India launches subsidies to support green hydrogen for ammonia and oil refining
India’s Ministry of New and Renewable Energy has announced two new auctions for subsidies to drive the uptake of green hydrogen in ammonia production and oil refining.
The two auctions will aggregate demand from industry and tender fixed payments for production and supply, although the exact mechanism of pooling demand has not yet been published.
One auction will specifically subsidise green hydrogen producers supplying oil refineries, while the other will pay companies that produce green ammonia, as long as the hydrogen is made in-house.
Green H2 producers with offtake from refiners can receive a similar maximum payout per kilo offered in India’s first green hydrogen subsidy auction, ie, 50 rupees ($0.60) in the first year, 40 rupees in the second, and 30 rupees in the third.
However, ammonia producers will receive only 8.82 rupees per kilo of green NH3 in the first year, falling to 7.06 rupees in the second and 5.30 rupees in the third — figures that essentially offer the same hydrogen subsidy, given the amount of H2 (176g) in each kg of ammonia.
Both auctions also explicitly disqualify buying or trading green hydrogen on the market, which could present a particular problem for the ammonia producers.
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While green hydrogen producers supplying refineries would receive a payment regardless of how much grey or externally-bought green H2 the refiners top their consumption up with, NH3 producers seeking subsidies would need to ensure all hydrogen feeding into their processes is both green and made in-house.
The auctions, both of which will base their awards on lowest-price bids, also prohibit subsidy stacking by winners of the previous green hydrogen auction.
The ammonia auction is capped at 550,000 tonnes of annual NH3 production, while the oil refining auction will tender for a maximum 200,000 tonnes of hydrogen a year, although further guidelines on minimum and maximum capacity per bidder are yet to be decided.
While the Ministry of New and Renewable Energy’s state-owned Solar Energy Corporation of India will manage the ammonia auction, the oil refining tender will be under the remit of the Ministry of Petroleum and Natural Gas.
The government announced ten winners of its first green hydrogen auction earlier this month, two of which had bid for zero subsidies, representing 412,000 tonnes of annual H2 production capacity.
Last August, the Indian power and renewable energy minister Raj Kumar Singh suggested that the government would introduce a mandate for industrial hydrogen users to consume a certain proportion of green H2, but such a policy has not yet been introduced.
