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US, Saudi Firms Plan Green Hydrogen Project

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Air Products of the US is teaming up with Saudi firm Acwa Power to build a $5 billion plant in Saudi Arabia that will supply "green hydrogen" for use as a transportation fuel. Assuming it goes forward as planned, the project would represent an important milestone in the kingdom's efforts to diversify its economy and reduce its dependence on oil. The plans announced Thursday call for construction of a hydrogen-based ammonia production plant powered by renewable energy in Neom, a "city of the future" that is being built in northwest Saudi Arabia. The project will be equally owned by Air Products, a Pennsylvania-based supplier of industrial gases; Acwa Power, whose owners include Saudi government entities; and Neom itself. The plant will make ammonia by combining hydrogen with nitrogen. The hydrogen will be extracted from water and the nitrogen extracted from air. Energy for these processes will come from solar and wind power. Air Products will be the exclusive off-taker of the ammonia and plans to use a process known as dissociation to recover hydrogen from the ammonia, which it will sell around the world as a transportation fuel. The project is scheduled to come on line in 2025 and the partners estimate that it will save more than 3 million tons of CO2 emissions annually and will eliminate pollutants from the equivalent of more than 700,000 cars. In a recent interview with Energy Intelligence, Acwa CEO Paddy Padmanathan said falling costs for renewables have brightened the picture significantly for hydrogen (NE Jul.9'20). Hydrogen production has previously been expensive due to the large amounts of electricity needed to make it. But production using low-cost renewable energy has emerged as a cost-effective way forward. Indeed, several records for low-cost solar power have been struck in recent months in Abu Dhabi and Dubai. Regulators in Dubai awarded a consortium led by Acwa the fifth phase of a major solar park at a winning tariff of $1.69 per kilowatt hour. The Acwa CEO says that once green hydrogen is produced at scale from water using electrolysis, the production costs will come down the same way they have for solar and wind. Padmanathan estimates that green hydrogen will eventually fall to an extremely competitive $1/kWh as soon as 2030, although others typically see that milestone being reached around 2050. Such low costs would make green hydrogen a feasible source of energy for the decarbonization of a broader range of sectors from aluminum and steelmaking to long-distance transportation via ships, trucks or even aircraft. Acwa is owned by several Saudi government institutions and conglomerates including the Public Investment Fund, which acts as the kingdom's main investment arm as it pursues diversification of the economy under Crown Prince Mohammed bin Salman's Vision 2030 initiative (IOD Jan.16'19). By diversifying into renewables and developing other non-petroleum industries, Saudi leaders hope to free up more oil for export and shield the economy from the ups and downs of the oil market. However, this process already appeared to be moving more slowly than the government had indicated, even before the coronavirus pandemic ushered in a global recession. Acwa has achieved rapid growth over the past 10 years, expanding its footprint from a local Saudi firm to become an international player with projects across the Gulf region as well as in Azerbaijan, Vietnam and South Africa. Lauren Craft, Washington, and Yousra Samaha, Dubai

Topics:
Upstream Technology, Hydrogen
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