ACWA Power, a utility developer in Saudi Arabia, has revealed that it will soon close financing for a multi-billion dollar green hydrogen plant in the Neom city of the desert country. This hydrogen project, slated to be among the biggest in the world, will near completion soon.
Paddy Padmanathan, Chief Executive Officer of ACWA, stated in an interview that work on the $5 billion plant in the northwest of the kingdom has begun and is “very much on track” to be completed as planned in 2026.
The largest renewable energy company in Saudi Arabia is a part of the consortium overseeing the project. Other businesses include Air Products & Chemicals Inc. of the US.
At the COP27 climate conference in Egypt, Padmanathan stated, “We expect to complete the full financing before the end of this year…. We’re almost finished.” As per him, the equity partners have invested around 900 million dollars of their funds in the project.
Saudi Arabia aspires to dominate the global hydrogen export market. The fuel produced from it is less harmful than coal, natural gas, and oil since it only releases water vapor when it is burned.
When water atoms are divided using solar and wind energy, the green variety of the fuel is produced. The kingdom’s efforts to make blue hydrogen, which is created by converting natural gas and collecting the carbon dioxide emitted in the process, are being led by the state energy company, Saudi Aramco.
The Inflation Challenge
For the Neom and other renewable projects, higher financing rates and inflation have been “extremely tough,” according to Padmanathan. The coronavirus pandemic and the turmoil in Ukraine have both affected supply chains, driving up the cost of equipment, he claimed.
He has previously stated that solar power project expenses would increase for the next five to seven years. At the Egyptian resort of Sharm el-Sheikh, he remarked, “Every country that we are working with—and we are working in 13 countries] says, “How much more renewables can you offer me, faster?” “Everyone is aware that the trajectory toward renewable energy is the best course of action. Profit is important, too, not simply for the environment.”