Neom Green Hydrogen mulls next phase

23 November 2023

 

Neom Green Hydrogen Company (NGHC) received the first set of wind turbines for one of the two renewable energy plants that will power its integrated green hydrogen and ammonia production facility in early October.

The initial panels for the project’s solar power plant and hydrogen storage tanks are expected to arrive soon. The first air separation units, meanwhile, will be delivered in the first quarter of 2024.

“We are on track to meet our 2026 target commercial operation date, with the first ammonia production expected sometime between mid to late summer of 2026,” David Edmondson, CEO of NGHC (pictured), tells MEED.

Announced in the summer of 2020, the region’s first, and probably the world’s largest, green hydrogen and ammonia production facility reached financial close in May this year. The project required a final investment of $8.4bn.

“The decision to develop the project was made in 2019 in the strong belief that there would be a market for green hydrogen,” explains Edmondson.

“Having Air Products was certainly a major factor in that decision because of their hydrogen knowledge and experience. They already have an existing infrastructure for the production and distribution of hydrogen, including for mobility.”  

The US-headquartered industrial gases firm, Saudi utility developer and investor Acwa Power and Public Investment Fund-backed Neom equally own NGHC.

The scale of the integrated project is unprecedented. It will require over 4GW of wind and solar power and 400MW of battery energy storage systems. A 190-kilometre electricity transmission grid will link these to a 2GW electrolysis plant in Neom’s Oxagon industrial city.

The plant will produce up to 600 tonnes of hydrogen daily, which will be converted into roughly 1.2 million tonnes of ammonia a year. Air Products will ship the ammonia to Europe to be cracked back to hydrogen for mobility applications.

Despite some pushback on the business model's efficiency and the feasibility of green hydrogen applications in transport and mobility, Edmondson assures MEED that years of due diligence and compliance with EU carbon intensity policies support the business case. Twenty-three banks are financing the project, he points out.

“The NGHC plant is designed to ensure that the carbon intensity of the end product will be beneath the required threshold in Europe,” he says.

Edmondson acknowledges the premium costs currently involved in a low-carbon-intensity supply chain. However, this is expected to change as companies implement their net-zero commitments and suppliers scale their production to meet rising demand.

Air Products’ key role

In addition to being the exclusive offtaker for over 30 years for the green ammonia produced at the plant, Air Products is also the project’s main engineering, procurement and construction (EPC) contractor.

The firm’s triple role as an equity investor, EPC contractor and offtaker ensures that “we keep the focus on lowest cost of green hydrogen or ammonia”, notes Edmondson.

“Despite being the EPC contractor and a major investor in NGHC, Air Products’ primary objective is to generate revenue out of selling the ammonia that they have agreed to offtake from NGHC, not through the EPC contract,” he adds.

Phase two

With construction well under way for the integrated Neom green hydrogen and ammonia project, NGHC and its shareholders are now looking at a potential second phase.

“The Neom green hydrogen project is not expected to be a single investment,” says Edmondson.

“With all the ammonia to be produced at the plant under construction already sold to Air Products, there remains an interest in looking at additional investments for both the export market as well as the local market requirements for green hydrogen.”

Neom, which aims to be carbon-free and 100 per cent powered by renewable energy, is considering alternative fuels such as green hydrogen to achieve that goal.

Potential applications include mobility, given the plan to develop a rail system and other modes of transport for Neom.

“There was no domestic demand for green hydrogen fuel when the project was originally conceived in 2019. The market is continuing to evolve and we now see a stronger business case for local supply of green hydrogen,” says Edmondson.

The next phase is envisaged to be another large-scale project addressing domestic and international demand for green hydrogen and green ammonia.

Edmondson says more serious discussions about the project’s next phase will be on the agenda in 2024.

Ongoing innovation

The groundwork for the more widespread adoption of green hydrogen in Neom and across Saudi Arabia is under way.

In 2024, Neom’s energy and water subsidiary Enowa will open the Hydrogen and Innovation Development Centre (HIDC), which aims to produce and adopt decarbonised and clean synthetic fuels in partnership with Saudi Aramco. 

Initially, the NGHC project at the HIDC will gather operational data from the facility’s first 20MW electrolyser from Germany’s ThyssenKrupp Nucera, which will be used at the NGHC plant.

This will help advance Enowa’s plans with Air Products Qudra to test advanced hydrogen fuel cell-based mobility and logistics solutions at Neom. 

Neom factor

As a trailblazing project, Edmondson recognises the many opportunities that Neom has provided.

“We have had excellent support from Neom on both our land and permitting requirements as we have developed the project,” he says.

“We have also benefitted from legislation that allowed the first private grid in the kingdom and were granted the first industrial licence in Saudi Arabia for a green hydrogen plant.

“Neom has certainly risen to the challenge of supporting investors to make the project a reality.”

https://image.digitalinsightresearch.in/uploads/NewsArticle/11317662/main2557.jpg
Jennifer Aguinaldo
Related Articles
  • Bahrain mall to install solar carport

    24 April 2024

    The Avenues-Bahrain has signed a solar power purchase agreement (PPA) with UAE-headquartered solar company Yellow Door Energy (YDE) for a 3.5MW solar carport system encompassing the mall’s entire outdoor parking facility.

