April 14, 2022 • Paul Rodden • Season: 2022 • Episode: 107
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In episode 107, New information is launched on NEOM. Let's talk some numbers and its viability potential on today's hydrogen podcast.
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New information is launched on NEOM. Let's talk some numbers and its viability potential on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden and welcome to the hydrogen podcast.
Enter an article from oil price.com Alan Mammoser writes Saudi Arabia looks to position NEOM as a hydrogen leader, Alan writes, at the first ever conference devoted exclusively to carbon free hydrogen in the Middle East and North Africa. MENA participants looked in depth at the technical and financial complexities of getting major projects off the ground. They cover projects announced by various consortiums worldwide, all in early stage development. An exception appeared to be in Saudi Arabia's $5 billion hydrogen based ammonia plant, a project of NEOM Energy and Water Company. Many conference participants and panelists saw NEOM's ambitious green hydrogen to ammonia project as the most likely leader.
They expressed confidence that among the many major green hydrogen initiatives, now appearing in the news, this one would reach actual production. Discussions occurred at the World hydrogen MENA conference held in Dubai last month. It brought together more than 200 attendees for two days of panels and networking, sponsored by the MENA hydrogen Alliance, the initiative of DII Desert Energy. The conference was delivered by the world hydrogen leaders networking platform of UK based Green Power conferences NEOM the clean energy city under development in Northwest Saudi Arabia was launched in 2019, with the backing of the country's public investment fund. In 2020 it announced a joint venture to develop a major green hydrogen and ammonia production facility and the new cities industrial sector to be owned equally by NEOM and two partners.
Acwa Power, a Riyadh based power generation developer that is now half owned by PIF will lead development of a wind and solar power assets. US based Air Products will develop a hydrogen based ammonia plant, it will be the exclusive offtaker and will invest $2 billion in distribution. The plant will produce 650 metric tons of hydrogen daily to produce 1.2 million metric tons annually of green ammonia electrolyzers with a capacity of two gigawatts will be supplied by thyssenkrupp Unde Chrlorine Engineers, a joint venture with Italy’s Industrie De Nora. Energy for the electrolyzers will be derived from wind one and a half gigawatts and solar PV two and a half gigawatt capacity to be developed on site with a first phase utility scale production beginning in 2026. Considering the sheer size of it, there have been doubts, but according to Roland Kaeppner, Executive Director, NEOM Energy & Water Company, the energy and water subsidiary recently branded ENOWA. There will be an fid in June with delivery of the first electrolyzer unit in 2024 and completion of the plant in 2026. Speaking at the Dubai conference in March, he also mentioned the development of an onsite Innovation Center with 20 megawatt electrolysis capacity. This took shape and NEOM'S recently announced Hydrogen and Innovation Development Centre (HIDC).
The project progressed further last week with Acwa Power and Air Products signing a $900m engineering, procurement and construction (EPC) contract. As for offtakers, Kaeppner mentioned flexible ammonia for mobility markets in Europe. Cornelius Matthes, CEO of Dii Desert Energy, says that NEOM is a leader for several reasons. First, he points to the players involved the ACWA powers impressive record as a developer of renewables and our products substantial financial depth, making it a credible guarantor of the entire offtake from the project. He also says that the purely commercial nature of the project adds to its viability. While Saudi leadership is a key partner, it is expecting the project to succeed without direct subsidy. He's quoted as saying, if you look at the announcements of major projects, they're often subject to special regulatory conditions and subsidies. This is a bold project without such supports.
Matthes’ organization Dii (Desertec Industry Initiative) is a Dubai based public private sector association that promotes renewable energy development, founded in 2009, with a supportive German government to explore the potential of MENA renewables to supply European power markets. It is now pursuing its Desert Tech 3.0 agenda that looks at renewables as the basis of entire energy systems. He sees as the last piece of the puzzle for any major hydrogen project a critical need to secure off takers. Here again, he sees significant advantages for NEOM again, he's quoted as saying, it is a bet by Air Products on a market starting four years from now. They're looking at options in Europe, especially in the mobility sector. Matthes references the growing array of hydrogen based infrastructure in Germany, which already has more than 100 Hydrogen filling stations, which is currently supplied with grey hydrogen, or hydrogen derived from hydrocarbons through Steam methane reforming without carbon capture.
