Acwa Power plans to 'replicate' $5bn Neom green hydrogen project abroad

Acwa Power, which is developing a $5 billion green hydrogen-based ammonia production plant in Saudi Arabia’s smart city Neom, plans to "replicate" the project elsewhere, a top executive said.

“Huge capacities” of the fuel are required to meet an anticipated growth in demand, Andrea Lovato, global head of hydrogen at Acwa Power, told The National at the CEBC Annual Summit in Dubai on Tuesday.

In 2020, Acwa Power signed a $5 billion agreement with US-based Air Products and Neom to build the "world’s largest" green hydrogen-based ammonia production centre in the kingdom's $500 billion futuristic city.

The green hydrogen scheme at Neom will use 4 gigawatts of renewable power from solar, wind and storage to produce 650 tonnes a day of hydrogen from electrolysis, using technology supplied by German company Thyssenkrupp, the companies said at the time.

The project, expected to come on stream in 2025, will produce about 1.2 million tonnes of green ammonia a year.

Last year, Acwa Power again teamed up with Air Products and Oman’s OQ energy company to create a multibillion-dollar green hydrogen-based ammonia production unit in Oman's Salalah Free Zone.

In October, the company also joined forces with the Industrial Development Corporation of South Africa, a finance institution, to develop projects on green hydrogen and its derivatives worth $10 billion in Africa’s second-largest economy.

Acwa Power also teamed up with Posco Holdings, the holding company of South Korea’s Posco Group, in July last year, to develop green hydrogen.

The entities will also develop green hydrogen derivatives, such as green ammonia, to decarbonise Posco’s power generation and steel making processes, they said at the time.

Globally, 520 million tonnes of hydrogen will be needed to achieve net-zero targets by 2050, the International Energy Agency said.

French investment bank Natixis estimates that investment in hydrogen will exceed $300 billion by 2030.

“To [build] all this capacity, you need a lot of equipment and electrolysers and that will be the bottleneck … in a time everybody is investing in [hydrogen]” Mr Lovato said.

Hydrogen, which is produced from renewable energy and natural gas, is expected to become a critical fuel as economies and industries turn to a low-carbon world.

It comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas.

The production of green hydrogen, obtained by electrolysis of water, will require “trillions of dollars” in investment along with increasing co-operation with countries where renewable energy is available, said Mr Lovato.

The Middle East, abundant in renewable energy sources, has “high potential” when it comes to green hydrogen production, given the rising investment in infrastructure and the presence of global industry suppliers, he said.

The Acwa Power executive expects hydrogen to be traded in the market in the next seven to 10 years as more capacity comes online.

The hydrogen market is evolving similar to the liquefied natural gas market, with large projects and long-term off-take agreements, said Mr Lovato.

But a crude oil-style “liquid market” for the clean fuel could emerge in the next decade, he said.

Last year, the International Renewable Energy Agency said that members of the Group of Seven advanced economies could be “front runners” in green hydrogen, but warned that overuse of the fuel could slow the energy transition.

The fuel will “grow alongside” renewables amid increasing demand in hard-to-abate sectors such as steel and aluminum, Mr Lovato said.