News
06/03/25
Q&A: Ocior touts Indian H2 drive, urges rule tweaks
Mumbai, 6 March (Argus) — Indian company Ocior is developing renewable hydrogen
and ammonia projects in India and Egypt. Its most advanced project in Odisha,
India, will be developed in two phases — 200,000 t/yr in the first and 800,000
t/yr in the second — with plans to take a final investment decision (FID) for
the first phase by September. Argus spoke with the firm's founder and chief
executive, Ranjit Gupta, about India's regulatory framework for green hydrogen
and progress of the company's projects. Edited highlights follow: How is India
faring in development of the hydrogen sector? India is actually doing a very
good job by creating a market for 200,000t/yr of green hydrogen use in
refineries. The central government has allocated this capacity across various
refineries, which are coming up with individual tenders for hydrogen plants to
be put up at or around them. One tender by [state-owned refiner] IOC is already
closed and other tenders are expected to close in March and April. Once a price
for green hydrogen is discovered through these tenders, it will really help the
industry move forward. If the government is able to demonstrate that there is
offtake available, there will be no dearth of investments in this sector. What
more can the government do on the regulatory side? There are a lot of things
that the government could potentially do. The objective is to get green hydrogen
and green ammonia costs as low as possible. And you do that by at least bringing
it down on par with current grey hydrogen and ammonia prices. Both grey hydrogen
and ammonia are produced from natural gas. India imports most of its natural
gas, and all of it is denominated in dollars. But the refineries and
[state-owned] SECI [Solar Energy Corporation of India] are giving us rupee
pricing. We have requested dollar pricing—that could help us drive the cost of
debt down. If you have a dollar offtake, you can go for a dollar debt, which
means you don't have to hedge the dollar to rupee. Another thing, when setting
up a green hydrogen and green ammonia project, it should be recognised that we
are replacing imported goods. Therefore, the industry should receive benefits
that help reduce taxes. If I can reduce my taxes and cost of debt, that will
really help in reducing my capital expenditure number, ultimately bringing down
the cost of hydrogen and ammonia. Earlier, selling renewable energy from one
special economic (SEZ) zone to another was not allowed, but the government has
fixed that. But selling renewable energy from an export-oriented unit to an SEZ
is still not allowed. The ministry of new and renewable energy (MNRE) has been
trying for last two years to get it changed at the behest of the industry.
Additionally, you cannot sell excess energy outside the SEZ. That needs to
change. The regulator could define taxes I have saved and determine a tariff
adjustment if I sell excess renewable energy to the domestic tariff area. There
are several small things like this which we are requesting the government to do.
And MNRE has done a fabulous job in trying to get these things done. But when it
becomes inter-ministerial, the process is drawn out a little longer. How are
your projects progressing? We have two projects — in Egypt and Odisha, India. We
hope to FID the first phase of the Odisha project by September, and the Egypt
project by March next year. But further progress will depend on offtake. For our
Odisha project, we have acquired land and started front end engineering design
(FEED) study. We have contracted Norwegian company Aker solutions to work on the
FEED study. We have awarded ammonia licensor contract to [US engineering firm]
KBR and green certification study to [German certification provider] TUV
Rheinland. We have already completed geotechnical studies. We are in discussions
with GRIDCO [Grid Corporation of Odisha] for renewable power. So, a lot of
progress has been made. The issue is offtake. If we are able to determine that,
then we could potentially start construction of the project by August-
September. We have signed a memorandum of understanding with an European trader,
Ameropa, and are in discussions with other Japanese and European companies for
offtake. Plus, we are going to take part in the SECI's green ammonia tender. Are
you facing any challenges in developing the project in Egypt? Every country is
different. In Egypt, the big advantage is that solar and wind resource are
fantastic, much better than India. No issue with land availability — we have
been allocated 600 km² of land for the wind project and around 11,000 acres for
solar projects by the Egyptian authorities. That's a big advantage over India,
where land is always a challenge to aggregate. On the regulatory framework, both
countries are similar. The disadvantage of Egypt is that they don't have a good
electricity grid. India has great infrastructure for project development and
construction. And you will not have a problem with labor or skilled engineers.
Egypt might not have that available. So, there are advantages and disadvantages
to each country. How much does compliance with EU standards on renewable fuels
of non-biological origins impact production costs? The biggest issue is temporal
correlation. If they could do away with it, that would make things easier. In
dollar terms, the difference in production costs would be close to about 10pc
for the price of ammonia. The EU green lobby needs to realise that the more
stringent they make green standards, the further away the pricing will be from
grey hydrogen, making it more difficult for consumers to accept green hydrogen.
This will also leave the doors open for blue hydrogen, which will come in
somewhere in the middle. By starting with less restrictive covenants, not
compromising on carbon content, green hydrogen pricing can be more competitive
than blue hydrogen for EU. By Akansha Victor Send comments and request more
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