Acwa Power is developing a $5 billion green hydrogen-based ammonia production plant in the smart city of Neom in Saudi Arabia, with plans to replicate the project elsewhere. Acwa Power's global head of hydrogen, Andrea Lovato, told TheNational at CEBC's annual summit in Dubai that huge capacity would be needed to meet the expected growth in demand.

In 2020, Acwa Power signed a US$5 billion agreement with Neom to build the world's largest green hydrogen-based ammonia production center in Saudi Arabia's US$500 billion future city.

Neom's green hydrogen plan would use 4 gigawatts of renewable energy from solar, wind and storage to produce 650 tonnes of hydrogen per day through electrolysis, using technology supplied by German company ThyssenKrupp, the companies said at the time. The project is expected to be put into operation in 2025, with an annual output of about 1.2 million tons of green ammonia.

In 2022, Acwa Power will again partner with Air Products and Oman's OQ Energy to create a multi-billion dollar green hydrogen-based ammonia production facility in Oman's Salalah Free Zone. In October, the company also partnered with the South African Industrial Development Corporation, a financial institution, to develop a $10 billion green hydrogen and derivatives project in Africa's second-largest economy.

Acwa Power is also partnering with Posco Holdings, the holding company of South Korea's Posco Group, in July 2022 to develop green hydrogen. The entities would also develop green hydrogen derivatives such as green ammonia to decarbonize POSCO's power generation and steelmaking processes, they said at the time.

The International Energy Agency says the world will need 520 million tonnes of hydrogen by 2050 to meet net-zero emissions targets. French investment bank Natixis estimates that hydrogen investment will exceed $300 billion by 2030.

Hydrogen produced from renewable energy sources and natural gas is expected to become a key fuel as economies and industries transition to a low-carbon world. It comes in many forms, including blue, green and gray. Blue and gray hydrogen is produced from natural gas.

Mr Lovato said producing green hydrogen through electrolysis of water would require trillions of dollars in investment, along with increased cooperation with renewable energy countries. Given the increasing infrastructure investment and the presence of global industrial suppliers, the Middle East region is rich in renewable energy and has great potential for green hydrogen production.

Acwa Power executives expect hydrogen to be traded in the market over the next seven to 10 years as more capacity comes online. Mr Lovato said the hydrogen market was developing similarly to the LNG market, with large projects and long-term offtake agreements. But he said there could be a crude oil-style clean fuel liquidity market in the next decade.

In 2022, the International Renewable Energy Agency said members of the Group of Seven advanced economies could be frontrunners in green hydrogen, but warned that overuse of the fuel could slow the energy transition. Mr Lovato said the fuel would grow alongside renewables as demand increased in hard-to-reduce industries such as steel and aluminium.Editor/XingWentao