Neom Green Hydrogen Company has signed agreements with banks and executed a letter of commitment with the Saudi Industrial Development Fund to finance a green hydrogen production plant.
Saudi Arabia is building the world’s largest green hydrogen-based ammonia production plant in the kingdom's planned futuristic city. The green hydrogen scheme within Neom will use 4 gigawatts of renewable power from solar, wind and storage to produce 600 tonnes per day of hydrogen.
The project, set to come on stream in 2026, is expected to produce about 1.2 million tonnes of green ammonia per year.
Financial terms of the deals signed on Sunday were not disclosed.
“NGHC has a clear mission: to leverage the expertise and vision of its partners to accelerate the global green hydrogen economy,” David Edmondson, chief executive of the company, said.
“We are grateful for the significant support from our shareholders and the investment community [for] making that happen.”
Saudi Arabia is focusing heavily on renewable energy as it looks to meet its climate commitments, while diversifying away from oil exports.
Hydrogen, which is produced from renewable energy and natural gas, is expected to become a critical fuel as economies and industries transition to a low-carbon world.
It comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas, while green is derived from splitting water by electrolysis.
Last month, the International Renewable Energy Agency (Irena) said that members of the Group of Seven advanced economies could be “front runners” in green hydrogen, but that overuse of the fuel could slow the energy transition.
Globally, the hydrogen industry is expected to be worth $183 billion by 2023, up from $129 billion in 2017, according to Fitch Solutions. French investment bank Natixis estimates that investment in hydrogen will exceed $300 billion by 2030.
State-owned oil exporter Saudi Aramco has established a $1.5 billion sustainability fund to invest in “breakthrough” technology and start-ups to help fight climate change.
The fund, managed by Aramco’s venture capital arm, will invest in technology that supports the energy company’s 2050 net-zero goals while helping to develop new lower-carbon fuels.
The International Energy Agency expects fossil fuel demand to peak or reach a plateau in all its scenarios.
Based on current policies, natural gas demand will reach a plateau by the end of the decade while oil demand will “level-off” in the mid-2030s amid rising sales of electric vehicles, the agency said, in its World Energy Outlook report in October.