Renewably produced hydrogen has potential beyond its current status. A global scale-up depends on concerted investment, improved infrastructure and international collaboration
One of the key planks in strategies to mitigate climate change is a shift away from burning carbon-intensive fossil fuels towards a greater reliance on energy produced from renewable sources. However, some sectors are notoriously “hard to abate”. These include energy-intensive, heavy-industrial processes such as steelmaking and cement production, as well as fuel applications where direct electrification is difficult, such as shipping and aviation. In these cases, the use of green hydrogen has been propounded as a viable alternative to fossil fuels with the added potential of storing renewable energy in bulk.
Produced through electrolysis, which splits water into hydrogen and oxygen, and using electricity generated from renewable sources such as wind, solar or hydropower, green hydrogen is emissions-free at the point of production when produced using renewable energy, and it emits no greenhouse gases when burned. Currently, the vast majority (around 98 per cent) of global hydrogen is “grey” – produced using natural gas and coal, releasing large amounts of greenhouse gases into the atmosphere. However, projections by the International Energy Agency, based on its own Net Zero Emissions scenarios, suggest that green hydrogen could constitute 60 per cent of overall hydrogen production by 2050.
“At NEOM, a 26,500 sq km region under construction in north-west Saudi Arabia, we are developing and testing scalable energy solutions for the world.”
Vishal Wanchoo, CEO, Oxagon
Ramping up production will require both abundant natural resources and considerable investment. Green hydrogen production relies on large amounts of renewable energy: Dolf Gielen, Senior Energy Economist and Hydrogen Lead at the World Bank, says that if the world’s industries were to replace all grey hydrogen with green hydrogen, it would require all the solar and wind power generation capacity currently in operation. Green hydrogen is also expensive to produce, and consequently can cost as much as eight times more than grey. However, the World Bank has forecast that costs are likely to fall rapidly over the next few years, thanks to more efficient technology and production processes, as well as economies of scale.
Located in north-west Saudi Arabia on the Red Sea, NEOM sits in an area with notable wind and solar resources. Studies of Saudi Arabia show high annual mean Global Horizontal Irradiance (GHI), with resource maps indicating that several regions, including parts of the Red Sea coast such as NEOM, fall within the higher bands of solar potential. When paired with suitable storage technologies, these conditions can provide a basis for more stable renewable-energy generation.
Upping the stakes
Until now, green hydrogen production facilities have been relatively modest in scope. The largest currently in operation, at Chifeng in China, has a capacity of 500MW. This will be dwarfed by a number of major multi-gigawatt projects currently under construction around the world. These include potential plants in Australia, India, Denmark and Germany. They range between 7GW and 70GW in capacity, but none is scheduled to enter commission before 2030.
The world’s first green-hydrogen megawatt plant to begin operating is expected to be the 2.2GW NEOM Green Hydrogen Company (NGHC) facility now under construction in Oxagon in north-west Saudi Arabia. A blueprint for at-scale green hydrogen production, the plant aims to be powered by up to 4GW of renewable energy from a dedicated wind garden and solar farm. The aim is to produce up to 600 tonnes of green hydrogen daily using electrolyser technology. The green hydrogen will be transported in the form of green ammonia via a dedicated jetty onsite at NGHC’s production facility. NGHC says it expects to ship up to 1.2mn tonnes of green ammonia annually to support the decarbonisation of global hard-to-abate sectors such as heavy industry and transportation.
“NGHC is not just building the world’s largest green hydrogen plant, we are also aiming to set a new global benchmark for industrial-scale integration”
Wesam Alghamdi, CEO, NGHC
The plant is at the heart of the renewable energy ecosystem emerging in Oxagon, NEOM’s projected clean industrial city. “NEOM is designing affordability and efficiency into its energy system from day one, positioning generation near demand and integrating automation to reduce waste and emissions,” says Vishal Wanchoo, CEO of Oxagon.
Located by the Port of NEOM – an operating port with strategic access to major east-west shipping routes – the site offers critical logistical advantages. Progress across NGHC’s three sites has been accelerated by its proximity to the Port of NEOM, a key supply-chain enabler that supported major deliveries during the construction phase, including wind turbines and hydrogen storage vessels.
“NGHC is not just building the world’s largest green hydrogen plant, we are also aiming to set a new global benchmark for industrial-scale integration,” says Wesam Alghamdi, CEO of NGHC. “We are demonstrating that green hydrogen can move from concept to reality, seeking to contribute to powering a sustainable future for industries and cities worldwide.”
Such developments require investment. NGHC offers a useful demonstration of the level of funding required to finance green hydrogen production at scale – and how government policies, multi-stakeholder cooperation and global investment all play a vital role. The project is an equal joint venture between renewable energy company ACWA Power, industrial gas specialists Air Products and NEOM, the overarching Saudi “giga-projects” that aims to create a new model for sustainable living in the Kingdom. It reached full financial closure in 2023 with $8.4bn investment, including $6.1bn non-recourse financing from 23 international and regional banks and financial institutions.
A vision of the future
NGHC is part of the Saudi Green Initiative, which outlines Saudi Arabia’s ambition to become the world’s leading hydrogen producer and exporter. The project is aligned with Saudi Vision 2030, a government programme focused on reducing dependence on the country’s oil resources and creating a thriving economy.
By partnering with the Kingdom’s Energy and Water Academy and launching a green hydrogen and renewable energy training programme for Saudi youth, the project also seeks to address the growing demand for skilled professionals in the green hydrogen sector and the development of a new generation of engineers and technicians in Saudi Arabia. “Our commitment extends beyond production – it's about building a sustainable future,” adds Alghamdi. “NGHC is fostering new industries, creating jobs and developing skills within the local community, ensuring a lasting positive impact for the Kingdom and beyond.”
While some mega projects such as NGHC are making progress, global challenges for the green hydrogen industry remain. These include building infrastructure for transportation and storage and establishing regulatory frameworks around safety and certification.
“NEOM is not just investing for the region. We aim to support global efforts to overcome these barriers, aligning with projects and the broader philosophy of Saudi Vision 2030. NEOM’s unique advantages – space, renewable resources and freedom from legacy infrastructure – enable us to test energy solutions at scale. The lessons learned here can be adapted by cities facing their own energy trilemma,” concludes Wanchoo.
