India’s renewable ammonia auctions hit $604/mt in new global trade price point

India's recent domestic renewable ammonia auctions, which concluded at a weighted average price of around $604/mt, offer a new price point for global trade and may encourage faster adoption of the clean fuel, although regional regulatory differences may fragment the export market, industry members said.

Solar Energy Corp. of India conducted its first renewable ammonia auction through July and August, choosing seven developers as suppliers of 724,000 mt/year of the clean fuel at a delivered, weighted average price of Rupees 53.27/kg (around $604/mt) to 13 fertilizer firms.

"[The results] are likely to strengthen offtakers' confidence in green ammonia and accelerate adoption across hard-to-abate sectors such as fertilizers, shipping, and other industries" Abdelaziz Yatribi, CEO of Yamna, a global renewable hydrogen developer, told Platts, part of S&P Global Commodity Insights.

"They also demonstrate how competition can effectively drive tariffs down..." and show "cost parity with grey ammonia comes into closer reach."

On the same note, a spokesperson at German renewable hydrogen initiative, H2Global said the Indian auctions, though backed by local subsidies and benefits, could lead to stiffer competition in upcoming auctions in Asia and Europe.

"We see this as a meaningful signal that large-scale projects under India's specific framework can clear at low prices," the H2Global spokesperson told Platts. "We believe it may influence expectations and negotiations elsewhere, especially for long-term offtake, and could encourage more aggressive bidding where similar conditions apply."

The Indian price is almost half of the H2Global price in 2024 at Eur1,000/mt ($1,165/mt), for delivery of RFNBO-compliant renewable ammonia to Northwest Europe. While the SECI tender is for 10 years, the H2Global contract is for a cumulative volume of 397,000 mt/year over seven years.

Platts assessed Middle East renewable-derived ammonia delivered to Far East at $820/mt on Sept. 8.

Issue of power banking

Most Indian developers are eyeing the global market, where ambitious net-zero targets will necessitate a faster adoption of renewable hydrogen/ammonia. Though the auction prices can be considered as FOB price levels for export, the regulatory compliance of different countries would play a key role in export deals.

There are several local subsidies and benefits backing Indian renewable hydrogen/ammonia, such as waiver of interstate transmission costs, priority open access, demand aggregation and power banking, Shigeru Muraki, an advisor at Japan's Clean Fuel Ammonia Association, told Platts.

"In particular, power banking will have an impact on cost reductions because the load factor of green ammonia production will be very much improved [with the help of banking]...," Muraki said. However, he added that "if India exports green ammonia, most countries would not accept power banking being utilized in the process."

According to Muraki, the carbon intensity of the total power supply for ammonia production is the big question, because the majority of the power supply during the night, when solar power is inactive, may be coal-derived in India.

A SECI auction winner said that to overcome the power banking issue, producers may consider battery storage facilities, which would increase the cost of renewable ammonia for export.

RFNBO compliance to cost more

A future buyer of renewable ammonia in Europe pointed out that RFNBO rules, with its three pillars -- Additionality, Time Matching and Geographic Co-relation -- is expected to add a premium to the SECI price.

These rules require the developer to set up additional renewable generation, have monthly time matching for power supply and locate electrolyzers in the same geographical proximity as the renewable power assets.

"I believe the RFNBO ammonia FOB India price level [is] around $700/mt," the European buyer said.

While additionality is not a concern in India due to its growing renewable capacity, time matching and geographic correlation may pose challenges. Developers have appealed for relaxing the rules, especially regarding geographic correlation, citing India's unified national grid.

SECI's director Sanjay Sharma, who oversaw the auctions, told Platts that SECI is visiting EU officials soon to putSECI's director, Sanjay Sharma, who oversaw the auctions, told Platts that SECI is visiting EU officials soon to put India's case for a unified power grid to be considered okay under RFNBO.

The regulatory clarity would be needed when H2Global and SECI launch joint tenders for renewable hydrogen/ammonia they are working on.

Contract signing is the next step

Next, India's Department of Fertilizers will estimate the projected cost of conventional ammonia three to four years down the line, when trade is expected to start, to ascertain the subsidy budget for covering the cost gap between the renewable and conventional ammonia.

Sharma said auction winners would sign contracts with SECI after that, and as per the rules, set up the renewable ammonia plants in 36 months.

"The bidding was very competitive, and I have no doubt that the commitments will be met," Sharma said.

The winning bids ranged from Rupees 49.75/kg to Rupees 64.74/kg (56 cents-73 cents/kg) with the highest and lowest bids from ACME Cleantech Solutions, which won more than 50% of the supply volume. Other winners included NTPC Renewable Energy, Jakson Green and SCC Infrastructure.

SECI's auctions were a part of the Rupees 197.44 billion National Green Hydrogen Mission that targets production of 5 million mt of renewable hydrogen by 2030 and a 10% share of the global market around the same time.