The recent comparative research has highlighted that Saudi Arabia boasts a more efficient method of producing green hydrogen than Germany. Favorable natural conditions in the Kingdom mean it requires significantly less capital to reach the same hydrogen production targets as its European counterpart, as per the latest findings from the King Abdullah Petroleum Studies and Research Center.
Particularly, the Kingdom benefits from intense sunlight radiation, which leads to reduced costs for solar-powered hydrogen generation, a stark contrast to the wind-driven techniques commonly used in less sunny regions such as Germany.
An analysis predicts that by 2030, Saudi Arabia will need 25 percent less investment for the daily generation of 600 tonnes of green hydrogen using solar power compared to Germany’s wind-powered methods.
The research by KAPSARC also notes that the financing costs in Saudi Arabia are at least 200 basis points lower than in Germany, even when including the expenses of shipping.
This substantial cost advantage cements Saudi Arabia’s status as a prime player in the arena of solar energy, enhancing the economic feasibility of its green hydrogen initiatives.
Yousef Al-Shammari, an energy expert at Imperial College London, emphasizes the crucial role of green hydrogen in combating global warming. Western markets are particularly interested in this form of hydrogen, aiming to produce up to 10 million tonnes annually by 2030 as part of their decarbonization efforts.
Al-Shammari illustrates the cost disparity, noting that producing green hydrogen in Germany could cost $5 per kilogram, while in Saudi Arabia, it may only be between $1 and $2.
He further explains that Germany, being Europe’s largest economy, will likely depend on importing affordable green hydrogen from countries like Saudi Arabia for the foreseeable future.
The KAPSARC analysis underscores how differences in financing costs can greatly influence the economics of green hydrogen production and trade.
Saudi Arabia is poised to become a leader in renewable hydrogen production, aiming at both domestic consumption and global export, in line with worldwide decarbonization trends. This ambition is supported by its vast solar energy potential, onshore wind projects, and strategic geographical location, which not only reduce production costs but also align with its goal of becoming a dominant energy exporter in the journey to net-zero emissions.
As the world progresses towards decarbonization, the Kingdom’s influence in shaping the future energy market, especially in green hydrogen, becomes increasingly significant.
During the Future Minerals Forum in January, Saudi Minister of Energy Prince Abdulaziz bin Salman announced the nation’s transition towards becoming a diversified energy exporter, moving beyond its traditional role as an oil exporter.
He stated, “We are no longer being called a leading oil country or oil-producing country. Our tag now is that we would like to be an energy-producing country of all sorts of energy, so our task is to prove it and we shall.”
Saudi Arabia’s geographical position provides it with a key advantage in the global energy market, especially for exporting green hydrogen. Located at the crossroads of Europe, Asia, and Africa, the Kingdom enjoys minimized transportation distances and costs to key markets with increasing H2 demand.
Al-Shammari points out the strategic northwest location of ACWA Power and NEOM, facilitating easy exportation of green hydrogen to Europe. ACWA Power boasts the world’s largest green hydrogen storage facility, capable of producing 1.2 million tonnes of ammonia per year.
The study suggests that even with the anticipated shipping and reconversion costs of $1 per kg of H2 in the form of ammonia, Saudi Arabia could still deliver green hydrogen to Europe, specifically Germany, at competitive rates.
These geographical and climatic benefits enable lower production costs and offer a stable and reliable energy supply for green hydrogen production. The nation’s existing infrastructure and expertise as a global oil supplier lay a strong foundation for expanding green H2 export capabilities.
The report accentuates Saudi Arabia’s economic and logistical advantages, highlighting its capacity to competitively supply green H2 to international markets. As the world shifts toward decarbonization, the Kingdom’s strategic vision and dedication to sustainability mark it as a key player in the future of renewable energy.