The kingdom is building a $5 billion plant to make green fuel for export and lessen the country’s dependence on petrodollars.
As governments and industries seek less-polluting alternatives to hydrocarbons, Saudi Arabia – the world’s biggest crude exporter – doesn’t want to cede the burgeoning green hydrogen business to China, Europe or Australia and lose a potentially massive source of income. Thirteen nations have hydrogen strategies in place, and another 11 are preparing theirs, according to BloombergNEF. To assure its position, the Kingdom is building a $5 billion plant powered entirely by sun and wind that will be among the world’s biggest green hydrogen makers when it opens in 2025.
Hydrogen is morphing from a niche power source — used in zeppelins, rockets and nuclear weapons — into big business, with the European Union alone committing $500 billion to scale up its infrastructure. As countries around the world are jostling for position in a future global market, hydrogen experts list the kingdom as one to watch.
Saudi Arabia is setting its sights on becoming the world’s largest supplier of hydrogen — a market that BloombergNEF estimates could be worth as much as $700 billion by 2050.
The current cost of producing a kilogram of green hydrogen is estimated to be a little under $5, according to the International Renewable Energy Agency. Saudi Arabia possesses a competitive advantage based on its perpetual sunshine and wind, and vast tracts of unused land. The new plant – called Helios Green Fuels – is anticipated to use 4 gigawatts of solar and wind power, and estimates that its costs likely will be among the lowest globally and could reach $1.50 per kilogram by 2030, according to BloombergNEF.
The plant is being built in Neom, a megacity backed by Crown Prince Mohammed bin Salman, the 35-year-old de facto ruler of Saudi Arabia, who envisions Neom as a zero-emissions exemplar helping transform society and the economy. The government is partnering to build the green hydrogen plant with Acwa Power, a Riyadh, Saudi Arabia-based power developer partly owned by the kingdom’s sovereign wealth fund, and Air Products and Chemicals Inc., a $58 billion company based in Allentown, Pennsylvania.
The three entities are splitting the cost of the new plant. Helios will produce 650 tons of hydrogen a day by electrolysis – enough for conversion to 1.2 million tons per year of green ammonia. Air Products will buy all of that ammonia, which is easier to ship than liquid or gaseous hydrogen, and convert it back upon delivery to customers.
Despite its massive size compared to existing green hydrogen generating facilities, the Helios plant will produce 15,000 barrels of oil equivalent per day at most, hardly a match for the 9 million barrels of crude the kingdom pumps daily. Even so, finding a way to corner part of the clean-fuels market represents a necessary economic lifeline. And, adds a knowledgeable observer, “It’s sponsored at the highest possible level, so if any project happens, it’s got to be this.”
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