INTERVIEW: India aims to expand renewable ammonia tenders post-739,000 mt launch

Solar Energy Corp. of India, the government's renewable energy tendering arm, plans to issue more renewable ammonia procurement tenders for fertilizer firms following its first 739,000 mt/year tender in June 2024, Sanjay Sharma, director of solar at SECI, told S&P Global Commodity Insights on Feb. 7.

SECI is issuing tenders for 14 fertilizer plants under the government's Rupees 197.44 billion ($2.36 billion) National Green Hydrogen Mission (NGHM).

"This [739,000 mt/year] tender is expected to be concluded by the first quarter of this calendar year," Sharma said. "Beyond this quantity, we have already received substantial demand from other fertilizer companies, and once the first auction is concluded, we can shortly carry out tenders for the next phase of demand."

The bidders for the production and supply of renewable ammonia will be selected via a cost-based competitive bidding process using a reverse auction. SECI would be the intermediary, while fertilizer firms would be the buyers of the renewable ammonia.

Sharma, who has been instrumental in designing renewable hydrogen and electrolyzer tenders over the last two years, said the next round of tenders can be issued after a directive from the Ministry of New and Renewable Energy (MNRE) and the Department of Fertilizers.

SECI is also collaborating with Germany's H2Global to understand each other's tendering and auctioning methodologies for renewable hydrogen and its derivatives, an initiative that could lead to joint global tenders to facilitate trade, said Sharma.

The company could amend some of the clauses before the Feb. 18 bid submission deadline for the June 2024 tender to facilitate the procurement process, according to some government officials and market participants.

Bidders have sought clarifications on a "land border" clause that created ambiguity about using cheaper Chinese electrolyzers in the June 2024 tender.

Bidders have also requested dollar-denominated contracts, as the tender aims to replace imported conventional ammonia with domestically produced renewable ammonia, to take advantage of the dollar's strength against the rupee.

Additionally, bidders have sought purchase agreements longer than the 10-year term offered in the tender.

SECI's renewable ammonia tenders are significant as the NGHM aims to substitute imports. Over 2020-21, India imported about 3 million mt of conventional ammonia, representing an annual import value of over $6 billion.

"With the expected reduction in the price of green hydrogen, there will be an economic rationale for producing these fertilizers domestically, using green hydrogen/green ammonia to substitute imports," NGHM has said.

Platts, part of Commodity Insights, assessed blue ammonia CFR Far East Asia at $453.2/mt on Feb 7, down 6.7% month on month.

Global tenders

Hintco, acting as H2Global's intermediary, and SECI are evaluating each other's tendering systems and could mutually adopt the best practices in their respective tenders, according to Sharma.

"Discussions on this are at a preliminary stage. However, our expectation is that the demand will be of significant quantum in order to support India's target to produce 5 million mt/year of renewable hydrogen by 2030 under the NGHM," Sharma said.

Hintco has the knowledge and expertise of demand aggregation in Europe, and it is likely to shape the future auctions for renewable hydrogen and ammonia in Europe and other demand centers worldwide, he said. SECI has the capability to aggregate the supply of renewable hydrogen and its derivatives for export purposes.

"Once they collate funding by governments to cover the envisaged cost of difference for a dedicated H2Global India tender, and we receive a go-ahead from MNRE, we can do the tendering for green hydrogen/ammonia demand aggregation," he said.

"After getting a nod from the respective European authority or authorities of respective countries intending to import renewable hydrogen, H2Global/Hintco can call a tender for demand aggregation."

In November, SECI and H2Global signed a memorandum of understanding for designing joint tender plans for promoting global trade for renewable hydrogen.

"At present, discussion on various factors, including timelines, is going on, and as soon as it is firmed up, we will make a suitable announcement in this regard," Sharma said.

Scope of work

H2Global can issue tenders for demand aggregation in Japan and supply aggregation in the US and Australia, Sharma said, referring to the association's wider scope.

"SECI will discuss how it can associate for such offshore supply and demand aggregation tenders," he said. "SECI would also like to explore offshore production avenues for Indian producers of green hydrogen/ammonia on foreign soil."

India has over 100 renewable hydrogen projects in varying phases, with a combined capacity projected to exceed 10 million mt, according to Commodity Insights data.

Trade body India Hydrogen Alliance has sought an additional $2.5 billion for the government's renewable hydrogen fund to incentivize demand and boost supporting infrastructure, it said in its recommendations for the fiscal 2025-26 budget on Jan. 22.