Mumbai: Reliance Industries’ $3 billion deal to sell green ammonia to South Korea's Samsung C&T Corporation takes India closer to its aspiration of becoming a green hydrogen hub, but more such deals and policy push would be needed for the country to meet its green hydrogen targets, experts said.
The 15-year agreement, starting in October 2028, is one of the largest such export deals signed by an Indian company and calms investor nerves at a time when many countries are scaling back their green fuel targets.
Yet, as per an industry body estimate, India so far has visibility on just 13% of its target to produce 5 million tonnes of green hydrogen annually by 2030 under the National Green Hydrogen Mission.
Reliance did not disclose the quantity of green ammonia that would be supplied as part of this deal with Samsung C&T. However, while announcing the deal on Monday, it hinted in a press release that this was the first of a series of such deals that it plans to strike in the coming days.
The Korean company is the holding company of the leading chaebol and is engaged in materials trading and construction, among other things.
Reliance did not respond to Mint’s query on the quantum of the supply.
This is the second large export agreement struck by an Indian manufacturer of green hydrogen. In January, Hyderabad-based AM Green signed a similar offtake agreement with Germany’s state-owned Uniper Global Commodities SE to supply 500,000 tonnes of green ammonia a year starting 2028. The gas will be supplied from the company’s upcoming facility in Kakinada, Andhra Pradesh. This is so far the largest supply agreement for green ammonia in the country, including domestic deals.
India defines hydrogen as green if the total emissions for every kilogram of hydrogen produced are less than 2 kgs of carbon dioxide equivalent. The gas is typically produced by splitting water into hydrogen and oxygen in an electrolyzer using electricity from renewable sources.
Since hydrogen is highly volatile, the most stable and efficient way of transporting it is in the form of ammonia. One tonne of hydrogen produces about 5.7 tonnes of ammonia.
Producers ready, but who are the buyers?
Indian companies that have bet on the green hydrogen ecosystem have sought the government’s help to boost demand for the cleaner fuel. Presently, green hydrogen costs over twice as much as grey hydrogen, derived from fossil fuel-based sources.
Government policies and subsidies under the National Green Hydrogen Mission, launched in January 2023, have created a “very conducive environment” for green hydrogen production in India, said Anil Taparia, chief operating officer for ACME Group’s green hydrogen and ammonia business.
“However, during the initial years, there is slight premium on green products, which can be compensated by an incentive on the offtake side or clear consumption mandates,” Taparia said.
Such an intervention would help more projects reaching final investment decision (FID) and commercial operation date (COD) stages, he said. More successful projects will also increase lender and investor confidence in the sector, which will enable the access of low-cost funds, he added.
India Hydrogen Alliance (IH2A), an industry body representing the interests of hydrogen producers, estimates that publicly disclosed projects in advanced stages so far would lead to less than 640,000 tonnes per annum of green hydrogen production against the target of reaching 5 million tonnes per annum by 2030. This includes AM Green’s Kakinada project and 13 green ammonia tenders awarded by the Solar Energy Corporation of India (SECI) to aggregate demand for fertilizer companies.
India should introduce $2.5 billion worth of additional incentives for high polluting sectors like oil refineries, fertilizers, steel and chemicals to adopt green hydrogen, IH2A said in a letter to the secretary of the new and renewable energy ministry in November.
SECI should also aggregate demand from oil refineries for green hydrogen to further aid domestic production, it said.
“Slow public procurement and limited domestic industrial offtake commitments risk stalling green hydrogen projects and plans for green hydrogen and electrolyzer production, putting India’s National Green Hydrogen Mission (NGHM) and supply side support through the NGHM SIGHT Scheme at risk,” the industry lobby said in its letter, a copy of which Mint has seen.
The government has committed fiscal support of ₹19,744 crore to the green hydrogen mission by FY30. The capital will be used to incentivize local manufacturing of electrolyzers as well as for aggregating demand for green hydrogen.
Policy interventions have led to aggregation of demand of 724,000 tonnes a year of green ammonia through 13 tenders for fertilizer companies in June last year. However, supply agreements for these projects are yet to be signed. The green ammonia companies will set up plants only once these agreements are inked.