India's northeastern state of Assam has unexpectedly paused its flagship green hydrogen policy, according to government and industry sources, a move that has surprised and concerned investors already grappling with reduced incentives for clean energy projects. This decision, disclosed on July 11, casts uncertainty over millions of dollars in potential investments in a region Assam sought to position as a hub for renewable energy, despite its historical lag in adoption.

Major energy firms, including NTPC Green Energy Ltd., Larsen & Toubro Ltd., Singapore-listed Sembcorp Industries Ltd., and Abu Dhabi-based Ocior, had expressed initial interest in bidding for green hydrogen projects in Assam. The abrupt halt in policy development has forced these companies to re-evaluate their financial projections and investment strategies, as confirmed by three sources familiar with the matter who requested anonymity due to the sensitivity of discussions.

Assam's Principal Secretary at the power department, Krishna Kumar Dwivedi, acknowledged that "Every state keeps on revising its policy and what incentive it can give based on the demand and requirement," but declined to elaborate on the specific reasons for the policy pause or the earlier cuts to incentives. The state's clean energy policy was initially unveiled in February, but by June, it had significantly reduced transmission subsidies and increased bank guarantee requirements for solar projects, compared to the initial framework.

Industry analysts emphasize the paramount importance of policy stability for attracting long-term capital. Debabrat Ghosh, head of India at Aurora Energy Research, stated, "Investors look for long-term stability even if policies aren't best designed." This sentiment is echoed by a large Indian renewables developer, who noted that Assam's limited indigenous renewable energy sources would necessitate importing power from neighboring states, driving up operational costs by an estimated 10%-15% without adequate transmission subsidies. This cost disadvantage could render Assam less competitive compared to other Indian states offering more favorable policy environments.

The Assam government is reportedly working on a revised draft policy, which is anticipated by the end of July. The companies involved did not respond to requests for comment. The green hydrogen sector, which produces hydrogen using clean electricity, is globally recognized as a crucial tool for industrial decarbonization and limiting global warming. However, the success of such initiatives hinges on clear, consistent, and supportive regulatory frameworks.