India’s Second Electrolyser Manufacturing Subsidy Auction: Successes and Challenges
Eleven companies achieved partial and full success in their bids; aimed to support 1.5 GW of annual manufacturing capacity.
India’s second electrolyser manufacturing subsidy auction has seen significant interest, with eleven companies achieving success in their bids. The auction aimed to support 1.5 GW of annual manufacturing capacity, but it was oversubscribed with bids amounting to nearly 2.8 GW.
The auction was divided into different “buckets” to encourage the development of indigenously developed technology. Specifically, 300MW and 100 MW were ringfenced for larger and smaller manufacturing capacities, respectively, under buckets 2A and 2B. This structure allowed companies to place bids across multiple categories, effectively hedging their bets.
Adani secured a full award for its bid in the small-scale Indian-developed technology bucket (30 MW) and was partially successful in the large-scale Indigenous technology bucket (71.5 MW of its 101.5 MW bid). However, its bid for 101.5 MW in the open technology category (Bucket 1) was unsuccessful. Similarly, Suryaashish KA1 Solar Park placed bids in both the small-scale and large-scale indigenous technology buckets but only received support for 10 MW in the former.
Avaada, another prominent bidder, saw only a partial allocation, with 49.5 MW of manufacturing capacity supported from its 300 MW bid in the any-technology bucket.
The bids were evaluated based on energy consumption metrics, with all successful bids demonstrating efficiencies below 50 kWh per kilogram of hydrogen produced. Additionally, the local value addition, measured by the sales value of the electrolysers relative to the cost of imported materials and services, was a critical factor in determining subsidy awards.
The subsidy scheme offers a base rate of 4,440 Rupees ($53.54) per kilowatt of electrolyser capacity sold in the first year. This amount decreases progressively over five years, with rates dropping to 3,700 rupees in the second year, 2,960 Rupees in the third, 2,220 Rupees in the fourth, and 1,480 Rupees in the final year.
However, companies face penalties if they fail to meet the local value-addition targets they promised in their bids. If local value addition falls below 98% of the quoted amount, the subsidy could be partially withheld, and if it drops below 95%, the subsidy could be entirely revoked. Additionally, if the electrolyser performance degrades by more than 2 kWh per kilogram of hydrogen or exceeds a consumption threshold of 56 kWh per kilogram of hydrogen, the manufacturer could forfeit the subsidy for that year.
This auction highlights the strong interest in India’s electrolyser manufacturing sector and underscores the challenges companies face in meeting strict performance and localisation criteria to secure government support.
