Finance is not the main issue for the dozens of green hydrogen projects being launched across the region. Instead, finding good projects with reasonable tariffs is, according to Frederic Claux, Engie’s managing director, thermal and supply, Africa, Middle East and Asia.

“The main question for investors is do we commit today, or do we wait until the costs of both renewables and electrolysers stabilise?” Claux tells MEED, emphasising the need to scale up green hydrogen projects to drive down the cost to a level comparable with blue or grey hydrogen.

Local authorities will likely not extend [the contracts] due to various reasons… including in Abu Dhabi the availability of nuclear energy for baseload and renewable energy
Frederic Claux, Engie

Engie recently signed a memorandum of understanding with Abu Dhabi’s Masdar to codevelop a UAE-based green hydrogen hub, which will require an investment of up to $5bn.

While project details remain scarce, it is understood the planned hub will consider various potential applications of green hydrogen, including in harder-to-abate industries such as steel and mobility.

Expiring contracts

However, green hydrogen projects are just one of several routes Engie is pursuing to achieve its goal of reaching net-zero carbon emissions by 2045.

Other measures entail considering greener options for existing or future utilities developments and renewable energy projects.

For instance, negotiations are under way for several gas-fired independent power projects or independent water and power projects that are approaching the end of their contract periods.

“Negotiations are under way for … projects with expiring power and water purchase agreements (PWPAs) or power purchase agreements (PPAs), particularly in Oman and to a lesser extent Abu Dhabi,” says Claux.

“Local authorities will likely not extend [the contracts] due to various reasons … including in Abu Dhabi the availability of nuclear energy for baseload and renewable energy.”

The case is slightly different in Oman, which expects to start operating an electricity spot market this year.

“It will likely be a hybrid market [in Oman], with some contracts continuing to operate on PPAs or PWPAs,” explains Claux.

The executive also notes that Engie’s 2045 net-zero carbon emissions target means they carefully consider every project in terms of potential contract extension and “whether that will contribute to the firm’s overall net-zero objective”.

New technologies

Regarding seawater desalination projects, the balance has shifted towards new technologies such as reverse osmosis (RO). Some of the most recent projects are considering the adoption of zero liquid discharge (ZLD) technology to mitigate the environmental impact of the water treatment process.

However, adopting ZLD for every reverse osmosis project would entail some technical challenges.

“At the same time, the tariffs a client wants have to be reasonable, as integration of brine processing increases costs,” says Claux.

Of note is that an Engie-led team has won two of the last three independent water project (IWP) contracts awarded in Saudi Arabia.

These include the estimated $850m Yanbu 4 IWP, which integrates a water transmission pipeline and a desalination plant with a daily capacity of 450,000 cubic metres (cm/d), and the $693m Jubail 3B IWP, with a capacity of 570,000 cm/d.

Claux says his firm is also keen to bid for the next renewables round in the kingdom, particularly the 850MW wind farm planned in Yanbu.

Meanwhile, the adoption of renewable energy-based RO desalination plants is another promising development being considered by clients in the region.

And while Claux concurs that green or sustainable water is a good idea, he also notes that intermittency of renewables requires further solutions such as battery energy storage.

“Costs involved in battery storage… make full solar-based desalination schemes not practical at the moment,” he tells MEED.