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Business News/ News / India/  ‘Govt will invite bids for green ammonia projects in 6 months’

The government plans to invite bids for setting up green ammonia projects within six months to reduce import dependence, Union power and new and renewable energy minister Raj Kumar Singh said. The move assumes significance given India imports substantive volumes of ammonia each year to produce fertilizers. In an interview, Singh also spoke about India’s growing electricity demand, solar power tariffs and problems due to pending power purchase agreements (PPAs). Edited excerpts:

India’ energy transition and the pathway will define the way ahead for our economic trajectory. What is happening there?

Only for fertilizer manufacturing, India imports significant volume of ammonia per year. I will have a meeting with the ministries of fertilizer, petroleum and other concerned ministries.

What I am saying is, basically, begin with an obligation that a certain percentage of hydrogen will be green. You need ammonia, you are importing ammonia. Let’s begin with a certain percentage—say 1% which is a huge number at our base. Let’s have a trajectory, whereby you keep on increasing the percentage of green ammonia. That is what we have discussed in our ministry. But I have to discuss with other ministries and I have to take it to the cabinet.

We are discussing this that there should be some obligation of blending. This is our concept. This has to be discussed first with the concerned ministries about what kind of trajectory they will be comfortable with. Hopefully, we will be one of the earliest nations to transition to green hydrogen and green ammonia and set up a pathway and roadmap for transition.

Also read Why Dalit students are facing a fund crunch in India’s educational institutions

How will this be done?

Green ammonia will only be through bids. First, we will start with green ammonia.

When do you see these bids happening?

We want to be at the forefront of that change. I am looking at a maximum of six months before we come out with the bids for green ammonia. That will be a landmark. The bid will be conducted by SECI (Solar Energy Corp. of India Ltd).

How have the electricity distribution companies (discoms) fared in the backdrop of this pandemic?

We have weathered corona well and the entire system is out of it and demand is increasing. In October, our electricity demand was higher than what it was in October 2019. In November also, our demand is higher.

Where is this demand coming from?

Economy is growing because whatever additions I had to do, I had done much before 19 October in terms of number of connections. It’s not because of the number of households increasing. All that happened earlier. All that demand is now coming online.

You expect the solar tariff of falling further than the 2 per unit record low price. There are PPAs pending. The plan in the works involves bundling the comparatively high tariffs of these previously bid-out projects, with that of the recently bid ones. This will result in a weighted average tariff at which the PSAs will be signed with the discoms. What is happening there?

The idea was to bundle this and sell it at weighted average (tariff). So, they are trying. I have been told that in another 15-20 days, they should be able to finalize.

Are the states amenable to the idea?

It is difficult. Basically, in solar, the trajectory is towards lower and lower tariffs. So, the longer it takes, the more difficult it will become to sell it. It is already very difficult because with every successive month, fresh bids will come out where the tariffs will be lower. So, if you have a bid today, you may get a rate X but three months down the line, this may seem to be high. So, if you are not able to sell it now, selling it two months or three months down the line will be more difficult. And selling it six months down the line will be more difficult. So, they are at it. They will try, let us see.

But ultimately, the thing is that the distribution companies are independent. They buy only if it makes commercial sense for them. So, it is a market. Let us see. Up till now, we have been doing very well. As I said, we are the fastest- growing renewable energy capacity in the world. But all of this is in a market mode. It is not by fiat because the states are free and not bound to buy whatever.

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Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Updated: 15 Dec 2020, 08:40 AM IST
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