Assam pauses green hydrogen policy in setback to investors

Assam has put its flagship green hydrogen policy on hold, government and industry sources said, surprising investors already hit by a cut in incentives for clean energy projects.

The state, the largest in the northeast, has sought to attract major investments in a region that has lagged behind much of the country in renewable energy adoption, offering financial incentives and waivers to bring in electricity.

Energy firms, including NTPC Green, Larsen And Toubro, Singapore-listed Sembcorp, and Abu Dhabi-based Ocior, expressed initial interest in bidding for green hydrogen projects in Assam, four sources familiar with the matter told Reuters.

Assam's decision to pause the green hydrogen policy surprised some of the companies, forcing them to recalibrate potential returns and investment plans worth millions of dollars, three of the sources said.

The state is now working on a new draft policy, which is expected by the end of this month, the government official said.

The companies did not respond to Reuters' emails seeking comment. The industry officials and sources declined to be identified as they are not authorised to speak on the matter.

Green hydrogen is produced using clean electricity and is seen as a decarbonisation tool to help limit global warming.

"Every state keeps on revising its policy and what incentive it can give based on the demand and requirement," Krishna Kumar Dwivedi, principal secretary at Assam's power department, said without elaborating.

He did not provide details on why Assam is holding back on the policy or the reasons for cuts in previously announced incentives.

The clean energy policy was first unveiled in February. In June, Assam sharply reduced transmission subsidies and increased bank guarantees in its solar policy compared to the initial framework.

"Investors look for long-term stability even if policies aren't best designed," said Debabrat Ghosh, head of India at Aurora Energy Research.

An official from a large Indian renewables developer said the lack of renewable energy sources in Assam will make green hydrogen projects in the state dependent on its neighbours for power, which will drive up costs and lower competition.

"Without adequate subsidies for transmission, power costs could be 10%-15% higher. Unless such costs are reduced, Assam will fall behind other states with more competitive policies," the official said.