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ACWA Power to build three more giant green hydrogen projects in Saudi Arabia

6 Mar 2023

Saudi Arabia's ACWA Power is set to build three more giant green hydrogen projects in the country after finalising the financing agreements for the NEOM Green Hydrogen Project, which is the world's largest utility-scale green hydrogen facility. The NEOM Green Hydrogen Project, which is powered entirely by renewable energy, will produce 600 tons per day of clean hydrogen through electrolysis and up to 1.2 million tons per year of green ammonia when it becomes operational in 2026. The project's investment cost of $8.5 billion will be funded by a combination of long-term debt and equity.

ACWA Power's chief executive, Paddy Padmanathan, said that the company plans to develop five projects similar in scale to the NEOM hydrogen plant, with the first plant already completed. The company is currently looking at two other sites adjacent to the NEOM facility, while also considering another location for the third plant. The new projects are expected to be cheaper than the NEOM facility as developers gain more experience, and technologies improve.

ACWA Power's commitment to developing these megaprojects is significant, given Saudi Arabia's ambitious goal to generate 50% of its electricity from renewable sources by 2030. Green hydrogen has emerged as a potential solution for decarbonising energy-intensive industries such as steel and chemicals production. Saudi Arabia is also keen to monetise its vast renewable energy resources and green hydrogen could be a significant contributor to its economic growth.

The NEOM Green Hydrogen Project is a joint venture between ACWA Power, Air Products and NEOM Company, with ACWA Power holding a 33.3% equity stake. The project's higher than estimated cost is due to additional scope, cost inflation and higher project financing costs, including interest, according to ACWA Power.

ACWA Power is one of the world's leading developers of power and desalinated water production plants. The company has been rapidly expanding its renewable energy portfolio in recent years, with a particular focus on solar and wind power projects. ACWA Power's latest announcement underscores its commitment to developing green hydrogen as a future fuel, given its potential to transform the global energy system and accelerate the transition to a low-carbon economy.

As green hydrogen gains momentum as a potential solution for decarbonising energy-intensive industries, the need for megaprojects like those being developed by ACWA Power will only grow. The success of these projects will not only be critical to the global energy transition but also to the economic growth of countries with vast renewable energy resources like Saudi Arabia.

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