    According to the shopping mall operator, YDE will build, operate and maintain the solar carport, which will comprise over 6,000 bi-facial solar panels providing shade for 1,025 parking spots while generating over 5.8 million kilowatt-hours (kWh) of clean energy in its first year.

    The Avenues-Bahrain expects construction of the solar carport to begin soon and be completed by the fourth quarter of 2024.

    The solar carport, covering an area of 23,500 square metres (sqm), will complement the mall’s four-year-old rooftop solar photovoltaic (PV) system, which has a capacity of 250KW and offsets 300 metric tonnes of carbon emissions annually.

    The Avenues-Bahrain win marks YDE’s sixth secured solar project in Bahrain, bringing its total portfolio in the country to over 30MW of awarded solar projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11709324/main.jpg
    Jennifer Aguinaldo
  • No extension for Dubai sewer tunnel prequalification

    24 April 2024

     

    Register for MEED's guest programme 

    Dubai Municipality expects interested engineering, procurement and construction (EPC) companies to submit their statements of qualifications (SOQs) by the end of April for the contracts to develop the Dubai Strategic Sewerage Tunnels (DSST) project.

    “No further extension has been granted,” a source close to the project tells MEED.

    International, regional and local EPC contractors are keen to prequalify to bid for the contracts for the $22bn DSST scheme, which Dubai Municipality is implementing on a public-private partnership (PPP) basis.

    In addition to its size, the project is gaining significant interest due to its unique procurement approach, whereby EPC contractors’ prequalification precedes developers’ prequalification.

    Dubai Municipality is undertaking the prequalification process for EPC contractors ahead of prequalifying companies that can bid for the contracts to develop and operate various packages of the project.

    According to industry sources, the floods resulting from last week’s storm that hit Dubai and other emirates have also made implementing the project more urgent. 

    The bidders for each of the PPP requests for proposals (RFPs) will be prequalified consortiums comprised of sponsors, EPC contractors and operation and management (O&M) contractors.

    MEED previously reported that the overall project will require a capital expenditure of roughly AED30bn ($8bn), while the whole life cost over the full concession terms of the entire project is estimated to reach AED80bn.

    The project aims to convert Dubai’s existing sewerage system from a pumped system to a gravity system by decommissioning the existing pump stations and providing “a sustainable, innovative, reliable service for future generations”.

    Dubai currently has two major sewerage catchments. The first in Deira is Warsan, where the Warsan sewage treatment plant (STP) treats the flow.

    The second catchment, called Jebel Ali, is in Bur Dubai, where the wastewater is treated at the Jebel Ali STP.

    DSST-DLT packages

    Under the current plan, the $22bn DSST project is broken down into six packages, which will be tendered separately as PPP packages with concession periods lasting between 25 and 35 years.

    The first package, J1, comprises Jebel Ali tunnels (North) and terminal pump stations (TPS). The tunnels will extend approximately 42 kilometres, and the links will extend 10km. 

    The second package, J2, covers the southern section of the Jebel Ali tunnels, which will extend 16km and have a link stretching 46km.

    W for Warsan, the third package, comprises 16km of tunnels, TPS and 46km of links.

    J3, the fourth package, comprises 129km of links. Once completed, Dubai Municipality will operate them, unlike the first three packages, which are envisaged to be operated and maintained by the winning PPP contractors.  

    J1, J2 and W will be procured under a design-build-finance-operate-maintain model with a concession period of 25-35 years.

    J3 will be procured under a design-build-finance model with a concession period of 25-35 years.

    J1, J2, W and J3 will comprise the deep sewerage tunnels, links and TPS (DLT) components of the overall project.

    MEED understands the project’s remaining two packages, the expansion and upgrade of the Jebel Ali and Warsan STPs, will be procured in a process separate from the four DSST-DLT components.

    The RFPs for the four DSST-DLT packages will likely be issued sequentially, staggered around six to 12 months apart.

    Dubai Municipality has appointed Abu Dhabi-headquartered Tribe Infrastructure Group as lead and financial adviser, UK-based Ashurst as legal adviser and the US’ Parsons as technical adviser for the DSST project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11708845/main.jpg
    Jennifer Aguinaldo
  • UAE and Oman firms sign $32bn energy deal

    24 April 2024

    Register for MEED's guest programme 

    An industrial and energy project valued at an estimated AED117bn ($31.8bn) topped the recent investment agreements reached between the UAE and Oman following Sultan Haitham Bin Tariq’s visit to the UAE capital earlier this week.

    The package encompasses renewable energy initiatives, including wind and solar projects, alongside green metals production facilities.

    The agreement’s signatories included Abu Dhabi National Energy Company (Taqa), Abu Dhabi Future Energy Company (Masdar), Emirates Global Aluminium, Emirates Steel Arkan, OQ Alternative Energy and Oman Electricity Transmission Company.

    Details of the planned projects have not yet been disclosed, although the production of green steel and green aluminium in either jurisdiction is implied.

