MNRE Issues MSA for Electrolyser-as-a-Service to Accelerate Green Hydrogen Adoption

The Ministry of New and Renewable Energy (MNRE), vide Office Memorandum No. 353/43/2026-NT dated July 23, 2026 (the “Office Memorandum“), has issued a Model Service Agreement (MSA) for procurement of Green Hydrogen under the Electrolyser-as-a-Service (EaaS) model. The MSA has been developed under the National Green Hydrogen Mission to provide a standardised contractual framework for industrial consumers procuring green hydrogen from third-party developers without investing in electrolyser infrastructure.

Under the proposed EaaS model, the electrolyser developer is responsible for designing, financing, installing, owning, operating and maintaining the hydrogen generation plant on a Build-Own-Operate (BOO) basis at the consumer’s premises. In contrast, the industrial consumer is required to:

• provide the project site and necessary utilities, including power, water and other essential infrastructure;
• facilitate uninterrupted access to the site for construction, operation and maintenance; and
• procure the green hydrogen generated from the plant in accordance with the contractual arrangements.

The MSA adopts a long-term commercial framework intended to provide revenue certainty to developers while ensuring assured supply for consumers. In this regard:

• the MSA prescribes an initial 15-year contract period, extendable by mutual agreement;
• consideration is structured through a Fixed Monthly Payment, comprising lease charges and operation & maintenance charges, with partial escalation linked to the Consumer Price Index for Industrial Workers (CPI-IW);
• payment security is proposed through a revolving Letter of Credit equivalent to three months’ Monthly Lease Rent; and
• additional payments and performance adjustments are contemplated for excess hydrogen supply, plant availability and energy consumption.

The Office Memorandum also introduces a detailed performance-based operating framework by prescribing measurable technical and operational benchmarks. These include:

• guaranteed hydrogen and oxygen purity levels and committed production volumes;
• minimum annual plant availability requirements;
• Threshold Energy Consumption (TEC) benchmarks together with incentives for improved efficiency and penalties for excess electricity consumption;
• performance guarantee testing following commissioning; and
• periodic operational reporting and maintenance obligations throughout the contract period.

Recognising the evolving regulatory framework governing green hydrogen, the MSA clearly allocates statutory and compliance responsibilities between the parties. In particular:

• the industrial consumer is responsible for obtaining statutory approvals and securing Green Hydrogen Certification under the applicable MNRE framework;
• the electrolyser developer is required to provide operational data and facilitate certification-related audits;
• the agreement incorporates compliance requirements relating to the Public Procurement (Preference to Make in India) Order, 2017 issued by the Department for Promotion of Industry and Internal Trade and the restrictions on procurement from bidders from countries sharing a land border with India under Rule 144(xi) of the General Financial Rules, 2017, in each case only where the consumer is a government entity, a central or State public sector undertaking or another entity to which Government of India public procurement guidelines apply; and
• both parties are required to comply with applicable environmental, labour, health and safety requirements.

The MSA also seeks to provide contractual certainty by incorporating provisions relating to force majeure, insurance, events of default, termination, limitation of liability, intellectual property rights, confidentiality and dispute resolution by arbitration under the Arbitration and Conciliation Act, 1996. Importantly, the agreement provides that it cannot be terminated merely for convenience and prescribes the contractual consequences in the event of default by either party, thereby seeking to balance long-term investment protection with operational certainty.

MNRE has, however, clarified that the MSA is a purely facilitative and reference document and that parties remain free to negotiate, alter, modify, add to or delete its provisions to suit their commercial requirements.