Energetica India Magazine March 2022

Green Hydrogen Policy a Positive Step towards Energy Transition Plans: Report AP High Court’s Order Reinforcing the Sanctity of PPAs, a Positive for RE IPPs: ICRA Credit rating agency ICRA has said that the Government’s recently announced Green Hydrogen policy is a positive step towards its energy transition plans to support the significant Renewable Energy (RE) capacity addition in the country. The Government of India (GoI) has re- cently notified a Green Hydrogen Policy last month, in line with its strong poli- cy focus on renewable energy, a path of net-zero energy transition by 2070. As per ICRA estimates, the majority of the hydrogen demand currently in In- dia pertains to the industrial segment (i.e. refining, fertilisers & chemicals), at about 6 MMT in FY2020, which is pro - jected to grow at a CAGR of 3.5-4 per cent till FY2030. The consumption of hydrogen is cur- rently met through a steam reforming process of fossil fuels i.e. Grey Hydro- gen. Explaining about ICRA’s recent report on Green Hydrogen, GirishkumarKad- am, Senior Vice President & Co-Group Head - Corporate ratings, ICRA, said, “The policy by the Ministry of Power, Government of India (GoI) for Green Hydrogen has various supportive mea- sures and thus remains a positive step. Even in a scenario of 30 per cent of hydrogen demand to be met through Green Hydrogen by 2030, incremental renewable (RE) capacity requirement is estimated to remain significant at about 60 GW. This is over and above the RE addition to meet all India en- ergy requirements. From the industrial off-taker’s perspective, Green Hydrogen is currently estimated to remain costli- er by about US$ 3.5-4 /Kg against Grey Hydrogen. The cost competitiveness of Green Hydrogen would remain contin- gent upon the reduction in capital cost and an improvement in the energy effi - ciency level of electrolyser, besides the cost of RE procurement.” The High Court (HC) of Andhra Pradesh (AP) vide its order on March 15, 2022 in the matter of PPA tariff renegotiation, initiated by Government of Andhra Pradesh (GoAP) for wind and solar power projects, has set aside its previous order issued in September 2019 by a single judge bench of the HC. The AP High Court in its order dated September 2019 had ordered the AP state distribution utilities (or discoms) to make the payments at interim tar- iff of Rs. 2.43/2.44 per unit, instead of PPA tariff and had set aside the order issued by GoAP earlier in July 2019, to form a high-powered committee to re- view the wind and solar power tariffs. The HC in its latest order has thus re- inforced the sanctity of power purchase agreements (PPAs) signed between the wind & solar (or renewable energy / RE) independent power producers (IPPs) and state discoms. As per the order, the HC has directed the state discoms to honor the terms of the signed PPAs and clear the pending payments, as per the agreed tariff under the PPA within six weeks from the date of the order. Commenting further on this,Mr. Girish - kumarKadam, Senior Vice President & Co-Group Head - Corporate ratings, ICRA,said,“The order issued by the AP High Court upholding the sancti - ty of the signed PPAs is a significant positive development for the renewable energy sector and thus, will provide a major liquidity relief for the affected IPPs in the state. Pending resolution of PPA tariff renegotiation matter has been a key concern for the RE sector and in turn affected the credit profile of wind and solar IPPs in AP, especial - ly the entities belonging to relatively weaker sponsor group. However, timely implementation of the HC order by the discoms remains a critical monitorable, given the weak financial profile of the discoms in AP marked by continued losses and large debt dependence.” 13 energetica INDIA- Mar_2022 MARKET RESEARCH