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Scatec hydrogen project overcomes key hurdles

12 July 2024

Norwegian renewable energy developer and investor Scatec has signed a 20-year offtake agreement with Abu Dhabi's  Fertiglobe for the green hydrogen-derived ammonia produced at the fertliser company's existing plant in Sokhna, Egypt.

The signing of the offtake agreement between the two partners, which are co-developing the 100MW Egypt Green Hydrogen project, follows Fertiglobe winning a tender and signing an offtake agreement with Germany's Hydrogen Intermediary Network Company (Hintco).

Hintco is an affiliate of the Germany-based non-profit H2 Global, which is facilitating auctions for green hydrogen imports to Europe.

The intercontinental deals provide the proverbial light at the end of the tunnel for the project, which was first announced in 2021. 

The project is now expected to reach financial close in the first half of 2025, with key development banks in Europe and the US providing finance.

It is a major victory for all companies involved, especially for Scatec, which owns a 52% stake in Egypt Green Hydrogen, along with Fertiglobe and Egypt's Orascom Construction.

MEED reported in May last year that Scatec withdrew from two planned solar projects in Iraq and a planned green hydrogen project in Oman to focus its resources in Egypt.

In addition to the green ammonia project with Fertiglobe, Scatec along with partners has been exploring the development of green methanol plants, wind power projects and a long-distance interconnector in Egypt that will require investments of at least $13bn in the coming years.  

The signing of the offtake deals is also a significant milestone for Egypt, which has courted many investors to develop similar projects in the country despite ongoing currency concerns.

The green ammonia plant in Sokhna is relatively small compared with the projects being planned in Egypt and elsewhere in the region. It will feature a 100MW electrolyser facility powered by an estimated 270MW of solar and wind capacity to produce approximately 13,000 tonnes of renewable hydrogen and up to 74,000 tonnes of renewable ammonia annually, which is just a fraction of the capacity of the $8.4bn Neom green hydrogen project in Saudi Arabia.

However, the offtake and project financing negotiations are not less complex compared to those involved in much larger projects due to the newness of the supply chain, the risks that need to be mitigated, and the uncertainty of demand.  

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Jennifer Aguinaldo

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