Refineries could become a main anchor for renewable hydrogen demand in South Korea, as adoption for power generation has become more uncertain, Saudi Arabian project developer Acwa said.
South Korea's primary focus in recent years for use of imported clean hydrogen and ammonia has been on power generation. Changes to long-term power supply and energy security planning have altered this, but Acwa sees offtake opportunities in other sectors.
"We are really trying to encourage the authorities to expand the scope beyond power generation," the firm's head of green hydrogen business development, Driss Berraho, told Argus on the sidelines of the World Hydrogen Summit in Rotterdam last week. Refineries could provide "a good avenue to initiate the market" and to "create baseload large-scale demand with limited impact on the end consumer," he said.
Renewable hydrogen adoption in refineries could help scale the sector and develop infrastructure that would eventually bring down overall supply costs, Berraho said. This could support future hydrogen or ammonia use for power generation at more affordable prices, he said.
In Europe, refineries are already the main demand source for renewable hydrogen. Fossil-based hydrogen can be replaced with few technical modifications, and higher costs can be spread across all fuel consumers at the pump. The EU has doubled down on this through consumption targets under its revised Renewable Energy Directive (RED III).
South Korea has made plans to decarbonise refineries, but specific quotas for renewable hydrogen use and penalties are yet to be set, Berraho said. Still, Acwa has "observed that refiners are getting ready" and are "doing the groundwork to understand supply chains," he said.
Acwa generally remains "convinced of the long-term potential" of northeast Asian markets, Berraho said, pointing to encouraging signs from Japan including results of a recent zero-emissions power capacity auction.
Asian firms remain interested in co-investing in Saudi projects, Acwa's advisor to the chairman, Marco Arcelli, said in Rotterdam.
European focus
For now, Acwa sees Europe as the main offtake market, especially because of the RED III targets.
German utility EnBW has joined Acwa's Saudi Yanbu project, which could produce more than 2mn t/yr of ammonia, as a partner and potential key offtaker. Acwa is also engaged in offtake conversations with other firms, including Germany's Sefe, Arcelli said.
The company expects to finalise binding offtake deals for Yanbu by the end of this year or in early 2027, paving the way for a final investment decision (FID), Berraho said. On the project development side, everything should be lined up for a FID later this year, he said. Front-end engineering design work is ongoing and Acwa this week received pre-certification for Yanbu's compliance with the EU's definition of renewable fuels of non-biological origin.
Outside of Saudi Arabia, where Acwa is also developing the Neom project, most plans are less advanced. Acwa is planning large renewable ammonia plants in Morocco and in Egypt, but these are in much earlier development stages, Arcelli said.
In Indonesia, Acwa has teamed up with domestic firms PT PLN and Pupuk to make renewable ammonia for domestic fertilizer production. But the plans are "progressing very slowly," Arcelli said, noting that Indonesia has ample potential but that the "general framework" for development of hydrogen projects differs considerably between countries. Acwa had hoped the project "could go much faster because it would really position Indonesia as the leader in the Asia-Pacific region outside of China," Arcelli said.
The company operates a 20MW electrolysis plant in Uzbekistan that supplies renewable ammonia for domestic fertilizer production. This gives Acwa "the credibility that we can fully develop green hydrogen projects on our own," Arcelli said. Another larger plant in Uzbekistan is still on the cards, but this will depend on demand and learnings from the operational project, he said.
Uzbekistan stands out for renewable hydrogen and ammonia in central Asia as it has a "very unique combination of factors," Berraho said, including ample renewables potential and a very strong industrial base across refining, chemicals and heavy industry. Discussions on energy security feature strongly in the country, he said.
