Saudi Arabia’s $8.4 Billion Hydrogen Bet – Will Neom Dominate the Market?

In today’s episode of The Hydrogen Podcast, we dive into Newsweek’s June 2025 article on the Neom Green Hydrogen Company (NGHC), the heart of Saudi Arabia’s bold $500 billion Neom megaproject.

🚧 The world’s largest green hydrogen plant—80% complete and located in Neom’s Oxagon hub—is aiming to be operational by late 2026. With $8.4 billion in investment and 4 GW of renewable energy, this facility will produce 600 tons of hydrogen daily, converted into 1.2 million tons of ammonia annually for global export.

🔎 Topics covered in this episode:

• Key details on NGHC’s economic model, technology stack, and off-take strategy
• How NGHC fits into Saudi Arabia’s Vision 2030
• Market risks and the need for more buyers
• Job creation, environmental benefits, and the water-energy tradeoff
• A comparison to U.S. and China’s competitive projects like ExxonMobil’s Baytown facility and Sinopec’s $690M hydrogen fund

📊 Based on data from DOE, IEA, and BloombergNEF, we analyze NGHC’s future in the global hydrogen market and whether it can compete on cost and scale.

🌍 Whether you’re in energy, infrastructure, or policy, this episode offers essential insights into one of the biggest clean energy bets in the world.

Transcript

Today, we’re diving into a Newsweek article from June 4, 2025, titled "Images Show Power Plant Nears Completion at World's Biggest Construction Site," which spotlights the Neom Green Hydrogen Company’s plant in Saudi Arabia. First, we’ll unpack the article’s insights into this groundbreaking project’s progress and economics. Then, we’ll explore the broader implications of Neom’s full hydrogen development, digging into how they plan to use the hydrogen, their export ambitions, the portion earmarked for Neom itself, and other key details like job creation and environmental impact. All of this on todays Hydrogen Podcast

The Newsweek article offers a vivid snapshot of the Neom Green Hydrogen Company’s plant, part of Saudi Arabia’s $500 billion Neom megaproject. Located in Oxagon, Neom’s industrial hub, this $8.4 billion facility is billed as the world’s largest hydrogen production plant, a joint venture between Neom, ACWA Power, and Air Products. The article showcases images of the plant at 80% completion as of June 2025, on track for full operation by late 2026, with key equipment like wind turbines installed. The plant integrates 4 gigawatts of renewable energy—2.2 GW from 5.6 million solar panels and 1.6 GW from 250 wind turbines—to produce 600 tons of hydrogen daily via electrolysis, converted into 1.2 million tons of ammonia annually for export. This scale could power 20,000 hydrogen fuel cell buses yearly and reduce CO2 emissions by up to 5 million tons annually, equivalent to removing 1 million cars from the road.

Economically, the project’s $8.4 billion cost is financed by $6.1 billion in non-recourse loans from 23 banks and $2.3 billion in equity from the partners, certified as a green loan by S&P Global. Air Products, the exclusive off-taker, has a 30-year contract for all ammonia produced, ensuring market stability. Electrolyzers, at $1,000–$2,000 per kilowatt, and renewable infrastructure, at $3–$4 billion, drive the high cost, with hydrogen production via electrolysis costing $4–$6 per kilogram due to electricity prices of $50–$100 per megawatt-hour, per BloombergNEF. This compares to $1–$2 per kilogram for hydrocarbon-derived hydrogen via steam methane reforming (SMR), which emits 10–12 kg CO2 per kilogram without CCS, per DOE and IEA estimates. The article notes market risks, citing a Bloomberg report that only one buyer is committed, prompting NGHC to explore local demand within Saudi Arabia to avoid slowing development.

Technologically, the plant leverages thyssenkrupp’s electrolysis, Air Products’ air separation for nitrogen, and Haldor Topsoe’s ammonia synthesis, integrated at an unprecedented scale. Oxagon’s coastal location optimizes logistics, with a jetty for ammonia exports set for 2025 completion. Challenges include electrolyzer efficiency (50–60 kWh per kilogram at 60–70% efficiency), membrane durability (20,000–30,000 hours), and water desalination, consuming 12,000 tons of seawater daily, adding $0.10–$0.20 per kilogram, per DOE data. Grid balancing systems, costing $20–$30 million, manage renewable intermittency. The project aligns with Saudi Vision 2030, aiming to diversify the economy and position Saudi Arabia as a hydrogen export leader, creating 300 direct jobs and potentially 1 million Gulf-wide by 2050, per Dii Desert Energy. Yet, the article flags demand uncertainty, with only 6% of global hydrogen projects implemented, per IEA, due to financing and market barriers.

