India's Landmark Tender for Green Ammonia Seeks to Decarbonize Fertilizer Sector

Strategic Insights -

The Indian government has taken a significant step towards decarbonizing the fertilizer sector by floating a tender for the offtake of green ammonia. The Solar Energy Corporation of India (SECI) has issued a landmark tender inviting bids for the supply of 7.24 lakh tonnes of green ammonia annually. This move aims to transition the fertilizer sector from fossil fuel-based hydrogen to renewable energy-generated green hydrogen, enabling low-emission, domestically sourced fertilizer production. The government is offering production-linked incentives to make the transition financially viable.

Key Takeaways:

  • The tender, issued on June 7, 2024, seeks to supply 7.24 lakh tonnes of green ammonia annually to 13 fertilizer plants across the country.
  • The aim is to enable low-emission, domestically sourced fertilizer production, reducing dependence on imported natural gas.
  • The government is offering subsidies of é 8.82 per kilogram in the first year, é 7.06 in the second, and é 5.30 in the third, amounting to a total support of é 1,533.4 crore.
  • A robust Payment Security Mechanism has been put in place to safeguard suppliers from delays in payments by fertilizer companies.
  • The tender process will follow SECI's e-reverse auction model to ensure transparency and competitive price discovery.
  • The contracts will run for a 10-year period, providing market certainty and encouraging long-term investment.
  • India consumes approximately 17-19 million tonnes of ammonia annually, with more than 50% of its hydrogen requirement used in fertilizer production.
  • Producing green hydrogen emits less than 2 kg of COéé per kilogram, compared to up to 12 kg COéé from conventional grey hydrogen.
  • The tender is expected to drastically cut India's dependence on imported natural gas, supporting investment in electrolyser manufacturing and other clean energy segments.

Statistics:

  • 7.24 lakh tonnes of green ammonia to be supplied annually.
  • 13 fertilizer plants across the country to be covered.
  • é 1,533.4 crore in total production-linked incentives offered.
  • é 8.82 per kilogram subsidy in the first year.
  • é 7.06 per kilogram subsidy in the second year.
  • é 5.30 per kilogram subsidy in the third year.
  • 10-year contract period for supplying green ammonia.
  • 17-19 million tonnes of ammonia consumed annually in India.
  • More than 50% of hydrogen requirement used in fertilizer production in India.
  • 2 kg COéé emissions from producing green hydrogen.
  • Up to 12 kg COéé emissions from producing conventional grey hydrogen.

Sources:

  • Government of India (4)
  • Solar Energy Corporation of India (SECI)