    The companies signed the agreements on 22 April in the presence of Sheikh Theyab Bin Mohamed Bin Zayed Al Nahyan, chairman of the Office of Development and Martyrs’ Families Affairs at the Presidential Court, and Sheikh Hamed Bin Zayed Al Nahyan, managing director of Abu Dhabi Investment Authority.

    Along with other technology and infrastructure-related partnerships and projects, an agreement for the UAE-Oman rail connectivity project, valued at AED11bn, was also signed.

    Photo: WAM


    MEED’s latest special report on Oman includes: 

    > COMMENT: Muscat needs to stimulate growth
    > GOVERNMENT & ECONOMY: Muscat performs tricky budget balancing act

    > BANKING: Oman banks look to projects for growth
    > OIL & GAS: Oman diversifies hydrocarbons value chain
    > POWER & WATER: Oman expands grid connectivity
    > HYDROGEN: Oman seeks early hydrogen success

    > CONSTRUCTION: Oman construction is back on track

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11706425/main5922.jpg
    Jennifer Aguinaldo
  • Abu Dhabi and Oman launch $180m tech fund

    24 April 2024

    Abu Dhabi-based investment and holding company, ADQ, and Oman Investment Authority (OIA) have launched a $180m technology focused vehicle called Jasoor Fund.

    Jasoor Fund aims to bolster Oman’s digital economy as well as the wider Middle East and North Africa (Mena) region by supporting high-growth technology companies in sectors such as finance, education, health care, clean energy, food, agriculture and logistics.

    OIA is represented by Ithca Group, formerly known as Oman Information and Communication Technologies Group, in the fund.

    According to ADQ, the fund’s core focus will be on innovative technology companies established in the sultanate, in addition to technology startups in other countries in the region.

    It will undertake investments in high-growth technology companies at various stages of development that have established business models.

    Mohamed Hassan Alsuwaidi, ADQ managing director and chief executive, said the launch of Jasoor Fund “reinforces our commitment to make investments that unlock the potential of key sectors of the economy, while creating lasting value for stakeholders”.

    Jasoor Fund is part of broader framework agreement signed between both parties in 2022, when they identified investment opportunities worth over $8bn across key sectors of Oman’s economy.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11707308/main.jpg
    Jennifer Aguinaldo
  • Contractors win Oman-Etihad Rail packages

    23 April 2024

    Register for MEED's guest programme 

    Oman-Etihad Rail Company (OERC) has announced that it has awarded contracts for three civil works packages for the railway project linking Oman and the UAE, which is now officially called Hafeet Rail.

    The estimated AED5.5bn ($1.5bn) design-and-build contract was awarded to a consortium of Abu Dhabi-based National Projects Construction (NPC), National Infrastructure Construction Company (NICC), Tristar Engineering & Construction and Oman’s Galfar Engineering & Contracting.

    NPC is the infrastructure development arm of the Abu Dhabi-based Trojan Construction Group, which is a subsidiary of local investment firm Alpha Dhabi.

    According to sources close to the project, the clients are expected to appoint an engineering design firm for the project imminently.

    NICC is the project management consultant for the Hafeet Rail scheme.

    OERC also awarded a separate contract for the rolling stock systems and integration contracts to German firm Siemens and Egyptian contractor Hassan Allam Construction.

    Several high-ranking officials from both sides attended the agreement signing ceremony.

    They included Sheikh Hamed Bin Zayed Al Nahyan, managing director of Abu Dhabi Investment Authority; Suhail Bin Mohammed Al Mazrouei, minister of energy and infrastructure; Abdul Salam Bin Mohammed Al Murshidi, chairman of the Omani Investment Authority; Qais Bin Mohammed Al Yousef, minister of commerce, industry and investment promotion; and Ahmed Bin Hilal Al Busaidi, Oman’s ambassador to the UAE.

    In January, MEED reported that OERC had received bids for three civil works packages for the railway project linking the two countries.

    According to regional projects tracker MEED Projects, the firms submitted their bids on 4 December for packages A and B. The bid for package C was submitted on 11 December.

    OERC qualified companies that could bid for the three civil works packages for the railway project in August last year.

    Network development

    Oman-Etihad Rail Company was established in September 2022 to implement the railway network between the two countries.

    The project subsequently received a push after Oman-Etihad Rail Company inked a strategic agreement with Abu Dhabi-based Mubadala Investment Company to support its development.

    The UAE-Oman Rail Network is set to improve the two countries’ competitiveness in global trade and help establish their positions as logistics hubs that serve as gateways to regional markets.

    The scheme supports both countries’ sustainable development goals by improving their transport and infrastructure sectors.

    The line’s increased efficiency compared to other modes of transport is expected to reduce the overall cost of supply chains. The network will also provide trade and investment opportunities for the private sector and new job opportunities.

    Passenger trains will run up to 200 kilometres (km) an hour on the line, reducing the journey time between Sohar and Abu Dhabi to 100 minutes and between Sohar and Al Ain to 47 minutes.

    Freight trains will reach a top speed of 120km/hour.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11706161/main.gif
    Yasir Iqbal