This will be one of the first projects to be built in the industrial
hub of NEOM, a futuristic “model for sustainable living.” NEOM is a
key element in Vision 2030, Crown Prince Mohammed bin Salman’s plan to
diversify the Saudi Arabian economy and reduce dependence on oil
revenues. In other words, Saudi Arabia is establishing itself as “a
global leader in green hydrogen production and green fuels.”
The joint venture project is the first partnership for NEOM with
leading international and national partners in the renewable energy
field and it will be a cornerstone for its strategy to become a major
player in the global hydrogen market. It is based on proven,
world-class technology and will include the innovative integration of
over four gigawatts of renewable power from solar, wind and storage;
production of 650 tons per day of hydrogen by electrolysis using thyssenkrupp
technology; production of nitrogen by air separation using Air
Products technology; and production of 1.2 million tons per year of
green ammonia using Haldor Topsoe technology. The project is scheduled
to be onstream in 2025 ...
“We are honored and proud to partner with ACWA Power and NEOM and use
proven technologies to make the world’s dream of 100 percent green
energy a reality,” said Seifi Ghasemi, Chairman, President and Chief
Executive Officer for Air Products. “Harnessing the unique profile of
NEOM’s sun and wind to convert water to hydrogen, this project will
yield a totally clean source of energy on a massive scale …”
NEOM announcement, Air
Products, ACWA Power and NEOM Sign Agreement for $5 Billion Production
Facility in NEOM Powered by Renewable Energy for Production and Export
of Green Hydrogen to Global Markets,
July 7, 2020
According to NEOM’s announcement, this first green ammonia plant is a
“significant milestone … the first of many developments at this scale
that will put NEOM at the heart of a new future society.”
Green ammonia at oil and gas scale
The scale of this project is certainly noteworthy. With an operational
date scheduled for 2025, it will probably succeed in its claim of
being “the world’s largest renewable hydrogen project,” at least for a
few years. Other, bigger projects are on the table, but with longer
development periods, like InterContinental Energy’s Asian Renewable
Energy Hub (15 GW) or Siemens’s Murchison Renewable Hydrogen Project
(5 GW), both seeking to export renewable energy from Australia.
The homepage of Asian Renewable Energy Hub gets directly to the point:
“Renewable energy at oil and gas scale.” Green ammonia is no longer
restricted to small-scale projects; management of intermittent power
inputs is no longer a techno-economic problem for the future;
economies of scale matter; the chicken-and-egg problem of how to
finance a plant without an established green ammonia market has been
solved.
With an annual capacity of 1.2 million tons of ammonia, this is a big
plant, but it is not unusually large. Most modern ammonia plants have
an annual capacity of a million tons or so. It would take around 200
more of these $5 billion investments to supply enough green ammonia to
decarbonize the shipping sector (see: Maritime decarbonization is a
trillion dollar opportunity). Another 200 would be required to
decarbonize the fertilizer sector. And many, many more would be
required to satisfy renewable hydrogen demand from the fuel cell
powered trucks and buses that Air Products is focused on supplying
today — even more would be required as hydrogen is adopted in cars and
trains and other applications. And we haven’t begun counting the
opportunities in the power generation sector.
So, while we celebrate this first $5 billion investment, we should
also recognize that it is a fraction of what must come. The real
challenge isn’t the scale, but the speed at which we need to build all
this new energy infrastructure. By this measure, 2025 is impressive.
NEOM
NEOM fills a large, coastal region in northwest Saudi Arabia. Among
other things, the area boasts a combination of “perennial solar
resources (20 MJ/m2)” and “ideal wind speed (an average of 10.3 m/s).”
Beyond these data, it is difficult to describe NEOM in my own words.
