The production of green hydrogen and its derivatives, green ammonia and green methanol, is set to scale up in India, supported by enabling government provisions and interest from the public and private sectors. Players in the space are planning to set up production facilities to meet the demand for green hydrogen in industries at home, as well as to cater to the export potential in countries in Western Europe and the Far East. However, challenges such as limited offtake agreements, high costs and the lack of global uniform standards limit uptake. Two leading renewable energy developers discuss their perspectives on the opportunities and challenges in the green hydrogen sector in India. Edited excerpts…
Recent projects and plans
Hiren Mehta
ACME is among the leading players in the green hydrogen and ammonia space. We set up India’s first pilot-scale green hydrogen and ammonia plant at Bikaner in Rajasthan. This 5 tonne perday plant has been operational for over two years now. The experience of integrating the three key technologies – solar PV, electrolysers and ammonia synthesis loop – at this facility has been invaluable in planning our scale-up to commercial-size projects.
Currently, we have four active large-scale green ammonia projects under development – two in India and one each in Oman and the US. Our Oman project, which we have been working on since 2019, will be the world’s first commercial-scale green ammonia facility. It will be developed in phases, with the first phase set to produce 100,000 tonnes per annum of green ammonia. For this phase, we have signed an offtake agreement with Yara, which is perhaps the first such third party purchase agreement globally for green ammonia. Construction activities for this phase have commenced.
In India, our most advanced project is a 1.2 million tonnes per annum (mtpa) green ammonia facility in Odisha, which will be developed in three phases of 0.4 mt each. For the first phase, we have signed a term sheet with Japan’s IHI Corporation. The second and third phases will follow thereafter. The second Indian project under active development is located in Tamil Nadu, at a different port site. In the US, we are undertaking a feasibility study for a green hydrogen and ammonia project in Texas.
Beyond green ammonia, we are also very keen to participate in the growing green hydrogen opportunity within India by setting up captive green hydrogen production facilities for various industries such as refineries, steel, fertilisers, and chemicals. We are in active discussions with a number of potential industrial customers for this.
Arnava Sinha
Greenko’s primary focus is on developing green ammonia production capacity. Our goal is to commission plants totalling 4 mt of green ammonia production annually over the next five years. The key enabler for this ambitious target will be leveraging low-cost round-the-clock renewable power from our pumped hydro storage projects. This will allow us to produce green hydrogen at around $3 per kg today, which in turn will enable cost-competitive green ammonia production on a global scale.
Our first green ammonia project is under development in Kakinada, Andhra Pradesh, with commissioning targeted for end of 2026. We have already lined up European offtakers for this project and finalised the relevant agreements. The second plant is planned in Tuticorin, Tamil Nadu, while a third ammonia plant will also come up in Kakinada.
Recently, we secured land in Kandla, Gujarat, through a competitive auction process for setting up a green ammonia plant on India’s west coast. Additionally, we have been in discussions with Oil and Natural Gas Corporation Limited for the joint development of a green ammonia project.
While ammonia is the primary focus, we are also actively exploring opportunities in the green hydrogen space, particularly in the Indian refinery sector. We are executing the first commercial-scale green hydrogen tender for Mathura refinery, with project completion expected by mid-2025.
Technology trends
Hiren Mehta
The process of integrating power generation from intermittent renewable sources such as solar with an electrolyser and ammonia synthesis loop had not been demonstrated in India at any meaningful scale prior to our pilot plant. While the individual technologies have been around for decades, bringing them together seamlessly posed a novel challenge, especially in terms of managing the variable power supply tothe electrolysers.
Electrolysers have traditionally been operated with a constant, steady power supply. In our case, we had to work closely with electrolyser manufacturers to make suitable design changes to the electrolysers to handle the variability of solar power. This kind of real-world operating experience was not available earlier. There were instances during the pilot phase where the plant tripped and had to be restarted due to fluctuations in voltage and power when running on solar energy or the grid.
Another key learning has been around the optimisation of each individual component in the production chain – from solar modules and electrolysers to the ammonia plant. The overall efficiency and economics of green hydrogen and ammonia production depend critically on achieving the highest possible efficiency from each of these components and subsystems. Our primary focus during the pilot phase has been on gaining a deeper understanding of these issues and feeding it back to our technology partners and vendors. These learnings have shaped the design choices and specifications for our larger-scale commercial projects now under development. The operational experience has also informed our perspective on the personnel training and skill sets required to efficiently operate such plants.
Arnava Sinha
Regarding green ammonia plants at the scale of 1 mtpa, we are looking at electrolyser capacities in excess of 1.2-1.3 GW. At present, alkaline electrolysers are the only commercially viable option available at this scale.
Firstly, from an availability standpoint, sourcing such large quantities of any other electrolyser technology would be challenging today. Cost is the second key factor. Thirdly, alkaline technology offers an advantage in terms of scalability, with stack sizes of around 5 MW currently feasible. While polymer electrolyte membrane (PEM) and other technologies are likely to evolve over the coming decade, alkaline remains the most suitable choice for large-scale green ammonia plants in the near to medium term.