He sees a building momentum for a hydrogen market for cars, buses, trains and trucks appearing for example, in Daimler Trucks advanced work and it's Gen H2 truck. Such private sector initiatives are finding support in Germany's national hydrogen strategy approved in 2020, accompanied by a stimulus package that is supporting more than 60 carbon free hydrogen projects in the country. And Matthes view such developments in Germany and elsewhere in Europe are the necessary counterpart to minutes supply projects. He continues by saying, Today we need a clear offtake. Without it, we cannot finance any projects. It's why Dii is connecting production and demand. He says that when the off takers are identified, then European buyers can decide the amounts and benefit from competition among them in our producing countries.
The remarkable fall in the cost of renewable power has surely enabled commercial green hydrogen ventures such as Neom. It is equally clear that low cost renewable power is not enough to launch them. Matthes continues by saying we will need bold partnerships of government and industry something like a Marshall Plan but for hydrogen. To really launch a mega hydrogen economy. Matthes points to a key piece of infrastructure that could come through international collaboration. A pipeline connecting the eastern Mediterranean with Europe wouldn't be the kind of Marshall Plan Project he has in mind. While natural gas pipelines in the western Mediterranean, currently link Algeria, Tunisia and Morocco to Spain, Portugal and Italy. There is no pipeline in the east, but a hydrogen capable pipeline, there could be a breakthrough for NEOM and others.
Matthes says that within a 300 kilometer radius of Sharm el-Sheikh or the COP 27 conference were occurred this fall are places with potential 100 Plus gigawatt production potential in Saudi Arabia, Egypt and Jordan. He believes that while liquid organic hydrogen carriers can help to launch commercial hydrogen pipelines will be a key piece of infrastructure. These alone will be able to meet a massive demand for seen for the so called hydrogen backbone in Europe. A pipeline can easily carry NEOM's 2 gigawatt capacity and much more. As a large pipeline could have up to 60 gigawatts of capacity. It would dwarf the capacity of undersea electric cables. Putting it in place would require bold commitments from governments and a long term partnership for the importance of green molecules. The European Investment Bank EIB would be the most logical entity to manage the project. Matthes continues by saying Nord Stream two is now obsolete.
It's 11 billion euros stranded under the Baltic Sea. And Eastern med pipeline, he continues with similar capacity could be built for 15 to 17 billion euros, or about 50%. More than the now suspended Nord Stream 2 the minute hydrogen Alliance used the occasion of the conference to launch a work group devoted to hydrogen certification. This certification piece of the hydrogen puzzle was announced the same week Friday leading conference organizers to a claim the first ever Middle East conference devoted exclusively to carbon free hydrogen as Dubai hydrogen week. Okay, so a great article highlighting some very, very good numbers that we finally get to see out of NEOM. And the thing is Neom is one of those could be projects for hydrogen that would revolutionize global energy potential. It's that big. Now one of the key topics that this article highlights on is one of the factors that operators really need to start focusing in on as the industry moves from conceptualized ideas into an energy industry. And that's identifying your feedstock.
And in this case, you're off takers. Now if we focus first on their feedstock, and the entire point of NEOM is to be green. So that's going to be using wind and solar to electrolyze water. Now usually in deserts, my biggest concern is the availability of water. But in the case of Saudi Arabia, they do have plenty of water, they just have to clean it up quite a bit. So we're Only then their biggest task is to start identifying the off takers for their hydrogen. Now, first, it can be used locally to support the energy grid. But it sounds like they're really focusing in on Europe, especially Germany as a primary off taker. And that makes complete sense, especially now that the Nord Stream two line, and all the troubles going on between Russia and Ukraine has stopped that project completely. And so ultimately, this is a perfect time for a large scale green hydrogen project, to be started up with the intent of supporting the energy infrastructure in Central Europe, in the last part of this article is of critical importance to the hydrogen industry. And that is seeking certification. What's happening now in hydrogen is the evolution of the world's reliance on oil and gas for energy.
Now, that doesn't mean that hydrocarbons aren't going to be necessary moving forward, there'll be a critical feedstock. But what that does mean is a dire need for certification and regulation globally. And this applies to anyone in the hydrogen generation market or anyone downstream of that. And so that being said, it's good to see that the MENA hydrogen alliance is looking to launch a working group devoted to hydrogen certification.
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