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Licence issued for world’s largest green hydrogen plant in Saudi

Investment of nearly $12bn is expected for a pilot phase said Egypt's planning minister Hala El-Said Creative Commons
Investment of nearly $12bn is expected for a pilot phase said Egypt's planning minister Hala El-Said

The first industrial operating licence has been issued for Neom Green Hydrogen Company (NGHC), which aims to run the world’s largest production facility of its kind.

Saudi Arabia’s Ministry of Industry and Mineral Resources announced on Wednesday that the licence has been granted to NGHC, a joint venture between Neom, Acwa Power and Air Products.

The $5 billion project is a key part of Saudi Arabia’s ambitions to become the world’s leading hydrogen producer.

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

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. It is estimated that as a direct impact of the plant, up to 5 million tonnes of CO2 will be saved per year.

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

Last month, NGHC signed facility agreements with local, regional and international banks and completed a commitment letter with the Saudi Industrial Development Fund for the project. 

The financing is structured with significant participation from the Saudi Industrial Development Fund and the National Infrastructure Fund.

The licence announcement comes as the GCC is forecast to play a key role in the global hydrogen market.

A report published by Frost & Sullivan earlier this month paints a picture of huge opportunity for the region. It said that with GCC countries seeking to achieve energy sustainability through a combination of renewable energy integration, energy-efficiency implementations and hydrogen production and transport, the region’s energy sector is set for “wide-scale evolution”.

“Hydrogen has gained increasing recognition as a key contributor to the evolution of the energy sector and is expected to play a key role in decarbonising the economy across end-use sectors in the GCC,” the report noted.

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.

The region has several competitive advantages to also play a key role in the global green hydrogen economy, said Frost & Sullivan, including solar and wind resources, financial capabilities and export potential.

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.

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