SINGAPORE - Global energy company BP said on Wednesday (June 15) that it has agreed to buy a 40.5 per cent stake in what is billed as one of the world’s largest renewable energy and green hydrogen fuel projects.
BP said it would also operate the Asian Renewable Energy Hub (Areh) in the Pilbara region of Western Australia.
The project is still in the planning stages, but if fully developed, it would have up to 26 gigawatts of wind and solar power capacity that would be used to produce 1.6 million tonnes of green hydrogen or 9 million tonnes of ammonia a year, much of which would be exported. Exports are forecast to start late this decade.
The project area will cover 6,500 sq km of desert, or about 8.5 times the area of Singapore, and the 26GW is just over double the Republic’s operating power generation capacity.
Major partners include renewable energy firm CWP Global and InterContinental Energy, a leading green hydrogen developer. Singapore’s sovereign wealth fund GIC is an investor in privately owned InterContinental Energy, which is also developing mega-scale hydrogen projects in the Middle East.
“Having BP as a major consortium partner is certainly a game changer for the project and sends a signal to the world that the global energy giants are now seeing clearly the business opportunity in transitioning to green power and fuels,” Mr Alex Hewitt, co-founder and chief executive of CWP Global, told The Straits Times.
He said at full capacity, Areh will require upwards of US$30 billion (S$41.8 billion) in project finance.
Ms Anja-Isabel Dotzenrath, BP’s executive vice-president of gas and low carbon energy, said: “Areh is set to be one of the largest renewable and green hydrogen energy hubs in the world and can make a significant contribution to Australia and the wider Asia-Pacific region’s energy transition.”
Global energy giants, among the world’s top greenhouse gas polluters, have been trying to figure out how to cut their emissions to reach net-zero emissions by 2050, and shifting to cleaner energy is a key part of that transition.
“Areh could provide significant net renewable generating capacity for BP as well as make a material contribution to its strategic aim to capture a 10 per cent share in core hydrogen markets globally,” Ms Dotzenrath said in a statement.
The value of BP’s stake was not disclosed.
Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable energy. The fuel is far less polluting than coal, oil or gas, and can be used in transport, power generation and industry, such as steel-making.
The fuel is still expensive to produce but mega projects such as Areh are expected to drive down costs. Worldwide, interest in hydrogen has boomed as governments and industry seek to cut emissions and cut dependency on fossil fuels.
The global Hydrogen Council says it is tracking 680 projects valued at an estimated US$240 billion - most of which are still in the planning stages.
Areh will also produce green ammonia, which can be used as a fuel for shipping and power generation, and as a key feedstock for fertilisers.
Areh was first proposed in 2014 and last year suffered a setback when the previous federal government said plans to expand the project to 26GW from the 15GW previously approved would have “unacceptable impacts” on internationally recognised wetlands and migratory bird species. The issue has yet to be resolved.
A spokesman for CWP Global told The Straits Times that new design concepts are under consideration, which “would potentially relocate key project infrastructure, reducing potential and perceived impacts on environmentally sensitive areas”.
“Applications for environmental approvals for the preferred design will be submitted in due course, following rigorous consultation with Commonwealth and state governments,” the spokesman added.
He said the project has attracted significant interest from potential customers in South Korea, Japan and Singapore, and more recently from Germany.
In the maritime sector, green ammonia is emerging as a possible replacement for carbon-intensive heavy fuel oil and one possibility is that Singapore could become a regional bunkering hub for green ammonia.
“The Areh project is ideally positioned to supply ammonia shipping fuels to Singapore at scale,” Mr Hewitt said.
The Government has said green ammonia is one of a range of energy options it is considering.