08/01/2024
SECI, the Solar Energy Corporation of India, recently announced the results of its auction for the development of green hydrogen generation facilities with a total capacity of 450,000 metric tons per annum (MTPA). The tender, issued in July 2023, had two categories: Bucket I with 410,000 MTPA and Bucket II with 40,000 MTPA. Bucket I was fully allocated to nine bidders, while Bucket II was undersubscribed.
The bidders for Bucket I had different objectives and capacities. Three bidders, Reliance, ACME and Greenko, each won 90,000 MTPA of capacity. They received an average incentive of Rs 18.9, Rs 30 and Rs 30 per kg of hydrogen, respectively. One bidder, Hygenco, won 75,000 MTPA of capacity, with an average incentive of Rs 25.04 per kg. They are likely to produce and export Ammonia.
Two bidders, Welspun and Torrent Power, each won 20,000 and 18,000 MTPA of capacity, respectively, with an average incentive of Rs 20 and Rs 28.89 per kg. Three bidders, Calcutta Electric Supply Corporation Projects, UPL and JSW New Energy, each won 10,500, 10,000 and 6,500 MTPA of capacity, respectively, with no average incentive. These bidders planned to produce and supply hydrogen to products with green attributes, which are likely to be exported.
The premium sought by the bidders was low, considering that the cost of green hydrogen production was estimated to be in the range of Rs 330-400 per kg, at least double the cost of grey hydrogen. This implied that the bidders were targeting the export market, where they could benefit from the higher prices of ammonia or green products. For instance, in December 2023, the UK government announced the results of the Hydrogen Allocation Round (HAR), with an average strike price of GBP 241 per megawatt-hour (MWh) or GBP 8 per kg of hydrogen (assuming 33 kWh of energy per kg of hydrogen). This set a high price benchmark for the green hydrogen market, creating an opportunity for arbitrage.