Now, let’s explore the implications of Neom’s full hydrogen development, focusing on utilization plans, export strategies, internal use within Neom, and broader impacts. NGHC’s core plan is to convert all 600 tons of daily hydrogen—219,000 tons annually—into 1.2 million tons of ammonia for export, leveraging ammonia’s density as a cost-effective hydrogen carrier. Air Products’ 30-year off-take agreement targets Europe and Asia, where ammonia can be cracked back into hydrogen for fuel cell vehicles, buses, and industries like steel and fertilizers, supplying hydrogen equivalent to 15,000 barrels of oil daily. However, with only one committed buyer, NGHC is pivoting to local markets within Saudi Arabia, such as heavy-duty transport and industrial clusters, to ensure demand, per Bloomberg. This shift could stabilize the project but risks delaying full-scale exports if global buyers don’t materialize.

Export strategies are pivotal, with the Oxagon jetty facilitating ammonia shipments to Europe, where demand for low-CI hydrogen is projected to hit 10 million tons by 2030, per IEA. Transport costs, at $0.50–$1 per kilogram of hydrogen equivalent, enable ammonia delivery at $1,000–$1,500 per ton, competitive with grey ammonia at $800–$1,200, per BloombergNEF. CEO Wesam Alghamdi emphasized the plant’s design for all markets, with Air Products ensuring EU-compliant carbon-free certification. Yet, Europe’s high electrolytic hydrogen costs ($4–$6 per kilogram) and subsidy dependence, like the EU Hydrogen Bank’s €992 million, could limit uptake unless prices drop to $2–$3 per kilogram by 2030, per BloombergNEF. Asia, particularly Japan and South Korea, is a key target, with fuel cell vehicle markets projected to consume 5 million tons of hydrogen by 2030, per IEA. NGHC could capture 10–15% of this, generating $2–$3 billion annually if prices stabilize.

Internal use within Neom is secondary, with 10–20% of the plant’s hydrogen output—20,000–40,000 tons annually—potentially allocated for local applications, per DOE estimates. Neom’s Oxagon hub and THE LINE city aim for carbon neutrality, using hydrogen for power generation, fuel cell buses, and industries like cement and steel. The Hydrogen Innovation and Development Center (HIDC) in Oxagon is developing solutions for storage and transport, which could boost local demand. However, Neom’s energy needs are primarily met by separate renewable projects, limiting the hydrogen plant’s internal role unless export markets underperform. Local use could include forklifts at Oxagon’s port and pilot projects for heavy-duty transport, aligning with Saudi Arabia’s goal to decarbonize domestic sectors.

Economically, NGHC could reshape Saudi Arabia’s energy landscape, supporting Vision 2030’s $10 billion hydrogen investment, including the Public Investment Fund’s Energy Solutions Company. The $8.4 billion cost is expected to yield $200 billion in Gulf hydrogen revenues by 2050, creating 1 million jobs, per Dii Desert Energy. NGHC’s 2025 recruitment drive for engineers underscores job creation, with 300 direct jobs and thousands in related sectors. Environmentally, the 5 million tons of CO2 savings annually is significant, but critics argue the energy could decarbonize Saudi Arabia’s crude-burning grid instead, per X discussions. Water use, at 12,000 tons daily, relies on desalination, requiring $50–$100 million in infrastructure, minimizing freshwater strain but adding costs, per DOE.

Globally, NGHC’s scale sets a benchmark, but competition is intense. The U.S., under H.R.1, prioritizes low-CI methods like SMR with CCS and natural hydrogen at $1–$2 per kilogram, leveraging the 45Q credit ($85 per ton of CO2) to undercut NGHC’s $4–$6 electrolytic hydrogen. ExxonMobil’s Baytown facility, producing 1 billion cubic feet daily by 2028, could export low-CI hydrogen to Europe at $1.50–$3 per kilogram, challenging NGHC’s pricing. China’s Sinopec, with a $690 million hydrogen fund, aims to scale electrolysis to $2–$3 per kilogram by 2030, threatening NGHC’s Asian share. To compete, NGHC must secure 2–3 additional buyers by 2026, reduce costs via AI-optimized electrolysis (targeting 40–50 kWh per kilogram), and leverage Saudi Arabia’s low-cost renewables ($20–$30 per megawatt-hour).

The HIDC could drive innovations like solid-state storage, cutting transport costs by 10–20%, per DOE, positioning NGHC to generate $5–$7 billion annually by 2035, decarbonizing 50–100 million tons of CO2 across transport and industry, per BloombergNEF. For the U.S., NGHC’s progress underscores the urgency to scale low-CI production, with pilots like Koloma’s natural hydrogen ($0.50–$1 per kilogram) and Monolith’s methane pyrolysis offering cost advantages. Global hydrogen demand could hit 150 million tons by 2030, and NGHC’s success depends on building a commodity market, as only 6% of projects are implemented, per IEA.

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