meed-logo

line1 line2 line3
SIGN IN / REGISTER

Region’s $155bn hydrogen projects require focus

17 November 2022

Commentary

Jennifer Aguinaldo

Energy & technology editor

As of 16 November, close to 50 green hydrogen projects requiring an estimated investment of at least $155bn are being planned in the Middle East and North Africa (Mena) region.

Integrated green hydrogen-based ammonia production facilities comprise the majority of these projects, which means the total estimated investments may be broken down into renewable energy plants, $102bn; electrolyser plants, $23bn; air separation units, $14bn; and civil works, $16bn.

The estimated investment excludes the infrastructure required to store or transport the end products to their destination.

These projects offer major opportunities for the entire value chain, not least for solar and wind power plants, which could account for an average two-thirds of the total investment.

The ongoing Cop27 UN climate summit in Egypt is helping build the momentum. Preliminary agreements for over 23GW of wind projects and several green hydrogen deals in Egypt have been signed immediately before and during the conference.

The North African nation already accounts for about 42 per cent of the planned green hydrogen and ammonia projects in the Mena region.

While there is widespread pessimism about the feasibility of most of these projects – with only one project having secured financing so far – the gravity of the Paris Agreement commitments and the stature of companies involved in these so-called early-mover projects are hard to dismiss.

Potential investors range from the region’s sovereign wealth funds, which built their portfolio using oil and gas revenues, to energy trading companies and suppliers, equity investors, port operators and international and regional utility developers.

Export credit agencies, particularly from the net-zero economies in Asia and Europe, are expected to play a crucial role as they consider underwriting the substantial risks, and potential returns, that these projects carry at this early stage.

Scaling electrolyser capacity and production in time to meet the proposed projects’ timelines is a key question yet to be answered. Producing and consuming countries also need to set up mutually agreed standards and regulations on what constitutes clean and green hydrogen. 

These and other issues will influence how these projects can reach a final investment decision (FID). Offtake and financing negotiations have been dragging on for nearly two years for some of the earliest schemes, which holds back the projects from reaching the construction phase.

The understanding is that potential stakeholders for most of the projects are nowhere near reaching FID and, except for a very small number of exceptions, may need a few more years to get there.

Similarly, the inertia to ramp up fossil fuel capacities in the wake of the energy crunch induced by the Russia-Ukraine war is not necessarily helping these projects get over the line sooner, or as expected.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10359141/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Oman 500MW solar project secures financing

    8 December 2023

    Oman's Manah 1 solar photovoltaic (PV) independent power producer (IPP) project has signed financing deals worth $302m with France's Societe Generale, the Export-Import Bank of Korea (Korea Eximbank) and Bank Muscat.

    The Manah 1 IPP developers and investors, comprising Korea Western Power Company (Kowepo) and France's EDF Renewables, signed the deal on 6 December.

    According to a local media report citing a Kowepo statement, the Korea Eximbank plans to provide $170m in project financing.  

    A team comprising EDF Renewables and Kowepo started mobilising to construct the 500MW Manah 1 solar IPP project in Oman, as MEED reported in September.

    The solar power plant will span over 7.8 square kilometres in Oman’s Al-Dakhiliyah governorate. 

    The developer intends to deploy over 1 million bifacial photovoltaic (PV) modules mounted on a single-axis tracker system for the plant.

    A project company, Wadi Noor Solar Power Company, has been formed to deliver and operate the project for 20 years.

    The company will work with Australia-headquartered Worley, which has recently been appointed as the owner engineer for the project.

    Oman Power & Water Procurement Company (OPWP) signed the 20-year power-purchase agreements (PPA) for the Manah 1 and Manah 2 solar IPP projects in March this year.

    Both plants are expected to be operational by 2025.

    A team of Singapore’s Sembcorp Industries (Sembcorp) and China-headquartered Jinko Power Technology was awarded the 500MW Manah 2 solar PV IPP contract.

    Manah 1 and 2 were previously named Solar IPP 2022 and 2023.

    To be located 150 kilometres southwest of Muscat, the Manah 1 and 2 solar projects comprise the second utility-scale renewable energy projects to be tendered by OPWP, after Ibri 2, which has been operational since 2021.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11358677/main.jpg
    Jennifer Aguinaldo
  • Masdar and OMV sign green hydrogen agreement

    8 December 2023

    Abu Dhabi Future Energy Company (Masdar) and Austrian energy and chemicals firm OMV have signed a preliminary agreement to partner in the production of green hydrogen for the decarbonisation of industrial processes in OMV’s refineries.

