing industry participation and capacity building, driving India closer to its green energy goals.

Impact

The national green hydrogen mission is expected to lead to the development of 5 MMT Green Hydrogen production capacity per annum by 2030. It is estimated that nearly 50 MMT per annum of CO2 emissions can be averted through the production and use of the targeted quantum of Green Hydrogen. India spends over $160 billion of foreign exchange every year on energy imports. These imports are likely to double in the next 15 years without remedial action.

Domestically produced green hydrogen can translate to a net energy import savings of $246–$358 billion cumulatively between 2020 and 2050 ($3–$5 billion between 2020 and 2030 alone). This is on account of a reduction in both natural gas imports as grey hydrogen is replaced with green hydrogen and oil imports as long haul freight transitions to hydrogen fuel cell trucks.

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Emerging Issues

Temporary Incentives and Technological lags: The SIGHT Incentives are only valid for three years. Although it provides financial support for green hydrogen production and electrolyzer manufacturing regardless, the global demand can’t be met until there’s a reduction in the input cost of renewable energy. Outdated infrastructure and slow adoption of emerging technologies threaten the program’s long-term sustainability. A report by The Energy and Resources Institute (TERI) suggests that nearly 60% of India’s existing hydrogen production infrastructure requires immediate upgrades to be compatible with green hydrogen processes.
Fragmented Efforts Hamper Efficiency: Disjointed efforts by various stakeholders – government, industry, and academia – are hindering overall program effectiveness. A 2023 study by the International Renewable Energy Agency (IRENA) revealed that a lack of clear communication channels between these entities has led to duplication of efforts and inefficiencies. A recent report by the World Economic Forum titled Green Hydrogen: Enabling Measures Roadmap for Adoption in India highlighted limited on-the-ground traction for green hydrogen. It also noted that key players are mostly adopting a ‘wait-and-watch’ approach. Until and unless the public and private sectors come up together the cost-effectiveness and future of the green hydrogen transition will be difficult.
Well-trained manpower on the ground: A significant mismatch exists between the skills imparted through current educational programs and the requirements of the green hydrogen industry. A 2024 survey by the National Skill Development Corporation (NSDC) found that over 70% of industry employers expressed dissatisfaction with the job readiness of graduates in the clean energy sector. Companies should incorporate training programs for recent graduates and students to bridge the skill gap, some companies like h2e Power Systems launched an 11-month training program called ‘UrjaUdhyami’ to train & develop human resources.

Conclusion

India’s Strategic Interventions for Green Hydrogen Transition (SIGHT) program indicates the nation’s ambition to lead in clean energy. With financial incentives aimed at boosting domestic green hydrogen production, the program has enthusiastic support from industry leaders.

Despite its ambitious climate goals and the promise of the SIGHT program, India relies on coal for about 70% of its power generation and aims to add 17 gigawatts of coal-based power generation capacity. This raises a critical question: Can India truly champion clean energy while simultaneously investing in fossil fuel projects? The success of the SIGHT program hinges on India’s ability to align its clean energy goals with its current energy practices. By adopting a holistic approach, we can transform this initiative into a foundation for a sustainable future.

Acknowledgment: Shubhika Rathi is a research intern at IMPRI and is pursuing her Bachelor’s in Economics at Symbiosis School of Economics.

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