PYQ Relevance[UPSC 2022] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Linkage: Green ammonia auctions operationalise renewable energy targets through industrial decarbonisation. The subsidy shift logic mirrors SIGHT incentives and viability gap funding for green hydrogen. |
Mentor’s Comment
India’s green hydrogen strategy has entered an implementation phase through competitive green ammonia auctions. The Solar Energy Corporation of India (SECI) has operationalised aggregated demand under the National Green Hydrogen Mission, securing long-term offtake contracts at prices nearly 40-50% lower than earlier global benchmarks. The development signals a structural shift from policy intent to market creation and positions India as a price-setter in emerging clean fuel markets.
Why in the News?
At India Energy Week 2026, the government operationalised its clean energy vision through SECI’s large-scale green ammonia auctions under the SIGHT programme, offering 10-year fixed-price contracts.Â
What is Green Ammonia?
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- Green ammonia is a 100% renewable, carbon-free fertilizer and energy carrier produced by combining nitrogen from the air with green hydrogen (generated via water electrolysis using solar or wind energy).Â
- Unlike traditional “grey” ammonia that uses fossil fuels, green ammonia emits zero, offering a sustainable solution for agriculture, energy storage, and marine fuel.
- Production: Water is split into hydrogen and oxygen using renewable electricity. This green hydrogen is then combined with nitrogen using the Haber-Bosch process to produce ammonia.
What is the SECI Green Ammonia Auction Model?The SECI Green Ammonia Auction Model, under the National Green Hydrogen Mission’s SIGHT Scheme (Mode 2A), is a competitive, cost-based e-reverse auction for procuring green ammonia. It is designed to bridge the price gap with conventional ammonia. It features a 10-year, fixed-price contract, with SECI acting as an intermediary to facilitate demand, resulting in record-low prices around ₹55.75/kg as of mid-2025. Key Features of the SECI Green Ammonia Model:
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How Does the Green Ammonia Auction Model Reflect a Governance Shift from Subsidy to Market Creation?
- Aggregated Demand Mechanism: SECI pooled demand of up to 7,24,000 tonnes annually across 13 fertiliser plants, reducing fragmented procurement and enhancing scale efficiency.
- Long-term Offtake Contracts: Provides 10-year fixed-price agreements, ensuring revenue certainty and reducing investor risk.
- Competitive Bidding Framework: Attracted 15 bidders, with 7 successful awardees, strengthening transparency and price discovery.
- Production Subsidy Support: Includes viability gap support of ₹8.82/kg, ₹7.06/kg, and ₹5.3/kg over three years under SIGHT.
- Outcome: Establishes a cost-competitive domestic green ammonia market.
How Does India’s Price Discovery Compare with Global Benchmarks and What Does it Indicate?
- Price Range Achieved: ₹49.75-₹64.74/kg ($572-$744/tonne).
- Global Benchmark Comparison: Nearly 40-50% lower than H2Global auction prices.
- Grey Ammonia Benchmark: Grey ammonia prices reach $515/tonne, narrowing cost gap significantly.
- Cost Gap Reduction: Long-term contracts and subsidies reduce transition risks.
- Outcome: Positions India as a potential global price influencer in green fuels.
How Does the Policy Strengthen Energy Security and Reduce Import Vulnerability?
- Import Substitution: Contracted volume equals nearly 30% of India’s ammonia imports.
- Price Predictability: Fixed-price contracts reduce exposure to global volatility, currency risks, and geopolitical disruptions.
- Domestic Value Chain Creation: Integrates renewable energy, storage, hydrogen electrolysis, and ammonia synthesis.
- Energy Independence Objective: Aligns with India’s shift from energy security to energy independence.
- Outcome: Enhances strategic autonomy in fertiliser and energy sectors.
What Institutional and Regulatory Innovations Support Market Viability?
- Pre-identified Delivery Points: Located near coastal fertiliser plants, enabling maritime logistics and reducing transportation bottlenecks.
- Banking and Grid Regulations: Requires harmonised regulations for renewable integration.
- Certification Alignment: Necessitates globally accepted green hydrogen certification frameworks.
- Risk Mitigation Mechanisms: Long-tenor blended finance and extended offtake agreements enhance bankability.
- Outcome: Strengthens institutional accountability and reduces implementation risks.
How Does Green Ammonia Contribute to India’s Decarbonisation Commitments?
- Industrial Decarbonisation: Supports fertiliser sector transition from grey to green ammonia.
- Hard-to-Abate Sectors: Enables decarbonisation in shipping, power generation, and heavy industry.
- Renewable Integration: Utilises low-cost renewable energy at scale.
- National Green Hydrogen Mission Alignment: Operationalises Mission targets through market instruments.
- Outcome: Advances India’s Nationally Determined Contributions (NDCs).
What Implementation Risks Could Affect Long-Term Sustainability?
- Financial Risk: High capital intensity of electrolysers and renewable infrastructure.
- Technology Risk: Need for hybrid renewable-storage integration.
- Regulatory Uncertainty: Grid access, incentives, and safety standards require stability.
- Global Competition: Emerging green ammonia producers may affect export competitiveness.
- Outcome: Sustained coordination between policymakers, developers, and financiers remains essential.
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