MNRE India: EAAS Model Service Agreement Standardizes Green Hydrogen

• India's MNRE issued a Model Service Agreement for "Electrolyser as a Service" (EAAS) on July 23, 2026.
• The agreement standardizes risk allocation, performance guarantees, and responsibilities for green hydrogen projects.
• Service Providers will design, build, own, and operate H2 Plants on sites provided by Service Recipients under a BOO model.
• Service Providers retain exclusive ownership and operational control, while Service Recipients pay monthly fees and provide security deposits.
• This framework aims to streamline contract negotiations and improve the ease of doing business in the green hydrogen sector.

The introduction of the MNRE EAAS Model Service Agreement India marks a pivotal moment for the green hydrogen sector, particularly for those involved in India renewable energy contracts.

The Ministry of New and Renewable Energy (MNRE) in India has introduced a significant regulatory framework for the burgeoning green hydrogen sector. On July 23, 2026, the MNRE issued an official memorandum unveiling its Model Service Agreement for "Electrolyser as a Service" (EAAS). This pivotal document is designed to establish clear industry benchmarks for contractual arrangements within the green hydrogen ecosystem.

The primary objective behind the introduction of this MNRE EAAS Model Service Agreement India is to foster a more predictable and efficient business environment. It seeks to standardize crucial aspects such as the allocation of risks, the establishment of performance guarantees, and the precise division of operational responsibilities between parties. By doing so, the MNRE aims to significantly enhance the ease of conducting business and streamline the often-complex negotiation processes that occur between developers of green hydrogen projects and their prospective consumers.

Under the stipulations of this new Electrolyser as a Service model contract, the Service Provider assumes a comprehensive role in the development and operation of the hydrogen production infrastructure. This entity is tasked with the design, construction, ownership, operation, and ongoing maintenance of the electrolytic hydrogen plant, commonly referred to as an H2 Plant. Crucially, this arrangement operates on a Build, Own, and Operate (BOO) basis, with the plant situated on a site specifically designated and provided by the Service Recipient.

The model agreement explicitly grants the Service Provider exclusive rights concerning the H2 Plant, encompassing full ownership, legal title, and complete operational control. It is unequivocally stated that no rights of tenancy, hire-purchase, financing, or deferred sale are to be created in favor of the Service Recipient, reinforcing the Service Provider's sole proprietorship. Furthermore, the Service Provider is obligated to secure all necessary insurance coverage for the H2 Plant and retains the right to encumber the asset for the purpose of securing financing.

In exchange for these services, the Service Recipient is required to make monthly payments. This consideration covers both the supply of the green hydrogen product and the operational and maintenance (O&M) charges associated with the H2 Plant. The agreement allows for an annual escalation of this consideration, indexed to the consumer price index for industrial workers, as published by the Department of Labour. To ensure financial security, the Service Recipient must furnish milestone-based security deposits and provide payment assurance through a revolving letter of credit. Beyond financial commitments, the Service Recipient's responsibilities also include providing the designated site for the H2 Plant and managing all associated civil work.

The introduction of the MNRE EAAS Model Service Agreement India marks a pivotal moment for the green hydrogen sector, particularly for those involved in India renewable energy contracts. By providing a standardized framework, this model contract is expected to significantly reduce the complexities and timeframes typically associated with negotiating bespoke agreements for green hydrogen projects. This standardization is crucial for accelerating the deployment of such projects across the nation.

For developers and consumers alike, the clarity on risk allocation, performance benchmarks, and defined responsibilities offers a more secure and predictable environment for investment and engagement. This structured approach is anticipated to attract further investment into the green hydrogen value chain, fostering growth and innovation. The explicit detailing of ownership, operational control, and financial mechanisms within this green hydrogen project agreement India provides a robust foundation, minimizing potential disputes and facilitating smoother project execution. Ultimately, this initiative underscores India's commitment to scaling up its green energy capabilities and positioning itself as a leader in sustainable energy solutions.

Lawyers advising green hydrogen project developers or consumers in India must familiarize themselves with this new MNRE Model Service Agreement. It standardizes key contractual terms, risk allocation, and payment structures, which will directly impact contract drafting, negotiation strategies, and compliance for future 'Electrolyser as a Service' projects.

Source: Information derived from an official MNRE release