The Middle East and North Africa (Mena) hydrogen industry may be about to move to a new phase of tangible projects as the financial close of Saudi Arabia's Neom project signals to financiers they are "bankable", the Neom Green Hydrogen Company's chief executive David Edmondson said at the World Hydrogen Mena conference in Dubai.
The Neom project developers this week said they had finalised agreements with lenders for around $6.33bn in project finance towards the $8.5bn plant, allowing for financial close together with the partners' own commitments.
Edmondson said lenders now "buy into" the idea of financing hydrogen projects, having been hesitant because few projects had reached final investment decision (FID) and they were seen as risky.
Another green ammonia project in Oman may reach an FID next month, one of its developers, Indian renewables firm Acme, said at the conference — albeit only for the $650mn first phase.
But other panellists questioned whether the nascent sector's progress has been overstated.
"There is too much hype in the market," Norwegian Scatec's head of power-to-X Mohamed Amer said. "Actual projects moving ahead are extremely limited." Scatec is developing the Oman project with Acme and is developing a 100MW ammonia plant in Egypt with Fertiglobe.
Neom, Acme, Scatec and other developers stressed the need for credible multi-decade purchase agreements in order to get financing. But overall appetite for these seems weak at present.
"We don't see a lot of offtake out there in the market," Amer said.
Indian conglomerate Reliance's senior vice president for hydrogen Marcus Guzmann said the global industry needs to answer a "key question" about how to secure long-term buyers "in order to achieve a bankable project today."
"If you develop a project at scale, you are locked in with today's technology and high costs… meaning you will be facing strong competition in future and customers may walk away," he said. But if no one takes the risk to develop the first projects then costs will never come down, he said.
"There will be a gap from today's cost and future cost and we somehow need to bridge that gap to provide security for early movers," he said.
Mechanisms like the German government-backed H2Global initiative aim to solve this problem. Japan is developing its own mechanism, with the current thinking being a contract for difference scheme, the minister of economy, trade and industry's special advisor Hiroshi Hasegawa said at the conference. These interventions could be the key tipping point for the industry to take off in earnest.
