'Money is not an issue' for green hydrogen projects — and here's how you succeed without subsidies: ACWA

Great partners, plenty of land, a brave first customer and lots of time: that’s the recipe for a developing a successful green hydrogen project without subsidies, according to Saudi Arabia-based renewables developer ACWA Power, one of the companies behind the country’s giant Neom Green Hydrogen Project.

In fact, with good offtakers, money is not an issue for green hydrogen projects at all, said Driss Berraho, ACWA’s executive director of green hydrogen business development and commercial director of the project firm, the Neom Green Hydrogen Company.

“There is plenty of money out there,” he told an audience at the World Hydrogen Congress in Rotterdam on Thursday last week. “As long as there are good projects, the money will just flow.”

And while he said it is important to establish good partnerships that support a complex supply chain, he added that it was even more important to secture an offtaker that would effectively underwrite any necessary project financing.

Elephant in the room

But the elephant in the room was that many, if not all, of these factors appear to hinge on the support of a government with bold hydrogen ambitions — ideally combined with the centralised executive power often seen in autocratic regimes.

Neom is reportedly set to be funded 50% by Saudi Arabia’s sovereign wealth fund, with 50% from private investors and international sovereign wealth funds. So although the project isn’t getting direct subsidies, it is benefitting indirectly from the financial heft of the Saudi petrostate.

And Berraho admitted that a supportive government was key to the progress of the Neom green hydrogen project so far.

He told the conference in Rotterdam that the scheme had experienced a “bullet train development cycle” that has led to the project initiating the first stage of construction work this April, just two years after its first announcement. The final investment decision that will precede major construction work is due “imminently”, Berraho added.

This super-fast development has been made possible by the “unique combination of sponsors and a unique environment [and] because of a lot of support from the government to allow this project to happen,” he said.

And even the project’s other great asset — the availability of vast tracts of land with high renewable potential — has been greatly augmented by the Saudi government’s enthusiasm for this project, as well as the country’s experience developing giant energy infrastructure complexes.

“You cannot take on such vast amounts of land without strong support from the government, [which is] seeing the long-term gain for the country,” Berraho said, noting that ACWA operates in several other countries where the going has not been so smooth.

ACWA operates wind and solar assets in 12 countries across the Middle East, North Africa, Central Asia and South Asia, as well as two schemes in South Africa.

“Also [consider] the investment framework that is available in Saudi Arabia,” Berraho said. “It is a country that has a track record of building very large-scale projects. That takes a lot of expertise, the right environment, the regulatory side as well, and the stakeholders. All of that [creates] a mature environment to be able to deploy such a project, at such scale and under such a rapid time frame.”