Powering India’s Green Hydrogen Future
An overview of the billing and payment mechanisms enabling continuous production from intermittent renewable energy sources across the nation.
The Core Challenge: Bridging the Gap
Green Hydrogen and Ammonia plants require a constant, 24/7 power supply. However, their primary power sources—solar and wind—are intermittent and often located in different states, hundreds of kilometers away from the production facility.
Renewable Plant
(e.g., Gujarat)
Intermittent Power
National Grid
Interstate Transmission
Process Plant
(e.g., Odisha)
Continuous Demand
The Billing Framework: A Three-Part Tariff
Monthly Bill Composition
For high-tension industrial consumers like Green Hydrogen plants, the monthly electricity bill isn’t just about consumption. It’s a structured tariff designed to cover both variable energy usage and the fixed cost of maintaining grid infrastructure.
- 1. Fixed / Demand Charges: A charge based on the maximum contracted power capacity (in kVA). This is payable monthly, regardless of how much energy is used, ensuring power is always available on demand.
- 2. Energy / Consumption Charges: The variable part of the bill, based on the actual units of electricity (in kWh) consumed. Rates often vary by time of day.
- 3. Other Charges: Includes various duties, taxes, and adjustments levied by state and central authorities.
Typical Bill Breakdown
Energy charges form the largest portion of the bill, making consumption management critical for cost efficiency.
Key Mechanisms for Cost & Supply Management
Time-of-Use (ToU) Tariffs
Plants can significantly reduce costs by shifting heavy consumption to off-peak hours when electricity rates are lower. This strategy is vital for optimizing the operational cost of electrolyzers.
Renewable Energy Banking
Surplus renewable power generated during peak sun or wind hours can be “banked” with the state grid. This stored energy can be withdrawn later, ensuring a round-the-clock supply. A small banking charge (e.g., ~8%) is typically levied on the banked units.
Inject 100 kWh to Grid
⬇️Withdraw ~92 kWh Later
Government Waivers & Concessions
The National Green Hydrogen Mission provides significant financial incentives, primarily by waiving hefty transmission charges for interstate power wheeling. This makes it economically viable to source power from the cheapest renewable locations.
The End-to-End Billing & Settlement Flow
RE Generation & Injection
Solar/wind plant generates power and injects it into the local state grid.
Power Purchase Agreement (PPA)
A “Sleeved PPA” governs the transaction, with an intermediary managing grid settlements under a pre-agreed tariff.
Power Drawal
The Green Hydrogen plant draws the equivalent amount of power from its local state grid.
Monthly Billing
The local utility bills the plant based on the three-part tariff (Fixed + Energy + Other charges).
Apply Waivers & Settle
Government waivers (like ISTS charges) are applied, drastically reducing the final bill. Payments are settled via the PPA.
Financial Impact: The Bottom Line
100%
ISTS Charge Waiver
Complete waiver on Interstate Transmission System charges, the single biggest enabler for cross-country renewable power procurement.
25
Years of Benefit
The ISTS waiver is applicable for 25 years for all projects commissioned before Dec 31, 2030, providing long-term cost certainty.
~92%
Energy Realization
Through banking, plants can utilize over 90% of their generated intermittent power on a round-the-clock basis, ensuring high asset utilization.
Green Hydrogen Power Bill Estimator
Estimate monthly power costs based on a hypothetical three-part tariff model.
Input Parameters
Estimated Monthly Bill
Total Fixed Charges
₹0.00
Total Energy Charges
₹0.00
Total Bill Before Waivers
₹0.00
Estimated Total Savings (ISTS Waiver)
₹0.00
This is a model and does not account for all regulatory and tax variations.
Understanding Basic Terms
Fixed Charge Rate (₹/kVA)
This charge is based on power demand, measured in kVA (kilovolt-amperes). It’s essentially a fee for the capacity you need to pull from the grid at any given moment. Think of it as a reservation fee for a table at a popular restaurant. Even if you don’t use the table for the entire night, you still pay for the reservation because the restaurant has to keep that table available for you.
Similarly, the electricity company has to invest in and maintain a vast network of infrastructure—transformers, transmission lines, substations—that is capable of meeting your maximum power requirement at all times, even if you only reach that peak for a brief period. The fixed charge ensures the utility recovers these fixed costs of building and maintaining the power grid, regardless of your actual energy consumption.
Off-Peak Rate (₹/kWh)
This charge is based on energy consumption, measured in kWh (kilowatt-hours). This is the cost for the actual electricity that you use. It’s the variable part of your bill that changes based on your usage. If you consume more energy, this part of the bill goes up; if you consume less, it goes down. It’s like paying for the food you actually eat at the restaurant after you’ve paid for the table reservation.
The reason for the different rates (off-peak, standard, and peak) is to encourage large consumers to shift their usage to times when the grid isn’t under stress. This helps balance the load on the grid, preventing power outages and making the system more efficient.
In short, the two different units represent two separate charges on your bill:
- ₹/kVA is a fixed cost for the capacity you have available.
- ₹/kWh is a variable cost for the energy you actually consume.
Together, they form a two-part tariff that ensures the utility can recover both its fixed costs and its variable costs. Does that make the distinction clearer?
