Abu Dhabi National Energy Company, better known as Taqa, will supply Emirates Steel with green hydrogen – a move that could bolster the UAE's efforts to lower the emissions of its energy-intensive industrial activities.
Hydrogen is used as a reducing agent in steel production, replacing the more polluting coal, which countries around the world are seeking to phase out.
Green hydrogen uses renewable energy to power electrolysis, which splits water molecules into hydrogen and oxygen.
"Finding commercially viable industrial-scale solutions like this is key to unlocking the potential of green hydrogen as an emerging clean energy source," said Jasim Thabet, Taqa's group chief executive and managing director.
"Taqa is uniquely well-placed in this region to combine our ... solar PV [photovoltaic], water and energy know-how to unlock opportunities that work for our stakeholders."
The UAE, Opec's third-largest oil producer, is evaluating alternative energy sources to rapidly decarbonise its economy by 2050.
Hydrogen has become a top investment priority for oil-exporting Gulf countries. Earlier this year, Adnoc, Mubadala and holding company ADQ formed an alliance for the development of green and blue hydrogen.
Abu Dhabi's Taqa is looking to increase the share of renewable energy in its portfolio to 30 per cent by 2030. The clean power is set to largely come from solar photovoltaic.
Last month, the company also signed an agreement with Abu Dhabi Ports to develop a 2-gigawatt green ammonia project in the UAE.
Green ammonia is an industry allied with the hydrogen economy. Green hydrogen produced through clean sources is converted to ammonia, which can be easily transported and reconverted into the fuel for power generation or for use as a fertiliser.
The planned project will tap into a 2-gigawatt solar photovoltaic plant to power an electrolyser to produce green hydrogen, which will be processed into liquid ammonia. The green ammonia will be used in ships as a bunker fuel and will be exported from Abu Dhabi through gas carriers.
The announcement by Taqa and Abu Dhabi Ports is one of many relating to ammonia projects being developed in the UAE's capital.
The Khalifa Industrial Zone Abu Dhabi is also developing a $1 billion green ammonia plant.
The project will be powered by an 800-megawatt solar power plant within Kizad and is expected to produce 200,000 tonnes of green ammonia from 40,000 tonnes of green hydrogen.