That being said, the technology choice can vary depending on the specific use case. For applications with significant power variability, such as those relying solely on solar or wind without any power-firming mechanism, alkaline may not be the optimal solution. In such scenarios, PEM or other electrolyser technologies that offer better flexibility are preferred. Whereas for a steady baseload type of operation, enabled by energy storage solutions such as pumped hydro or batteries, alkaline offers a cost advantage.
Key challenges and outlook
Hiren Mehta
Government policies, both on the supply and demand sides, play a crucial role in the development of the green hydrogen and ammonia industry. If we look back at how the renewable energy industry has matured, especially in India, policy support in the form of renewable purchase obligations, feed-in tariffs, waiver of interstate transmission charges, etc., has been instrumental in boosting the initial deployment and bringing costs down.
In the case of green hydrogen and ammonia, production costs are still considerably higher than the fossil fuel alternatives. Mandates and financial incentives are necessary in the near term to bridge this cost gap and create the necessary demand. We saw this in the case of solar power in India, where the levellised cost of electricity started at around Rs 15 per kWh a decade ago and has since fallen to just Rs 2-Rs 2.50 per kWh, especially due to the rapid capacity scale-up facilitated by an enabling policy environment.
A similar approach is required for green hydrogen and ammonia now. Government policies that mandate the use of a certain percentage of green hydrogen/ammonia in key consuming sectors such as fertilisers, oil refineries and steel would send a strong and clear signal to the market. It would spur investments in production as well as in research and development to bring costs down. Tax incentives or direct financial support to cover the incremental cost of green hydrogen/ammonia for end consumers is another potential policy lever, which has been successfully used in several European countries.
On the supply side, capital subsidies, low-cost financing, tax breaks and other fiscal incentives can help improve the economics of green hydrogen and ammonia production in the initial phase. We are seeing such supportive policies being put in place in India now, which is a very encouraging sign for the industry. The rising carbon prices in Europe and the upcoming carbon border adjustment mechanism will also make green hydrogen/ammonia more competitive against fossil fuel alternatives.
Offtake agreements, especially long-term contracts, are essential for securing the financing required to set up green hydrogen and ammonia projects, which are highly capital-intensive. At the same time, customers are wary of being locked into long-term commitments at the current cost premiums, anticipating that green hydrogen/ammonia prices will decline significantly in the future as the technology matures and scales up. Long-term contracts also introduce a certain degree of price risk for end consumers. This is where government policies have an important role to play in underwriting the offtake to some extent, reducing the risk perception for all stakeholders involved.
In Europe, we have seen countries such as Germany, the Netherlands and others issuing public tenders for buying green hydrogen and ammonia, wherein they provide guaranteed price support and absorb the cost differential with natural gas. India is also now developing a novel policy mechanism wherein the government will aggregate demand from various sectors and auction it with a price support commitment. Once we have such large-scale, long-term public procurement initiatives in place, it will catalyse private investment and offtake on the back of firm and sustained demand visibility. This will create a virtuous cycle of investments, leading to scale-up and cost reductions, which in turn will make green hydrogen/ammonia increasingly more competitive, generating even more demand.
To summarise, a full suite of policy interventions that address both supply- and demand-side constraints are needed to rapidly scale up the green hydrogen and ammonia ecosystem globally. Mandates and subsidies will play a key role in the near term to kick-start the industry. As the market attains critical scale and technologies mature, the need for such policy support will gradually diminish, as we have seen in the case of solar and wind power. What is essential is a clear strategic intent and policy roadmap from governments to provide the required long-term visibility for all stakeholders in this nascent industry.
Arnava Sinha
When it comes to offtake agreements for green ammonia, the dynamics are very different for the domestic and international markets. In the domestic market, the key challenge is the absence of a strong driver for the switch from conventional ammonia to green ammonia. The cost differential between the two is still substantial at the end-product level.
The key driver for the adoption of green hydrogen and ammonia in Europe is its clear regulatory mandates. For example, the European Parliament has set a target for 40-45 per cent of the industry to transition from grey to green hydrogen by 2030. Further, policy initiatives such as the “Fit for 55” package are creating the necessary market pull. When such consumption mandates are put in place, the relevant industries are compelled to procure supplies of green ammonia and hydrogen.
In India, a similar policy lever in the form of a green hydrogen/ammonia consumption mandate across suitable industries would help generate firm demand and provide greater offtake visibility for producers. We have been advocating for such a measure to be introduced. The key benefit would be creating the initial market scale in the country, which is essential for the subsequent cost reduction trajectory and transition away from imported fossil fuels.
On the export front, the key challenge we face is around convincing potential offtakers that India will continue to allow exports of green hydrogen/ammonia even as the domestic market scales up. There is apprehension that India may prioritise domestic needs and restrict exports of this critical energy vector in the future. A clear policy statement from the Indian government assuring the long-term continuity of exports would go a long way in assuaging these concerns and securing firm international offtake commitments.
However, setting aside this concern, India is very well positioned to emerge as a globally competitive supplier of green hydrogen and ammonia on the back of its exceptional renewable energy resources, enabling policy environment and proven project execution capabilities. When it comes to key factors such as project credibility, timely execution and cost competitiveness, the country has a distinct advantage over other potential suppliers globally.