India rolls out world's largest green ammonia tender

New Delhi: State-owned Solar Energy Corporation of India Ltd (Seci) is set to finalise the world's largest green ammonia tender on 26 June for the production and supply of 724,000 tonnes of green ammonia annually across 13 fertiliser plants, according to a statement from the ministry of new and renewable energy on Monday.

The largest tender so far is the one bagged by Fertiglobe last year to supply up to 40,000 tonnes of green ammonia to Germany annually.

Seci issued the tender for 724,000 tonnes over a year ago on 7 June 2024.

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The development assumes importance as India, which uses approximately 17 to 19 million tonnes of ammonia annually, with more than 50% of its hydrogen requirement used in fertiliser production, relies on imported natural gas for producing ammonia.

“Seci’s initiative is expected to drastically cut this dependence, reduce exposure to global gas price fluctuations, and lower the trade deficit,” said the statement by the ministry of new and renewable energy.

Ammonia, an essential component in urea and other nitrogen-based fertilisers, is currently produced using fossil fuels, leading to high greenhouse gas emissions. Seci is attempting to decarbonise the fertiliser sector by issuing a tender that leverages renewable energy to produce green hydrogen and ammonia, promoting low-emission, domestic fertiliser production, the statement said.

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Producing green hydrogen emits less than 2 kg of carbon dioxide per kilogram, compared to up to 12 kg of carbon dioxide from conventional grey hydrogen, the MNRE statement said.

"Seci will anchor demand aggregation and sign long-term offtake agreements, providing producers with market certainty over a 10-year contract period," the statement said, indicating that producers have a guaranteed buyer for their output for the said period.

To encourage participation, the government is offering Production Linked Incentives (PLI) of ₹8.82/kg in the first year of production, ₹7.06/kg in the second year of production, and ₹5.30/kg in the third year of production, amounting to a total support of ₹1,533.4 crore.

The government has also committed to a Payment Security Mechanism (PSM) to de-risk potential payment delays from fertiliser companies and assure suppliers of steady cash flows.

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The bidding process will follow Seci’s e-reverse auction model, in which companies compete by offering the lowest price they need to produce hydrogen.

India's National Green Hydrogen Mission, wherein the government targets the production of 5 million tonnes of green hydrogen annually by 2030, assumes importance as it will contribute to the country's net-zero carbon emission target by 2070.

The statement continued, “Domestic green ammonia production is expected to enhance resilience during geopolitical disruptions and generate new employment opportunities."