The Solar Energy Corporation of India Limited has achieved a record low price for green ammonia at Rs 55.75/kg under the Green Hydrogen Mission, marking a significant milestone for the fertiliser industry.
This auction covers 75,000 metric tonnes per annum for Paradeep Phosphates, highlighting the potential for green ammonia adoption despite challenges in cost and sector-wide implementation.
The first ever auction of green ammonia for procurement by the Solar Energy Corporation of India Limited under the Strategic Interventions for Green Hydrogen Transition or SIGHT scheme has achieved record low price of Rs 55.75/kg or $641/MT, in what is being called a landmark development under the Green Hydrogen Mission.
This auction would be covering the supply of 75,000 metric tonnes per annum of green ammonia to Paradeep Phosphates, an Odisha-based fertiliser-producing company. This is the first auction among the 13 planned over the coming months, aggregating a cumulative procurement capacity of 7.24 lakh MT/year.
This is being called the lowest price ever when compared to the previously discovered price of Rs 100.28/kg ($1,153/MT) in the H2 Global auction in 2024. As of March 2025, grey ammonia price has been at $515/MT, which is not much lower than the newly discovered price for green ammonia thus making a case of offtake of green ammonia.
Although green ammonia/green hydrogen can be adopted by multiple sectors like iron and steel, pharmaceuticals, chemicals etc. for cleaner production, the current readiness and demand is expected to come from the fertiliser sector. This is because it is the largest natural gas consuming industrial sector in India, which can presumably be readily replaced by green hydrogen if costs become affordable. But a sector-wide adoption has other challenges, beyond cost.
The Economic Survey of India 2024-25 shows agriculture and allied sectors contribute nearly 16 per cent to India’s gross domestic product and support around 46 per cent of the country’s population. This shows agriculture and its allied sectors form a major part of India’s economy and the fertiliser industry is crucial to its sustenance and growth. India is the world’s second largest consumer and third largest manufacturer of fertilisers. Production of fertilisers in India has grown over the years from 22.3 million metric tonnes (MMT) in 1990 to 50.33 MMT in 2023-24. There are largely three types of chemical fertilisers — nitrogenous, phosphatic and potassic. Urea, a nitrogenous fertiliser, has a production share of around 60 per cent, while Diammonium phosphate (DAP), Single Super Phosphate and other complex fertilisers form the rest of the share of all fertiliser production in India.
According to the third Biennial Update Report submitted by the Government of India to the United Nations Framework Convention on Climate Change, fertiliser production contributes less than 1 per cent (around 6 MT) of the country’s greenhouse gas (GHG) emissions, more than the pulp and paper, mining and quarrying and chemicals sectors but much lesser than the iron and steel, cement and aluminum sectors. Even then, this less than one per cent is more than the total emissions of many small-sized countries.
Ammonia is a key ingredient in the manufacturing of major fertilisers like urea, DAP and other complex fertilisers. Ammonia is currently produced in the fertiliser industry by mixing nitrogen from the air and hydrogen from natural gas at high temperature and pressure. The ammonia produced through this process is called ‘grey ammonia’, which leads to substantial GHG emissions from the sector. The use of green hydrogen i.e. hydrogen produced through electrolysis powered by renewable energy, could replace grey ammonia and significantly reduce emissions from the sector.
But when we look at the current fertiliser production trend in the country, the use of green hydrogen seems easily adaptable only by phosphatic fertilisers. The production of urea requires CO2, usually extracted from the process of making grey ammonia. The latter is largely domestically manufactured using natural gas. On the other hand, phosphatic fertilisers do not have such a requirement and are mostly dependent on imported ammonia, usually coming from West Asia.
According to The Fertilizer Association of India, around 19.4 MMT of ammonia is domestically produced in India. Of this, almost 95 per cent goes into urea production and the rest into other fertilisers. The CO2 produced in this domestic grey ammonia production is used for urea production. Around 2.5 MMT ammonia is imported and is mostly used for production of DAP and NPK fertilisers. Currently, almost all of it is grey ammonia.
Vikas Kumar, general manager of Indorama India Private Limited (a fertiliser manufacturing company), said, “Only this 2.5 MMT of imported ammonia being consumed for phosphatic fertiliser production is easily replaceable. But for adoption of green hydrogen for urea production, an equivalent amount of CO2 will be needed.”
He further said: “Currently, we already have excess grey ammonia with us and not even enough CO2 is available to convert that into urea.”
Kumar added: “Other industries like petrochemical complex, refineries, steel and others which have large amounts of CO2 coming out of their processes could be the potential source of supply to urea-producing companies as and when green replaces grey ammonia in urea production.”
Currently, the National Hydrogen Mission targets to establish a capacity of 5 million tonnes of green hydrogen by 2030. Since one tonne of ammonia requires roughly 178 kg of hydrogen, just half a million tonnes of green hydrogen will be enough to replace the 2.5 million tonnes of grey ammonia in phosphatic fertiliser production. To make use of green hydrogen further in the fertiliser sector, it will be crucial to resolve the CO2 issue.
Regarding the price discovery, experts do agree that it’s a very low one. But they also mention that the price of imported as well as domestically produced ammonia (a little higher than imported) is between $400 and $450 per MT, unlike $515/MT as mentioned in the press statement. This still keeps the price of green ammonia almost 1.5 times higher than the current grey ammonia prices.