NEOM is being conceived on a blank slate that will introduce a new
model for urbanization and sustainability. It is being designed,
constructed and independently administered in a way that is
unencumbered by the outdated and inefficient economic and
environmental infrastructure that constrains other countries …
NEOM is the brainchild and vision of HRH Crown Prince Mohammed Bin
Salman and is a centerpiece of Saudi Arabia’s Vision 2030 plan to grow
and diversify the Saudi economy and position the country to play a
leading role in global development …
NEOM will be backed by more than $500 billion over the coming years by
the Public Investment Fund of Saudi Arabia, as well as local and
international investors. NEOM’s contribution to the Kingdom’s GDP is
projected to reach at least $100 billion by 2030.
NEOM Fact Sheet, accessed July 2020
Air Products, thyssenkrupp, and Haldor Topsoe
The NEOM project connects the dots between a
series of announcements that have come in recent months from Air
Products, which describes itself as “a global leader in industrial
gases and megaproject development.”
Air Products is not known as a producer of ammonia, but it is deeply
embedded in the industry as a producer of nitrogen and owner/operator
of the air separation units (ASUs) that provide ammonia plants with
their nitrogen feedstock. The company is also a hydrogen producer and
distributor (“currently the largest supplier of hydrogen worldwide”),
with high ambitions for the adoption of hydrogen as a transportation
fuel.
In January 2020, Air Products combined these roles for ammonia
production when it announced that it would supply both nitrogen and
hydrogen to Gulf Coast Ammonia (GCA), a new ammonia plant being built
in Texas City, TX. To supply GCA, Air Products is making a $500
million investment to build its largest SMR plant and a 30-mile
hydrogen pipeline extension.
In May 2020, Air Products announced a “global Alliance Agreement” with
ammonia technology licensor Haldor Topsoe.
The two companies will collaborate, using their extensive market
network outreach for developing potential projects … on large-scale
ammonia, methanol and/or dimethyl ether plants to be developed and
built globally.
The Alliance Agreement provides Air Products access to Topsoe’s
technology license(s) and the supply of certain engineering design,
equipment, high-performance catalysts and technical services.
Haldor Topsoe press release, Air Products and Topsoe sign global
alliance agreement for collaboration on large-scale ammonia, methanol,
and/or dimethyl ether projects around the world, May 15, 2020
Other projects within this alliance include a coal-to-methanol plant
in Indonesia and the GCA plant in Texas, which will have the same
capacity as the NEOM plant. According to Haldor-Topsoe, these will
boast “the world’s largest” ammonia loop (other ammonia plants might
have bigger capacities, but only because they have two or more ammonia
loops on one site).
Then, in early July, Air Products announced another agreement, this
time with the electrolyzer arm of thyssenkrupp.
thyssenkrupp will deliver its technology and supply specific
engineering, equipment and technical services for water electrolysis
plants to be built, owned and operated by Air Products. The
collaboration leverages thyssenkrupp’s technology supporting Air
Products’ development of green hydrogen as an energy carrier for
sustainable transportation, chemicals and power generation …
Matching the need for low-CAPEX, low-OPEX, reliable technology and
solid project execution to make world-scale green hydrogen projects
feasible, Air Products and thyssenkrupp are committed to deploying
economic green hydrogen plants in the gigawatt size.
thyssenkrupp press release, Air Products and thyssenkrupp sign
exclusive strategic cooperation agreement for world-scale electrolysis
plants to generate green hydrogen, July 6, 2020
The size of the investment that Air Products is making, both in NEOM
and in its sales and distribution network to deliver the NEOM product,
is impressive. Beyond the $5 billion plant cost, it expects to invest
an additional $2 billion in “distribution to end customers.”
But, as discussed above, these numbers are for the first plant, and
they are only really relevant to that first plant. The impact that
building this plant will have on the cost of electrolyzers, at one end
of the value chain, and on the cost of ammonia crackers, at the other
end, will be significant. The cost of building the initial
infrastructure to deliver this volume of ammonia might be significant,
but those volumes can later be expanded at far lower incremental
delivery cost.
The second and third big green ammonia plants will have a lower capex;
the second and third hundredth plants will have economics that we’ve
yet to quantify.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
exactrix@exactrix.com
