Model contracts for Egypt hydrogen plans to be ready by mid-2023 + thoughts on how you should view the H2 land grab
- Model shareholder agreements ready by 2Q 2023;
- Signed agreements sometime around mid-year.
Why this matters: Subtle changes in language in the model shareholder agreement could make or break the viability of a project. And it’s not just Egypt that’s competing for developer interest — you can think about what’s going on right now as a land grab. Ultimately, each project developer aims to have multiple projects lined up around the world and — with limited capacity at their companies and in the supply chain — will execute the one(s) that make the most economic sense. If would-be regional titans Egypt and Saudi Arabia are going to get this right, they need to move quickly — but carefully.
So when will Egypt see money being spent? It’s a long game. El Said’s remarks yesterday gave us insight into how Egypt sees the hydrogen boom being phased, suggesting she expects as much as 16.5 bn to be deployed by 2025-26, with the balance happening in three phases, one ending in 2030 (worth as much as USD 38 bn) and one in 2035 (USD 28.5 bn). The caveat there, of course, is that the numbers she was talking about assume 100% of the projects now on deck will make it past final investment decision and to implementation.
Egypt isn’t done building a pipeline of potential projects: A new framework agreement with two international companies could be expected signed “during the coming period,” El Said added, without disclosing details.
With a little help from our friends? Egypt and the World Bank are lining up cooperation agreements in green hydrogen and renewable energy, according to a statement by the Egyptian Electricity Ministry on Sunday.
REFRESHER- Egypt had signed nine framework agreements with international power companies to construct green hydrogen and ammonia facilities in the Suez Canal Economic Zone at COP27 last week and the facilities will collectively produce up to 7.6 mn tons of green ammonia and 2.7 mn tons of hydrogen a year when fully operational.
AND REMEMBER- All of this is very new, not just to Egypt, but in the global marketplace. Electrolyser technology still has at least a few years left to mature. Rising interest rates in USD will challenge project economics. There are no pipelines linking Egypt to Europe to sell hydrogen or “carrier molecules.” There’s finite capacity in the world to design and build plants, let alone to supply electrolysers. And by our math, we still don’t have enough green power generation capacity — let alone the green corridor it will need to be transmitted to from solar or wind farms to plants — to do all of the projects now on the drawing board.
So, Enterprise — you’re pessimistic? Not even a little bit. We think hydrogen definitely has a place in the world’s energy mix going forward — and as it does, there are few places as well-suited to produce it than Egypt. But there are lots and lots of issues to sort out as we build this fascinating industry.
MORE DETAIL ON GLOBELEQ’S PLANT-
UK power producer Globeleq will develop, finance, build, own and operate its green hydrogen project in Egypt’s Suez Canal Economic Zone as a lead investor and developer, according to a company statement. The 2 mn ton per annum project will be developed in three phases over the next 12 years. It will see a total of 3.6 GW of electrolyzers powered by up to 9 GW of solar and wind energy. Green fuel production will also be considered. The first phase will see the production of 100k tons of green ammonia from hydrogen for export to Europe and Asia by 2026/2027. The firm had inked the agreement at COP27, following an MoU in August.