    The non-binding heads of terms (HoT) agreement forms the basis of a joint agreement to develop an industrial large-scale electrolysis plant, which will be powered by renewable energy, Masdar said in a statement on 8 December.

    The statement added that the partners will collaborate to develop the project and plan to make a final investment decision in the second half of 2024.

    The HoT signing follows an initial memorandum of understanding (MoU), which the two parties signed in Abu Dhabi earlier this year.

    The agreement with OMV is a step in the right direction towards building a robust hydrogen value chain and supports Masdar's ongoing aim of 1 million tonnes of green hydrogen per annum globally by 2030, according to Masdar's chief green hydrogen officer, Mohammad Abdelqader el-Ramahi.

    Green hydrogen oasis

    According to MEED data, there are at least 12 known and planned green hydrogen projects in the UAE, with a budget of at least $12bn.

    In addition to the planned $5bn green hydrogen hub planned by Masdar and French utility developer and investor Engie, the other major planned green hydrogen projects in Abu Dhabi involve its largest industrial firms, including Abu Dhabi National Energy Company (Taqa), Emirates Steel, Fertiglobe and Brooge.

    One of these projects, the 150MW green hydrogen-based ammonia production facility planned in Ruwais, is expected to reach a financial investment decision (FID) shortly.

    The UAE's Green Hydrogen Strategy envisages the production of 1.4 million tonnes a year (t/y) of hydrogen by 2031, with green hydrogen accounting for 70 per cent of the target.

    This is expected to increase to 7.5 million t/y by 2040 and 15 million t/y by 2050. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11358471/main.jpg
    Jennifer Aguinaldo
  • Sheikh Mohammed inaugurates Dubai CSP plant

    7 December 2023

    Sheikh Mohammed bin Rashid al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, has inaugurated the fourth phase of the Mohammed bin Rashid al-Maktoum (MBR) Solar Park in Dubai.

    The 950MW fourth phase of the MBR solar park required an investment of AED15.78bn ($4.34bn).

    It uses hybrid technologies: 600MW from a parabolic basin complex, 100MW from the CSP tower, and 250MW from solar photovoltaic (PV) panels.

    The independent power producer (IPP) project features the tallest solar tower in the world, at 263.126 metres, and a thermal energy storage facility with a capacity of 5,907 megawatt-hours (MWh), the world's largest according to the Guinness World Records.

    The project covers an area of 44 square kilometres. It features 70,000 heliostats that track the sun’s movement. The molten salt receiver (MSR) on top of the solar power tower is the core and the most important part of the CSP plant. It receives solar radiation and turns it into thermal energy.

    The MSR contains over 1,000 thin tubes that enable the absorption of sun rays and their transfer to the molten salt within these tubes.

    The project can power approximately 320,000 residences with clean and sustainable energy. It will reduce carbon emissions by about 1.6 million tonnes annually.

    The completion of the project's fourth phase brings the total capacity of the MBR solar park to 2,863MW so far. The phases and their capacities are:

    • 13MW solar PV phase one: Completed in 2013
    • 200MW solar PV phase two: Commissioned in 2017
    • 800MW solar PV phase three: Commissioned in 2020
    • 950MW hybrid CSP/solar PV phase four: Inaugurated in 2023
    • 900MW solar PV phase five: Commissioned in 2023

    Dewa is aiming for the MBR development to reach 5,000MW of capacity by 2030. It recently awarded the UAE-based Masdar the contract to develop the solar park's sixth phase, which has capacity of 1,800MW.

    Project background

    Dubai Electricity & Water Authority (Dewa) awarded a consortium of Saudi Arabia’s Acwa Power and China's Silk Road Fund the contract to develop a 700MW CSP plant with storage for the fourth phase scheme in November 2017. Since then, the project has been expanded to include a 250MW solar PV component.

    Acwa Power then awarded Shanghai Electric the $3.8bn EPC contract for the hybrid CSP/PV plant in early 2018.

    The project reached financial closure in March 2019. The cost will be met through $2.9bn of debt and $1.5bn of equity.

    According to the project structure, Dewa is to provide $750m, or half of the project equity. Project developers Acwa Power and the Silk Road Fund will provide 51 per cent and 49 per cent, respectively, of the remaining equity.

