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$8.5bn funding deals signed for Saudi green hydrogen project

The project is a key part of Saudi Arabia’s ambitions to become the world’s leading hydrogen producer Reuters/Denis Balibouse
The project is a key part of Saudi Arabia’s ambitions to become the world’s leading hydrogen producer
  • Neom Green Hydrogen Project is new joint venture
  • Saudia Arabia aims to lead the world in hydrogen production
  • The plant is expected to produce 600 tonnes of green hydrogen daily

Agreements have been finalised and signed to fund the world’s largest green hydrogen production facility, which will be built in Saudi Arabia with a total investment of $8.5 billion.

Acwa Power announced on Wednesday in a filing to the Saudi Stock Exchange that the Neom Green Hydrogen Project will be funded by a combination of long term debt and equity. 

It is being developed by Neom Green Hydrogen Company (NGHC), a joint venture between Acwa Power, Air Products and Neom Company.

The project is a key part of Saudi Arabia’s ambitions to become the world’s leading hydrogen producer.

The financing announcement comes as global investment in hydrogen is forecast to reach $500 billion by 2030, far short of the $1.2 trillion required to reach long-term net zero goals.

The financing consists of $5.8 billion senior debt, as well as $1.5 billion from the National Development Fund and $1.2 billion in the form of riyal-denominated financing from the Saudi Industrial Development Fund.

Last month the first industrial operating licence was issued for NGHC from Saudi Arabia’s Ministry of Industry and Mineral Resources.

The company is based in Oxagon, Neom’s hub for advanced and clean industries, which is planned to feature a next generation port and fully automated and integrated supply chain and logistics network.

Global market

It is expected that the NGHC plant will start producing green hydrogen from 100 percent renewable energy sources in 2026, with production of up to 1.2 million tonnes of green ammonia annually – a figure equivalent to 600 tonnes of green hydrogen per day. 

This green ammonia will be exported to global markets, supporting the decarbonisation of the heavy duty transport sector.

The multi-billion dollar plant will run on 4GW of wind and solar energy and produce green hydrogen using 2.2GW electrolysis technology.

GCC countries currently use large quantities of natural gas-based grey hydrogen. The availability of low cost natural gas, coupled with the ease of carbon capture, use and storage allows for the cost competitive production of blue hydrogen.

At least 17 countries and the EU have already developed hydrogen strategies, while about 20 other countries are presently formulating their policies. 

In August Abu Dhabi unveiled its hydrogen policy and regulatory framework – part of the UAE’s push to become a global force in the low carbon economy.

Hydrogen could account for up to 12 percent of global energy use by 2050, leading to the rise of new energy superpowers, according to a report from the International Renewable Energy Agency.

The hydrogen colour code

  • Green hydrogen is the term used to describe hydrogen that is produced on a CO2-neutral basis through the electrolysis of water. 
  • Turquoise hydrogen is created by a thermal process in which natural gas is broken down with the help of methane pyrolysis into hydrogen and solid carbon.
  • Blue hydrogen is generated from the steam reduction of natural gas. 
  • Grey hydrogen is obtained by steam reforming fossil fuels such as natural gas or coal. 
  • Yellow hydrogen refers to hydrogen production from a mixture of renewable energies and fossil fuels. 
  • Sometimes other colours are ascribed to hydrogen, based on how it is produced. For red, pink and violet hydrogen, the electrolysers are driven by nuclear power. 
  • Hydrogen that is merely a waste product of other chemical processes is referred to as white hydrogen, while the use of coal as a fuel produces brown hydrogen.