The clean energy dreams of the Middle East are being fueled by hydrogen

The sun, the land, the ocean, and the proximity to major consumer hubs, as well as domestic demand, are all there. 

More than 680 major hydrogen infrastructure projects have been announced around the world. Almost half of these initiatives take place in Europe. Although China's Asian initiatives are more numerous, the Middle East and North Africa also feature prominently. 

To be sure, the Middle East is gearing up to be a sizable decarbonization cluster, and its location makes it a natural focal point for energy transition discussions. Every significant participant from North Africa to the Gulf has their own set of pledges, clean energy pathways, and a clear hydrogen advantage. With such large quantities of cheap renewable resources, countries like Saudi Arabia, Oman, and the United Arab Emirates could easily dominate the global hydrogen market.

Saudi Arabia's Vision 2030 programme now includes ambitious hydrogen-related goals. Aramco pioneered the shipment of blue ammonia to Japan in 2020, sending 40 tonnes to the country. The Green Hydrogen Project at NEOM will be the world's largest utility size commercial hydrogen facility, using 4 GW of renewable energy to manufacture green ammonia. It will be powered by Acwa power and Air products. Several such massive initiatives are currently in the planning stages.

The goal is not to limit the aspiration to the frontiers of Saudi Arabia alone, but rather to work in tandem with other nations. Acwa power is a current example, having signed on with an Uzbek green hydrogen factory to produce 3,000 metric tonnes per year of green hydrogen. Located 45 km outside of Tashkent, the capital, in Chirchiq, the facility will be linked to an existing ammonia plant there. To achieve this goal, we have entered into supply agreements with Korea Electric Power Corporation and are planning to construct a green hydrogen facility in Sokhna, Egypt.

Middle East gearing up to lead global competition

The Middle East hopes to dominate the green hydrogen market at the expense of its primary competitors, Europe and Asia. There will be a flurry of new UAE projects announced that year. Engie, a French energy company, and Masdar, a renewable energy firm based in Abu Dhabi, have announced a US $5 billion investment in the UAE's green hydrogen industry, with a goal of doubling the country's electrolyser capacity by 2030. Additionally, Dubai unveiled the "first industrial scale" green hydrogen factory in the Middle East. The United Arab Emirates has announced that by 2030, it intends to capture 25 percent of the global low-carbon hydrogen market. Meanwhile, Saudi Arabia signed a US $7 billion green hydrogen production deal with ACWA Power, Omanoil, and Air Products in Oman's Salalah free zone. By 2040, Oman plans to have 30GW of renewable and sustainable hydrogen powering its economy.

The market for green hydrogen in the region has grown rapidly since 2021. Saudi Arabia has made significant investments in R&D, lowering the price of producing green hydrogen and making it a more competitive option. The state's goal is to become the world's lowest cost generator of green hydrogen at US $1 per kilogramme. Siemens has identified 46 possible green hydrogen projects in the region with a combined worth of US $92 billion, and many private enterprises are eager to get in on the action. Major investment opportunity was seen in Saudi Arabia, the United Arab Emirates, and Oman.

In addition to green hydrogen, the United Arab Emirates aspires to boost the share of renewable energy in its energy mix to 75% by 2050. Before COP28, the Al Dhafra Solar Project in Abu Dhabi will be fully operational. A total of 160,000 homes will be able to get their power needs met by the solar farm's 2 GW output. The Emirati government-owned businesses TAQA and Masdar own 60% of the project, with EDF Renewables and China's Jinko Power Technology owning the other 40%. The corporations anticipate the project will result in the creation of 4,000 new jobs. Other significant solar projects, such as Dubai's US $3.9 billion, 950-MW Noor Energy 1 farm and Abu Dhabi's Hatta Wind Power Project, will help support this initiative.

By 2030, Saudi Arabia hopes to derive half of its energy needs from renewable resources. The Sudair Solar Power Plant in Riyadh, with its capacity of 1,500 MW, and the Manah I and II solar power facilities in Manah will be major contributors to this trend. Saudi Arabia can decarbonize its oil and gas activities by investing in carbon capture and storage (CCS) technologies. And probably most audacious of all, Saudi Arabia plans to build a futuristic megacity they've dubbed NEOM. The Kingdom plans to invest US $80 billion into the construction of the megaproject in the country's northwest, expanding the size of the country's population to that of Belgium. The goal is to build a place of the future where 95 percent of the land is set aside for nature and there are no automobiles, roads or greenhouse gas emissions. Building of the metropolis has begun, despite widespread scepticism about its feasibility.

Thanks to massive investments in the future of the region's renewables and persistent focus on its well-established oil and gas industry, the Middle East is poised to become an energy powerhouse. With their ambitious ambitions for green hydrogen, solar, wind, and other renewable energy sources, Saudi Arabia and the United Arab Emirates (UAE) are poised to become regional leaders in the transition to green energy.