    The fourth phase project achieved a tariff of 7.3 $cents a kilowatt hour ($c/kWh) for the CSP component and 2.4$c/kWh for the PV capacity, two of the lowest tariffs for CSP and PV solar technology in the world at the time of award.

    Dewa holds a 51 per cent stake in the project company, Noor Energy 1, set up to develop the plant, with Acwa Power and the Silk Road Fund holding the remaining stake. The developer consortium has signed a 35-year power-purchase agreement to supply power to Dubai’s grid.

    Photo: Wam

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11354147/main.jpg
    Jennifer Aguinaldo
  • Firms win Saudi Landbridge

    7 December 2023

     

    Register for MEED’s guest programme 

    The team of US-based Hill International, Italy’s Italferr and Spain’s Sener has been awarded the contract to provide project management services for the estimated $7bn Saudi Landbridge project.

    The Landbridge is a rail project that will connect the Red Sea coast of Saudi Arabia in the west and the Gulf coast in the east. It is one of the largest infrastructure projects planned in Saudi Arabia. The scheme is being implemented by the Saudi Railway Company (SAR).

    Project scope

    The project comprises six lines. The first line involves upgrading the Jubail Industrial City internal network, which is currently under construction. It will require 10 kilometres (km) of track to be built.

    The second is the upgrade of the Jubail to Dammam railway line, which is also currently under construction. It will require 35km of track to be built.

    The third line involves the upgrade of the Dammam to Riyadh railway line, with 87km of track to be built. 

    The fourth line, known as the Riyadh bypass, is from the existing network in the north of the city to the south. It is split into two packages: the first has 67km of track, and the second has 35km.

    The fifth line is a link from Riyadh to Jeddah and then on to King Abdullah Port with three stations at Jamuma, Moya and Al-Doadmi. The Riyadh to Jeddah line will have 920km of track, and the Jeddah to King Abdullah Port link will have 146km of track.

    The sixth line is a new 172km line from King Abdullah Port to Yanbu Industrial City.

    There will also be seven logistics centres: Jubail Industrial City Logistics Centre, Damman Logistics Dry Port, a relocated Riyadh Dry Port, King Khalid Airport Logistics Centre in Riyadh, Jeddah Logistics Dry Port, King Abdullah Port Logistics Centre and Yanbu Industrial City Logistics Centre.

    Contractor negotiations

    MEED reported in November that negotiations with the Saudi China Landbridge Consortium that will build the rail link are in the final stages.

    The consortium signed a memorandum of understanding to implement the project on a public-private partnership basis in October 2018. It was formed by SAR and China Civil Engineering Construction Company.

    Al-Ayuni Contracting was named as the local partner for the consortium. Other members include French firms Systra and Thales; Canada’s WSP; Aldhabaan & Partners, the local partner of UK legal consultancy Eversheds & Sutherland; ALG Infrastructure; and Calx Consultancy.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11354086/main.jpg
    Colin Foreman
  • Siemens Energy wins five Iraq substation contracts

    6 December 2023

    Register for MEED's guest programme 

    Iraq's Electricity Ministry has awarded Germany-headquartered Siemens Energy a contract to deliver five high-voltage substations on a turnkey basis in Iraq.

    The 400-kilovolt (kV) substations will be installed in Baghdad, Diyala, Najaf, Karbala and Basra.

    Each substation will have a capacity of 1,500MW. Work on the substation projects is expected to commence in early 2024.

    German export credit agency Allianz Trade Trust, formerly Euler Hermes, will provide most of the project financing in collaboration with Iraq's Finance Ministry.

    MEED understands the substations address the increasing demand for power transmission in Iraq, providing power to around 2.5 million homes.

    On 5 December, a consortium led by K&K Group, which includes Siemens Energy, announced that it is moving ahead with a detailed study for an electricity corridor, known as Green Vein, whose initial stage will have the capacity to transmit up to 3GW of clean electricity from Egypt to Italy.

    Italian companies Cesi and Prysmian Group comprise the rest of the consortium planning to develop the Green Vein project.

    It entails the installation of a submarine high-voltage, direct current (HVDC) cable, which extends approximately 2,800 kilometres and reaches sea depths of up to 3,000 metres.

    The cable will connect the West Sohag area in Egypt to the Dolo substation near the Mestre Industrial Area in Italy.

    The project's initial capacity of 3GW equates to approximately 5 per cent of Italy's peak electricity demand.

    Image: Pixabay

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11352608/main.jpg
    Jennifer Aguinaldo