'World's best wind and solar': 150GW desert green hydrogen plans no mirage, says InterContinental Energy

At least twice already this year, renewable energy megaproject plans have been unveiled – first a 25GW giant in Oman, then one double that size Australia – that are of a scale to send industry observers’ jaws dropping.

The announcements had two things in common. Both aim to link vast wind and solar capacity to green hydrogen or ammonia production from desert locations near the coast, and both are being developed by consortia which include the until recently little-known InterContinental Energy.

For InterContinental Energy, says Jones – previously a Total (now TotalEnergies) veteran, who was for nine years the oil supermajor’s vice president for gas, renewables and power in Australasia – it’s all about the quality of the renewable energy.

The company’s founders, he explains, set out to find the parts of the world “where there are the best renewable resources – wind that blows in the night and solar by day, and near the coast”, with an view to using this clean-energy production to run huge arrays of electrolysers to produce green hydrogen and ammonia – InterContinental Energy’s green fuel of choice, at least for the time being – at a scale and cost that it believes won't be bettered anywhere on the planet.

But how low is that cost? And can it really be competitive with renewable hydrogen produced far closer to the point of consumption, for example via offshore wind operating just off the coast of major European industrial demand centres.

But on green hydrogen he says: “It’s true that every country or market has a degree of wind or solar resource – it’s just that the quality can be very poor, certainly not as good as Australia and the Middle East”.

InterContinental Energy’s projects by contrast “have the best wind and solar resource in a complementary profile to produce the lowest cost product,” he insists, even when the cost of transporting the end-product to its users is factored in.

Allied with smart energy management technology, that will allow the electrolysers installed at the projects to hum along at capacity factors of more than 70% across the portfolio, says Jones.

“For us producing green hydrogen is basically a reflection of capital cost – whereas for blue and grey hydrogen, the gas price changes the dynamic again.”

“We will be competitive, 100%. We will be at the lowest percentile of product produced because of the quality of the renewable resource.”

Gassing up green ammonia

The initial focus of InterContinental Energy’s projects as they come online will be green ammonia production. The developer and its partners see an early market for its projects in co-firing of green ammonia to lower the carbon emissions of Asian coal plants, and increasingly as a fuel in the shipping industry, and is in talks with both sectors over potential lead-off deals.

Challenged over the ability to InterContinental Energy to deliver such massive ambition when it doesn’t have an operating megawatt on its books, Jones claims a phased approach to development means the headline 150GW needs to be seen in the context of projects that will grow in “manageable chunks”.

“All that volume is not coming in one go. Think of these [projects] as four massive basins of energy. These basins will be developed over time as the market evolves – in a way, you could say they are multiple projects.”

Jones said the initial phase of one of the giant projects could be around 8GW, and InterContinental Energy is upbeat on the prospects for local manufacturing of major project components such as electrolysers and renewable power equipment to serve them. So should Australia – already planned to host more than 70GW of generation across two projects – expect a manufacturing boom?

“I think it’s a benefit if you can localise as much as possible around these mega-projects – I would hope around all of our projects there is manufacturing or prefabrication,” says Jones.

InterContinental Energy is also “partnering with the right people” to give the projects the best chance of success, Jones insists, citing as an example the presence of Oman’s state energy group OQ in the project there.

'Complex task' of financing

Those partners will be crucial as the four mega-projects approach the not inconsiderable task of financing what will be – even in “chunks” – some of the biggest renewables projects in the world, and in their full-blown form hitting costs of up to $70bn per 'basin'.

That financing will also have to be secured on the basis of agreements made in a green hydrogen and fuels market that’s still in its early stages.

Jones, however, is bullish that “we will succeed in making it work.”

He says: “The financing is going to depend on the strength of the offtake agreements that are put in place – they’re not going to be merchant projects.

“It’s going to be a complex task to knot all of the financing together,” but he points to precedents in the energy sector in renewables and LNG where it has already been achieved.

Jones adds: “We acknowledge that the volume of financing is going to be large, and we need to achieve the lowest costs of financing possible.

“We’ll likely have to tap into multiple liquidity pools – for example, export credit agencies, multilateral agencies, commercial debt.”

What about subsidies, which many are calling for to kick-start the green hydrogen economy? Jones says: “When it comes to the question of subsidies I think it is a question that remains open and should be asked in the context of geography as well as the scale of projects in question.

“InterContinental Energy is not building our portfolio of projects with direct government subsidies in our planning however will continue to work with governments in consumer countries to explore and support mechanisms to aid in the development and growth of the zero carbon fuels market.”

A buyer-dictated market

While it expects “cohabitation” between green and blue and grey hydrogen and its derivatives in the 2020s, by the 2030s Jones expects emissions-free credentials will prove decisive.

“Buyers will dictate the carbon intensity of their product.”

“If we’re to achieve 2050 targets, there’s only one real [hydrogen] product that has the lowest form of carbon, zero in the case of green, and that’s the one produced by renewable energy.”