Race for Renewable Green Hydrogen is On — Australia Makes A Move
It’s interesting times for the energy sector. All you need to do to realise this is to look at one of the top oil-producing countries in the world.
The Kingdom of Saudi Arabia found its massive oil reserves in 1938 with Aramco coming to life soon after.
Oil has since been crucial to the Saudi economy, and for decades the country kept Saudi Aramco a very guarded secret. That is, until it went public a couple years back, giving the world a glimpse into the company’s assets and finances, a significant sign that things are changing.
In the last decade Saudi has been facing competition from US shale producers, and then the pandemic dealt another blow to oil prices. It’s why Saudi Arabia has been looking to reduce their dependence on oil.
Of course, oil isn’t the only resource Saudi Arabia has plenty of. They also have lots of sun and wind.
One of the ways they are looking at diversifying is through Neom, their main project for Saudi Vision 2030.
Neom is set to be a futuristic city, an innovation on current cities. Hence the name Neom, neo from the ancient Greek new and ‘M’ for the Arabic word Mustaqbal (future).
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There’s not much there at the moment but the Kingdom expects to plunge US$500 billion into the new city with the first phase completed by 2025.
And it’s surely an ambitious plan.
Built on over 26,500 squared kms, Neom will be built in a 170 km straight line. It’s set to include robots and smart technology, with pedestrians on the surface and transport happening underground. The city will be powered by wind, solar, and green hydrogen.
Green hydrogen is produced through electrolysis using renewable energy, and it can be useful to power transport and industrial processes.
Green hydrogen has a big advantage. When demand for renewables is low, that excess electricity produced by renewables can go into producing green hydrogen and storing it, making it cheaper to produce.
But that’s not where Saudi’s ambition for Neom ends.
Last summer, US company Air Products said they partnered with Saudi’s ACWA Power and Neom to build the world’s largest green hydrogen project in Saudi Arabia. The plant, which will source its power from four gigawatts of wind and solar sprawled over the desert, is expected to cost US$5 billion.
Once finished the plant will produce 650 tons of green hydrogen per day, which they plan to use to power transport but also to export abroad in the form of ammonia. The idea is that it will become a global centre for renewable energy and green hydrogen.
That one of the biggest oil producers is shifting should speak volumes on the global energy transition…
…and on green hydrogen.
As I wrote last week there is a global race into green hydrogen, and to reduce the cost of it.
Costs for renewable hydrogen are between around US$4 and US$6.5 per kilo but bringing it down to US$2.50 would make it competitive with fossil fuel production.
The EU is investing €470 billion into hydrogen. Last year Japan opened a green hydrogen plant near Fukushima. Other countries like Chile and Korea are also working on it.
But things are moving in Australia too.
Western Australia is developing the 26 GW Asian renewable energy hub, which is planning to export green hydrogen from the Pilbara to Singapore.
South Australia has big plans for green hydrogen export with the Eyre Peninsula Hydrogen Project, a 75 MW electrolysis plant.
Queensland created its own ‘Ministry of Hydrogen’ in November last year, in a show of how important they believe the future of this type of energy is.
Last Friday, Victoria stepped up to the plate too by publishing their ‘Renewable Hydrogen Development Plan’, which is pretty much a blueprint for the state to develop a ‘thriving’ renewable hydrogen industry.
Victoria is looking at renewable hydrogen to take a ‘critical role’ in recovering the state’s economy after the pandemic.
As they said, Victoria sees hydrogen as a path to reduce emissions, create jobs, but also an opportunity in exporting it.
As the report noted:
‘Victoria is well-positioned to export renewable hydrogen as liquid hydrogen, or using a hydrogen carrier like green ammonia, to nearby Asia-Pacific markets and beyond. The potential demand for hydrogen and green ammonia in these regions is expected to increase exponentially as countries look to transition away from carbon-intensive energy sources in response to global climate challenges.’
The green hydrogen race is only starting.
For Money Morning
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