Saudi renewables developer ACWA Power has signed a framework agreement with the Egyptian government to develop a $4bn green ammonia facility in the Suez Canal Economic Zone.

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The firm, which is 50% owned by Saudi sovereign wealth fund PIF, plans to build 600,000 tonnes a year of green ammonia production capacity in the first phase, before later scaling up to two million tonnes.

However, a timeline on when the first phase, let alone the scale-up, will start construction has not been disclosed.

ACWA is one of the companies behind the 2.2GW Neom green hydrogen and ammonia complex in Saudi Arabia, which is currently in the midst of construction after reaching a final investment decision (FID) earlier this year.

“As a first mover in green hydrogen, ACWA Power is proud to bring its expertise in this new and exciting market to Egypt,” said the company’s CEO Marco Arcelli.

“We commend our partners for their bold step into producing the fuel for the future, for which there will be great demand in Europe and the rest of the world,” he added, noting that “Egypt is well-positioned to become one of the world’s top producers of green hydrogen”.

The Suez Canal Economic Zone has racked up a number of framework agreements for green hydrogen-based ammonia or methanol projects, with some, such as a $1.1bn facility to be developed by Norway’s Scatec, aiming to supply fuel to ships along the busy trade route.

However, only one renewable hydrogen facility in the country — the 15MW pilot phase of Egypt Green, developed by a consortium including Scatec and Fertiglobe — has started operations to date.

The rest of the $83bn pipeline of projects are yet to reach FID.

The Egyptian government has tabled a tax credit of up to 55% for green hydrogen facilities, although this depends on at least 70% of financing coming from outside the country.