Saudi Arabia's Neom Green Hydrogen Company has signed deals worth $8.4 billion with financial institutions for the plant it is building at Oxagon in the kingdom's $500 billion futuristic city Neom.
The equal joint venture between Acwa Power, Air Products and Neom is billed as the world’s largest green hydrogen production facility. It will integrate up to 4 gigawatts of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen by the end of 2026 in the form of green ammonia.
The project is being financed with $6.1 billion non-recourse financing from 23 local, regional and international banks and investment companies, Neom said on Monday.
The non-recourse financing structured for the project has been certified by S&P Global as “adhering to green loan principles”.
“It is one of the largest project financings put in place under the green loan framework,” it said.
NGHC has also concluded the engineering, procurement and construction agreement with Air Products in a $6.7 billion deal as the nominated contractor and system integrator.
It has also secured an exclusive 30-year offtake agreement with Air Products for all the green ammonia produced at the facility.
“This substantial financial backing from the investment community shows the unmatched potential of NGHC’s green hydrogen project,” said Nadhmi Al-Nasr, chairman of NGHC and chief executive of Neom.
“With the financial close announced today, we are taking a massive leap towards opening the plant, in line with Neom's vision to accelerate renewable solutions.
“At scale, this project is the first of its kind internationally, leading the world in the hydrogen revolution. Harnessing the energy of Neom’s abundant natural resources, NGHC’s project will pave the way for the large-scale adoption of green hydrogen, while driving Saudi Vision 2030’s sustainable development goals.”
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.
French investment bank Natixis estimates that investment in hydrogen will exceed $300 billion by 2030.
In January, Saudi Arabia’s Ministry of Industry and Mineral Resources awarded its first industrial operating licence to NGHC to produce hydrogen.
Neom will be powered by 100 per cent clean energy, through renewable solar, wind and green hydrogen-based energy.
Under the deal, Air Products will absorb the full production volume of the green hydrogen produced in the form of green ammonia at the NGHC facility, Seifi Ghasemi, chairman, president and chief executive of Air Products, said.
Green ammonia is considered a cost-effective solution for the transport and industrial sectors.
“Producing and exporting green ammonia supports the decarbonisation of these heavy-duty transportation and industrial sectors and will save the world about five million tonnes of carbon dioxide per year,” he said.
He also confirmed that the company had awarded all major subcontracts for the project to technology and construction partners.
“Land preparation is also complete, construction is well under way, and the joint venture team is in place and actively executing to bring green energy to the world by the end of 2026,” Mr Ghasemi said.