The Ministry of New and Renewable Energy (MNRE) has laid down the incentive implementation framework for the production and supply of green ammonia at the lowest cost through a competitive selection process under Mode 2A of the Strategic Interventions for Green Hydrogen Transition (SIGHT) program.

Under the framework, direct incentives for green ammonia production and supply will be granted over three years from the commencement date.

The total outlay for the incentive program for the production of green hydrogen and its derivatives under all modes is ₹130.5 billion (~$1.57 billion).

In the first year, the incentive is ₹8.82 (~$0.11) /kg, ₹7.06 (~$0.085)/kg in the second year, and ₹5.30 (~$0.064)/kg in the third year.

The same production and supply of hydrogen and its derivatives cannot receive incentives under two different modes of the SIGHT Program.

Implementing Agency

The Solar Energy Corporation of India (SECI) will act as the implementing agency, providing support and carrying out various tasks assigned by MNRE. Its responsibilities include receiving and assessing applications, issuing acknowledgments and awards, examining incentive claims from beneficiaries, and verifying claims with prescribed documents.

SECI will also compile data on the program’s progress and performance and submit quarterly reports to MNRE. As an administrative charge, SECI is eligible to receive 0.5% of the disbursed incentive amount annually.

SECI has the authority to inspect an applicant’s production plants physically. It can seek assistance from third-party agencies to verify technical parameters. If necessary, MNRE may designate accredited labs like the National Accreditation Board for Testing and Calibration Laboratories or other third-party certification agencies for this verification.

Capacity

The capacity available for bidding under Tranche I of Mode 2A is 550,000 MT per annum of green ammonia. Additional capacity of green ammonia, if any, may be decided by MNRE for subsequent tranches.

SECI may specify a minimum capacity below which bids will not be accepted. SECI may also specify a cap or maximum capacity that can be allocated to a single bidder.

Any unallocated capacity during the tranche could be carried over to the subsequent tranche.

Incentive payout in a given year = (Incentive for that year in ₹/kg of Green Ammonia) x (Allocated capacity or Actual Production and supply in the year, in kg, whichever is lower)

Allocated capacity will remain constant for three years. Incentives will be disbursed to each successful bidder on an annual basis after the requisite claim is received and duly verified by MNRE through SECI.

Green Hydrogen Standard

To qualify for incentives, the bidder must adhere to the ‘National Green Hydrogen Standard’ set by MNRE when using green hydrogen in the production and supply of green ammonia. The quantity is calculated at 0.1765 kg of green hydrogen per kg of green ammonia, influencing both the green hydrogen quantity and the corresponding incentive for a specific amount of green ammonia.

Eligibility

Bidders must have a net worth equal to or greater than ₹50 million (~$601,181)/ 1,000 MT/ Annum of quoted production and supply capacity of green ammonia as of the last date of the previous financial year.

Bidders can be a single company, a joint venture, or a consortium of more than one company.

Penalties

Bidders must submit earnest money deposit (EMD) as specified in the tender document during bid submission, with provisions detailing EMD forfeiture if the selected bidder refuses to submit required documents, performance bank guarantees (PBG), or similar instruments or if eligibility criteria are not met.

Successful bidders are required to submit PBGs or other performance guarantee instruments upon accepting the award, with potential forfeiture in case of default or delayed commissioning. The tender document will outline specific modalities, and SECI will remit any encashment of EMD or guarantees to the Consolidated Fund of India.

Successful bidders must sign an Agreement of Power Purchase (APA) with procurers and adherence to the APA terms is linked to the disbursement of incentives.

Monitoring

A program monitoring committee, co-chaired by the Secretary of the Department of Fertilizers and the Secretary of MNRE, with the Mission Director of the National Green Hydrogen Mission and other necessary experts as members, will regularly assess the progress and performance of Green Ammonia production and supply capacities established under the program.

The committee’s role includes identifying and recommending measures to address any challenges or difficulties encountered during the implementation of the program.

Last June, MNRE released a framework document outlining incentive programs for the manufacturing of electrolyzers and the production of green hydrogen within the country, with a combined financial outlay of ₹174.9 billion (~$2.1 billion).

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