World Bank to provide a further $1.5 billion for Indian renewable projects

The new loan from the World Bank will help India accelerate development of a “vibrant” market for renewable hydrogen. $1.5 billion will go towards programs that support the production of hydrogen via electrolysis, as well as the manufacture of electrolyser units themselves. The new loan will also help increase the penetration of renewable energy in India’s national grid. In June 2023, an initial $1.5 billion was provided from the World Bank to assist (amongst other items) the waiver of interstate transmission charges for electrolytic hydrogen projects – a key plank in India’s national hydrogen policy.

The loan (dubbed the “Second Low-Carbon Energy Programmatic Development Policy Operation” by the Bank) is expected to result in the production of at least 450,000 tons of renewable hydrogen and 1.5 GW of electrolysers per year from 2025-26. It is also part of the World Bank’s Hydrogen for Development (H4D) Partnership. In February this year, the World Bank laid out a roadmap for scaling hydrogen project finance, identifying “emerging markets and developing countries” (like India) as key locations for investment.

The World Bank is pleased to continue supporting India’s low-carbon development strategy which will help achieve the country’s net-zero target while creating clean energy jobs in the private sector. Indeed, both the first and second operations have a strong focus on boosting private investment in green hydrogen and renewable energy.

Auguste Tano Kouame, World Bank Country Director for India in his organisation’s official press release, 28 June 2024

India has taken bold action to develop a domestic market for green hydrogen, underpinned by rapidly expanding renewable energy capacity. The first tenders under the National Green Hydrogen Mission’s incentive scheme have demonstrated significant private sector interest. The operation is helping in scaling up investments in green hydrogen and in renewable energy infrastructure. This will contribute towards India’s journey for achieving its Nationally Determined Contributions targets.

Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, World Bank Team Leaders for the Operation in their organisation’s official press release, 28 June 2024

New hydrogen subsidy scheme launched

Shortly after the loan was finalised, the Solar Energy Corporation of India announced that it would launch a near-identical renewable hydrogen subsidy scheme to one run in late 2023. Subsidies for producers will run over three years, with up to 60 cents per kilogram of hydrogen available for the first year for the winning bidders. The scheme will look to support the production of 450,000 tons per year of electrolytic hydrogen in India.