Source: TH
Subject: Energy
Context: India recently conducted a landmark auction through the Solar Energy Corporation of India (SECI), discovering record-low prices for green ammonia that are 40%–50% lower than European benchmarks.
About India’s Energy Shift through the Green Ammonia Route:
What it is?
- Green ammonia is produced by combining nitrogen from the air with green hydrogen (generated by splitting water using renewable energy).
- Unlike traditional grey ammonia, which relies on natural gas and emits significant CO2, green ammonia has a near-zero carbon footprint.
Key Data/Stats:
- Record Low Price: SECI’s auction discovered a price of ₹49.75 to ₹64.74/kg ($572–$744/tonne), nearly half the cost of the EU’s H2Global auction ($1,153/tonne).
- Demand Aggregation: The tender targeted an annual demand of 724,000 tonnes of green ammonia across 13 fertilizer plants.
- Investment Goal: PM highlighted investment opportunities worth $500 billion across India’s energy sector.
- Import Reduction: Green ammonia is expected to replace 30% of India’s ammonia imports, insulating the economy from gas market volatility.
- Emission Savings: The National Green Hydrogen Mission aims to avoid nearly 50 MMT of CO2 emissions annually by 2030.
Potential of Green Ammonia:
- Decarbonizing Agriculture: It replaces fossil-fuel-based feedstock in fertilizers, making the food supply chain sustainable.
E.g. The supply of 75,000 tonnes of green ammonia to Paradeep Phosphates in Odisha marks the start of this transition in India’s fertilizer hubs.
- Zero-Carbon Marine Fuel: Ammonia is easier to store than hydrogen and can be used as a clean alternative to heavy fuel oil in ships.
E.g. India is developing the Rotterdam-India-Singapore green shipping corridor to operationalize maritime decarbonization.
- Hydrogen Carrier: Ammonia acts as a stable medium to transport hydrogen over long distances.
E.g. India is positioning its coastal ports like Kandla and Tuticorin as Hydrogen Hubs for global exports to Japan and South Korea.
- Energy Storage: It serves as a long-duration energy storage solution, helping balance the grid during renewable energy fluctuations.
E.g. Integration of hybrid renewable systems (solar + wind + storage) is being piloted to ensure round-the-clock green ammonia production.
Initiatives Taken:
- SIGHT Programme: An outlay of ₹17,490 crore under the Strategic Interventions for Green Hydrogen Transition to provide production-linked incentives (PLI).
- Green Hydrogen Hubs: Recognition of Deendayal, Paradip, and V.O. Chidambaranar ports as dedicated hubs for hydrogen and its derivatives.
- National Green Hydrogen Mission (2023): An umbrella mission to create a 5 MMTPA production capacity and attract ₹8 lakh crore in investments by 2030.
- SECI Auction Model: Implementing 10-year fixed-price offtake agreements and aggregated procurement to provide market certainty to developers.
Challenges Associated:
- Cost Gap with Grey Ammonia: Despite the price drop, green ammonia is still slightly more expensive than grey ammonia (approx. $515/tonne).
E.g. Even with incentives, the Green Premium remains a hurdle for price-sensitive industries without mandatory blending norms.
- Infrastructure Deficit: Lack of specialized bunkering and storage facilities at ports.
E.g. Current e-fuel demand at ports like VOC (Tuticorin) is insufficient to justify high-cost dedicated bunkering infrastructure without further scaling.
- Regulatory Fragmentation: Inconsistent state-level policies on grid banking and transmission charges.
E.g. Many states find it fiscally strained to provide the 60% subsidy promised in their local green hydrogen policies.
- Technology Readiness: High capital cost of electrolysers and the need for large-scale ammonia cracking units.
E.g. India still relies heavily on imported electrolyser technology, though local manufacturing PLIs are trying to address this.
- Safety and Toxicity: Ammonia is highly corrosive and toxic, requiring stringent handling protocols.
E.g. Expanding its use as a marine fuel requires re-engineering ship engines and training maritime staff in new safety standards.
Way Ahead:
- Harmonize Regulations: Implement stable and uniform rules across all states for grid access, power banking, and wheeling charges.
- Blended Finance: Leverage long-tenor, low-interest capital from multilateral banks to improve project bankability.
- Global Certification: Align India’s green hydrogen standards with global norms (like the EU) to facilitate seamless exports.
- Mandatory Blending: Introduce green hydrogen/ammonia consumption mandates for refineries and fertilizer plants to ensure a guaranteed market.
- R&D in Safety: Invest in indigenous safety monitoring and sensor technologies to manage the risks associated with ammonia handling.
Conclusion:
India’s move toward green ammonia marks a decisive shift from energy security to energy independence. By creating a competitive market through the SIGHT programme and SECI auctions, India is effectively narrowing the gap between clean and fossil-fuel-based energy. If supported by sustained policy and infrastructure investment, green ammonia will become the cornerstone of India’s journey toward Net Zero by 2070.
