RIYADH: Saudi Arabia’s vast renewable energy potential and natural gas reserves will support it in producing some of the cheapest green and blue hydrogen globally, a new study has said.
The findings were released this week in the “Economics and Resource Potential of Hydrogen Production in Saudi Arabia,” which was commissioned by the King Abdullah Petroleum Studies and Research Center (KAPSARC).
At current domestic gas prices and considering the average auction price of the renewable energy projects awarded in 2020, the cost of producing blue and green hydrogen is estimated to be at $1.34/kg and $2.16/kg, respectively.
Additionally, the delivered cost of hydrogen by 2030 from Saudi Arabia’s western region to the Port of Rotterdam, via the Suez Canal, will average between $3.50/kg and $4.50/kg depending on the hydrogen carrier used.
For context, the expected cost of green hydrogen production in Europe in 2030 is estimated to average between $3/kg and $5/kg.
The study also highlighted the Kingdom’s geographical resource distribution, pointing out that the eastern region is more likely to produce and export blue hydrogen, while green hydrogen production is ideally suited in the western region — far from the local oil and gas clusters.
“As countries commit to a low-carbon future, Saudi Arabia’s hydrogen production outlook presents tremendous opportunities for the Kingdom and other countries in their energy transition,’’ said Fahad Al-Ajlan, President of KAPSARC.
KAPSARC’s study follows the Kingdom’s announcement this March to have officially begun the construction of Helios, a $5 billion green hydrogen plant in NEOM, as the country pushes ahead with plans to export the carbon-free fuel in about four years with most of the expected demand to come from Europe and Asia.
The Kingdom’s hydrogen aspiration is in line with the launch of the Saudi Green Initiative launched in October 2021, in which the country pledged over $186 billion (SAR 700 billion) in investment to contribute to the growth of a green economy.