The role of hydrogen in stimulating economic development

Hydrogen has many advantages beyond meeting the country's rising demand for consumption. The Middle East might take the lead in developing and implementing innovative sustainable energy solutions. The Middle East and North Africa (MENA) is ideally situated to embrace the hydrogen economy due to its ready access to cheap solar power.

Furthermore, the area has a great deal of accumulated expertise in the field of energy. Oil prices are expected to fall over the long term. The area may reinvent itself to become a leading global exporter of green hydrogen if it moves fast and with purpose, shifting its attention to the developing hydrogen sector.

There are now planned green hydrogen projects in the MENA region with an estimated value of US $42 billion. In an effort to bring the price of green hydrogen down to less than US $2 per kilogramme by 2026, ACWA Power, a regional developer, has recently formed a cooperation with other companies.

The largest green hydrogen project in the world is also being developed in Saudi Arabia. To produce 650 metric tonnes of hydrogen per day via electrolysis, as well as nitrogen by air separation, and 1.2 million metric tonnes of green ammonia annually, NEOM, Air Products, and ACWA Power have formed a joint venture to integrate four gigawatts of renewable power from solar, wind, and storage. It is anticipated that the project will go live in 2025.

Facilitating the quick spread of hydrogen technology

Since 1970, Mitsubishi Power has dedicated itself to the study and development of hydrogen-related technology. To get closer to region’s 2025 target of full hydrogen ready in its massive, industrial J-class gas turbines, in 2018 company created a 30 percent hydrogen mixture combustion technology.

With this technique, gas-powered turbines can be converted to run on hydrogen fuel efficiently and at a minimal cost. With its cutting-edge carbon capture, utilisation, and storage technology, region can get to zero net CO2 emissions in under two decades.

Those units that are hydrogen-ready will need minimum modification and expenditure to upgrade to state-of-the-art units as region makes progress towards its goal of 100 percent hydrogen-fueled firing by 2030. Increased regional demand for hydrogen as a result of this shift will spur technological advancement and lead to further lower prices.

Smooth Transition

The worldwide energy transformation involves more than just localised generation of clean power; it also involves the collection, transmission, and distribution of energy. The Middle East is well-positioned to dominate the global green hydrogen industry thanks to its wealth of renewable resources, favourable location, and massive ongoing investments in logistical infrastructure. It has the potential for large-scale green hydrogen generation and the ability to export that hydrogen around the world to meet rising demand.

Leading the Change

While the worldwide average for hydrogen production costs is around US $7 per kg, Saudi Arabia consistently keeps its prices at or below US $2 per kg. This also applies to the production of environmentally friendly hydrogen, which is difficult to achieve elsewhere at affordable prices. Rates of US $1 per kg should be consistently feasible in Saudi Arabia in the long run, according to a forecast released this month by the King Abdullah Petroleum Studies and Research Centre (KAPSARC), making them easily the cheapest in the world.

The US $5 billion NEOM green hydrogen project has been under construction since March. With production set to begin in 2026, the plant will have the potential to produce 650 metric tonnes of carbon-free hydrogen per day, lending credence to Saudi Arabia's earnestness in its pursuit of leadership in the rapidly growing green hydrogen market in the Middle East.

Scaling up

While Saudi Arabia has the ability to create green hydrogen at the lowest cost, other Middle Eastern countries with equal advantages and a similarly strong political will are not far behind.

All indicators point to a significant growth in both the value of ongoing investments and the number of proposed projects in the Middle East, despite the fact that estimates for both tend to fluctuate widely. In August, Siemens discovered 46 green hydrogen projects in the MENA region with a combined value of US $92 billion. Last month, MEED estimated that the region's 50+ projects had invested over US $150 billion.

In comparison to Saudi Arabia's US $10.5 billion and the United Arab Emirates' US $10.28 billion, Egypt's current investment level of US $63.8 billion is more than six times higher. Oman comes in second with projects worth US $49.1 billion.

Given Egypt's ready access to wind and solar energy and its ongoing multi-billion dollar port upgrade projects, it is evident that the country is dedicated to being a major player in the regional rivalry to obtain green hydrogen supplier status and the development of the broader global market. There is a race to determine which country in the region can become the pioneer in the field of green hydrogen first.

Rising green hydrogen demand

As hydrogen production becomes more efficient and cost-effective, so too must the infrastructure built to permit its widespread usage around the world. In order to fully realise the region's potential for green hydrogen, this means that new ports, with larger and more advanced infrastructure, are needed in the MENA region.

Digital technologies are expected to be deeply integrated into plant operations in the future, which experts believe will allow for performance optimisation, predictive maintenance scheduling for equipment, and selective automated decision-making in matters of operation and maintenance, as well as risk reduction, to maximise the profitability of gas-turbine combined cycle power plants.

However, the potential for hydrogen generation in the Middle East goes much beyond mere efficiency and meeting demand. Its strategic location makes it possible to export green hydrogen to European and Asian markets, and its abundant natural resources provide fuel for renewable energy.

Investing in technological innovation is necessary for the region as a whole to reach its goal of a net-zero carbon future by making renewable energy sources, such as hydrogen, more accessible and affordable.