In the energy transition, the Middle East is positioned itself to remain a significant energy source. Countries in the region are developing visions and policies with a wide range of scope and aims. Some countries, such as the United Arab Emirates and Oman, are aiming to become significant hydrogen centers.
And it’s not without cause. Previously a niche sector, hydrogen is becoming a more appealing choice for achieving a zero-carbon future. According to our Energy Transition Outlook and Accelerated Energy Transition scenarios, global consumption will grow two to sixfold between now and 2050.
In the world of the hydrogen economy, location is crucial
The Sultanate of Oman and bp recently inked a deal to collect data to analyze renewable resource potential, emphasizing the relevance of location in green hydrogen project economics.
“The constancy of power generation is determined by location, which is a primary driver of green hydrogen economics.” Claude Mourey is the Director of Hydrogen and New Energies in the Middle East and North Africa (MENA).
The resources to be exploited aren’t underground, but rather the finest combination of wind and sun energy. The significance of collecting and analyzing renewable data on a wide scale, on the other hand, is comparable to geological surveys aimed at locating feasible hydrocarbon deposits. The consistency of power output is determined by location, which is a primary driver of green hydrogen economics. According to our findings, a more constant supply of renewable energy leads in reduced project costs since energy and hydrogen storage needs may be optimized. The higher the amount of power supply unpredictability, the higher the cost of buffer storage. Renewable Energy Credits (REC) are a short-term solution for using the grid as an energy storage buffer, but they become a concern if the proportion of renewables causes grid stability difficulties.
Because the whole green hydrogen value chain is still in its early stages, securing the optimum site for reliable renewable energy has a substantial influence on project value. The 8,000 km2 data gathering region included in the bp/Oman cooperation will be analyzed to determine the optimum development locations.
Oman is laying the foundations for its desire to become a world-scale green hydrogen production and export hub by teaming with bp, a business well-versed in large-scale natural resource assessments. According to a Wood Mackenzie research, Oman’s green hydrogen levelised prices might reach $2 USD/kg by 2030, putting the country in a highly favorable position.
The finest sites will provide considerable competitive benefits to hydrogen project developers
The Middle East has abundant access to renewable energy sources. It has the highest solar irradiation in the world, and its shores are windy.
The possibility of changing weather patterns will heighten the examination of potential green hydrogen production sites across the world. Will other nations with comparable hydrogen objectives allow site surveys of their renewable potential? If that’s the case, would they follow a similar cooperation model or seek out other approaches?
That will have to wait and see. We do know, however, that the technical and economic project screening criteria for green hydrogen/ammonia projects are complicated, and involve things like water availability, proximity to export infrastructure, and current local hydrogen demand. However, we believe that having access to high-quality data to analyze renewable energy resources would be a vital facilitator. This information will aid developers in their screening efforts and give potential investors more confidence.
Wood Mackenzie
