Saudi green hydrogen firm says NEOM plant is near completion

Saudi Arabia is on track to complete construction next year of the world’s biggest green hydrogen production plant.

Now the question becomes whether the oil-rich kingdom can round up enough customers to justify the mammoth cost of producing the eco-friendly fuel at its new Oxagon industrial city.

NEOM Green Hydrogen Co. – a joint venture of NEOM, Acwa Power and U.S.-based Air Products – said in a statement on Tuesday that more than 80% of the project has been completed.

The company released an accompanying video highlighting features that include a 250-turbine wind garden, a vast solar farm and a dedicated transmission grid. 

With construction of the $8.4 billion facility due to be completed by mid-2026, the company said it would be ready to export green ammonia, which can be converted into hydrogen to generate electricity, in 2027.

The nascent energy industry, however, faces challenges of high production costs and a lack of immediate demand to fuel its anticipated growth.

So far, Paris-based TotalEnergies is NEOM Green Hydrogen’s only committed customer, Bloomberg reports.

Saudi Arabia prepares to build second green hydrogen plant

Saudi Arabia has doubled down on its ambition to dominate the global green hydrogen market, with plans to build a second multi-billion dollar plant, even as it struggles to sell the output from its first large-scale hydrogen project.

ACWA Power, which is backed by the kingdom’s Public Investment Fund, has awarded a front-end engineering design contract for the 4 gigawatt Yanbu plant to Madrid-based engineering firm Tecnicas Reunidas and China’s Sinopec Guangzhou Engineering, Bloomberg reports.

The new plant, which is expected to go online in 2030, will generate 400,000 tons of green hydrogen per year using wind and solar power, almost double the 219,000 tons expected from its first $8.5 billion NEOM plant, which is estimated to be about 85% complete.

Green hydrogen, which is produced using renewable energy to split water molecules, is seen as a key to decarbonizing industries including steelmaking, shipping and fertilizer production. For export, it can be converted into more stable green ammonia and later reconstituted at its destination – a process known as “cracking.”

However the nascent industry has faced uncertainty and supply chain issues across multiple fronts, as it remains expensive compared to fossil fuels and industries have been slow to commit to building the infrastructure needed to use it.

Earlier this month, ACWA’s partner in the NEOM plant, U.S.-based Air Products & Chemicals, which has an exclusive off-take agreement, paused its $2.7 billion hydrogen cracking terminal in the English port town of Immingham over uncertainty related to obtaining U.K. subsidies.

The Saudi decision to press ahead with the Yanbu plant is a strong bet on the future of the green industry at a time when the kingdom needs to wean itself off fossil fuels. New analysis by Bloomberg Economics suggests Saudi’s dependence on oil revenue is largely unchanged from 2016 – and may have even grown deeper on some measures.

Energy industry lauds Trump’s policy changes at Texas summit

Drilling and fossil fuels are in. Green hydrogen is out. That appears to be the prevailing view among oil company executives who are gathered in Houston for the S&P Global CERAWeek conference.

The mood at the annual energy summit on Monday was described as celebratory by the Washington Post as industry leaders listened to U.S. Energy Secretary Chris Wright outlining a new manifesto.

“The Trump administration will end the Biden administration’s irrational, quasi-religious policies on climate change that have imposed endless sacrifices on our citizens,” Wright said.

At breakfast presentations and corporate-sponsored receptions, oil executives promoted plans for building more fossil-fuel infrastructure, arguing that advocates for cleaner energy need to recognize that petroleum is essential to meet growing U.S. demand for power.

“We can all feel the winds of history in the sails of our businesses again,” Saudi Aramco CEO Amin Nasser said in an address calling on the industry to invest more in fossil fuels and not expect green hydrogen and other new sustainable energy sources to fill global needs.

“There is more chance of Elvis speaking next than the current plan working,” Nasser said.