March 09, 2023 • Paul Rodden • Season: 2023 • Episode: 195
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In episode 195, Saudi Arabia wants to go even bigger into green hydrogen. And the city of Houston Texas has three hubs vying for that Department of Energy's $7 billion pie. All this on today's hydrogen podcast.
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Saudi Arabia wants to go even bigger into green hydrogen. And the city of Houston Texas has three hubs vying for that Department of Energy's $7 billion pie. All this 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.
In an article in bloomberg.com, Matthew Martin and Fahad Abuljadayel write, Saudi Arabia's Acwa Power eyes three more giant hydrogen plants. Saudi Arabian energy company Acwa Power is planning to develop as many as three more green hydrogen plants on a similar scale to its vast project being built at NEOM. ACWA has plans to develop two more projects adjacent to an eight and a half a billion dollar green hydrogen plant at NEOM, which is a $500 billion new city on Saudi Arabia's Northwest coast. This according to ACWA CEO, Paddy Padmanathan, the company is also looking at another location confident that demand for the fuel will rise as governments and companies accelerate plans to reduce their carbon emissions.
The CEO continues by saying Acwa power itself can do five of these projects without blinking. He says now that we have financially closed the first one we are looking in parallel to two others. Future green hydrogen projects would likely be developed by the same consortium behind the neom green hydrogen company, which also includes US based Air Products and Chemicals and neom. This again, according to the CEO, the new plants will likely be cheaper than the first one at NEOM. He said as developers get more experienced technology improves and a local supply chain develops. The first plants costs have ballooned from the initial estimates of $5 billion in large part due to inflation pushing up prices for solar panels, wind turbines and electrolyzers. Padmanathan also says the costs will come down when you do it again.
Now Acwa, which has $27 billion in market valuation in Riyadh signed financing agreements for the first neom project on Wednesday, March 1. It is one of the first plants of its scale to be developed and the 600 tonnes a day of hydrogen produced are expected to be exported in the form of ammonia, at least some of the output from future projects would likely be used for domestic industries. This again according to Padmanathan, the company is receiving support on the hydrogen plans from the Saudi government's Shareek program, which aims to encourage firms to invest in developing new industries inside the kingdom. The company also previously announced plans to develop green hydrogen plants in Uzbekistan, Oman and Thailand. Okay, so Acwa power is saying that there could potentially be three new green hydrogen projects in Saudi Arabia, all of them at roughly the same scale as the one to be developed at NEOM. Now I understand that they believe that the price of these plants is going to drop from the currently spec $5 billion plant going into neom. And I'm sure for things at this scale, there will be noticeable drops in prices for the three factors that they talked about wind, solar and electrolyzers.
But I don't think it's going to drop as much as they might be hoping for. Because while I'm sure there will be economies of scale, lowering the price points of that equipment. I think you're also going to see demand ramping up just as much. And I'm not entirely sure, especially on the electrolyzer side, that manufacturers will be able to put out equipment fast enough. Next, in an article in the Houston Chronicle, Amanda Drane writes, Houston hydrogen hub projects advance and race for $7 billion from the Department of Energy. Amanda writes the likelihood that Houston will host one of the nation's federally funded hydrogen hubs is increasing following steps by the Department of Energy to winnow the field of contenders.
The DOE selected three Texas hydrogen hubs, including to in Houston to submit applications for a piece of the $7 billion pie the agency is set aside for the development of hydrogen as an alternative to hydrocarbons. The funds would offer a boost to region that is poised to lead in hydrogen, a cleaner burning gas that many of Houston's energy companies see as key to their efforts to decarbonize their operations. The hubs would be in places with abundant natural gas reserves and would test ways to reduce and use hydrogen. The three proposals or among 33 projects still in the running for Department of Education Funding down from 79 submitted last year, as many as 10 hubs could be chosen to receive the money.
The Texas coalition's include the Leading in Gulf Coast Hydrogen Transition (LIGH2T) hub, which includes the University of Houston as the lead academic partner, the Southern States Energy Board, the National Energy Technology Laboratory, Marathon Petroleum subsidiary MPLX and chemical companies INEOS and Linde. HyVelocity hub, which includes the University of Texas at Austin, French gas supplier Air Liquide, California-based oil major Chevron, the nonprofit Center for Houston's Future and GTI Energy, a research-and-development company based in the Chicago area. Christi Horizons Clean Hydrogen Hub (HCH2), for which the Port of Corpus Christi is the primary applicant. The Texas projects may be encouraged to merge this according to Ken Medlock director of the synergy for energy studies at Rice University's Baker Institute for Public Policy, a fourth Texas proposal based in the Permian Basin that had received encouragement from the Department of Energy merge last month with the Corpus Christi hub, reflecting the fluid nature of these proposals. Medlock says that he would guess all three of the proposals are going to get some feedback from the DOE saying they all need to get together, but we'll see what happens.
The desire of the two Houston projects is to be able to receive funds independently and move forward on their own. This according to the Vice President of energy and Innovation at the University of Houston, Ramanan Krishnamoorti. He continues by saying the Houston area really needs that impetus. To be able to be a global leader. We need multiple projects to start up simultaneously and grow. The Texas coast sets itself apart from other applicant regions with his existing hydrogen production and infrastructure. The Houston region produces about a third of all hydrogen made in the United States about three and a half million metric tons annually, and is home to more than half the country's dedicated hydrogen pipelines.
Texas checks off all the boxes this according to Krishnamoorti, it has the abundant natural gas, water, carbon storage space and renewable energy production. Plus he said Houston has an existing industrial base along the ship channel and are ready workforce. Okay, so to my fellow Houstonians here in Texas, this is big news. The fact that three projects of the 33 total vying for that $7 billion piece of DOE funding are continuing to move forward is incredible. Now as to the validity of the three projects, I've talked about HyVelocity several times. And we've even interviewed Mike Lewis from the University of Texas at Austin, who heads up the project, they have incredible funding, and their partner base is extremely powerful. So I really can't see that project merging with any of the others. But that may not be the case with the other two projects. The light h2 project from the southern states energy board also has strong collaborators, including INEOS, Linde and MPLX. And I can definitely see that one merging with the Christy Horizons clean hydrogen hub. But with that being said, each one of these hubs has one of the most important if not the most important right now, factors in the success of these projects built in to their partners. And that is consumers for the hydrogen being produced.
Both the light h2 and the hyvelocity project, have partners that can use the hydrogen developed at the hub immediately. And that's going to be critical, as off takers of the hydrogen are still in rather short supply.
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