(Bloomberg) -- 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 a $8.5 billion green hydrogen plant at Neom, a $500 billion new city on Saudi Arabia’s north-west coast, chief executive officer Paddy Padmanathan said in an interview. 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, he said.
“Acwa Power itself can do five of these projects without blinking,” Padmanathan said. “Now that we have financially closed the first one, we are looking in parallel to two others.”
Green hydrogen is made when wind and solar power are used to split water atoms. The fuel’s seen as crucial to the clean-energy transition in the coming decades. It’s still far more expensive than oil and natural gas, but developers are confident they can bring down costs enough to make green hydrogen competitive.
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 & Chemicals Inc. and Neom, he said.
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 plant’s costs have ballooned from initial estimates of $5 billion, in large part due to inflation pushing up prices for solar panels, wind turbines and electrolyzers.
“The costs will come down when you do it again,” Padmanathan said.
Acwa, which has a $27 billion market valuation in Riyadh, signed financing agreements for the first Neom project on Wednesday. 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, Padmanathan said.
The company is receiving support on the hydrogen plans from Saudi government’s Shareek program, which aims to encourage firms to invest in developing new industries inside the kingdom, he said.
The company has also previously announced plans to develop green hydrogen plants in Uzbekistan, Oman and Thailand.
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