India’s Acme Group and Japan’s IHI Corp have secured a $3 billion price support from the Japanese government for their green hydrogen joint venture in Odisha, enabling customers in Japan to buy green hydrogen at a cost comparable to grey hydrogen.
The Gopalpur project, which has an annual capacity of 405,000 tonnes, will supply green ammonia to IHI Corp., as well as other Japanese customers including Mitsubishi Gas Chemical Co., Hokkaido Electric Power Co, Nippon Beet Sugar Manufacturing Co., Kobelco Power Kobe Inc., Sumitomo Chemical Co. and UBE Corp.
Green hydrogen produced using renewable energy costs more than grey hydrogen produced using non-renewable sources. Under the so-called contract for difference (CfD) subsidy, the manufacturer—-IHI venture in this case—sells green hydrogen to Japanese customers at the price of grey hydrogen, and Japan pays the difference to the manufacturer, ensuring its viability.
To be sure, gas is sold as liquefied green ammonia, which is broken down to green hydrogen at the destination. Japan will support the programme for 228,000 tpa (tonnes per annum) of clean ammonia for Japanese customers for a for a 25-year period starting September 2030. The project has been certified under Japan’s price gap support programme.
“Additionally, 177,000 tpa of the Gopalpur project’s capacity has also been earmarked under Japan’s Long-Term Decarbonized Power Source Auction (LTDA), to further underpin project assurances for the JV (joint venture) to supply decarbonized fuel into Japan’s power sector over a long-term horizon,” Acme said in a statement.
Anil Taparia, chief executive officer (CEO) of Acme Green Molecules Business said, “these approvals provide long-term revenue visibility across our green ammonia portfolio and materially strengthen the bankability of our projects while supporting the objectives of India’s National Green Hydrogen Mission and Japan’s decarbonization framework.”
Acme Group has also started another green ammonia project in Paradip, Odisha with a production capacity of 800,000 tpa, to be commissioned by 2029. The clean energy company has signed a green ammonia purchase agreement (Gapa) with Energy Corp. of India (Seci) for 370,000 tpa, creating a strong domestic offtake base.
This is one of the single-largest foreign collaborations in India’s green hydrogen and ammonia sector. It is funded through a combination of external debt, sourced from Japanese export credit agency, international financial institutions and equity from joint venture partners.
The production of green will be delivered mainly to Japanese end users in the power and chemical sectors enabling the long-term decarbonization goals of Japan.