Build a 100%-green energy system from scratch within 10 years to power a $500bn “living laboratory” that is the size of Belgium, home to a million, an eco-tourism paradise and a pioneer of clean industry – as projects go, Peter Terium has a lot on his plate.
“My CEO says that after the building of the Egyptian pyramids [Neom] is just about the biggest project done in human history… it’s just that we’re doing it in 10 years,” Terium tells Recharge as he lays plans for up to 40GW of renewable capacity to power the venture.
Where it comes in the wonders of the world stakes is subjective, but by any measure Neom is an epic plan that aims to construct a decarbonised model for a sustainable future human society on the shore of the Red Sea in Saudi Arabia's northwest.
As its managing director of energy, water and food, few have a more crucial role in making the Neom vision a reality than Terium, a former CEO of European utilities RWE and Innogy who now leads what will be one of the largest single procurement programmes in the short history of the renewables industry.
The scale of Neom’s green energy ambitions became clear in July 2020 when it announced a joint venture with gases group Air Products and Saudi developer ACWA Power for a $5bn green hydrogen and ammonia plant powered by 4GW of wind, solar and storage, with exports of the energy transition fuel targeting global bus and truck fleets from 2025.
That instantly became one of the most ambitious green hydrogen plans globally – but in the context of the whole Neom initiative, it is only the start. Backed by the nation's Crown Prince Mohammed bin Salman who is the project's chairman, Neom is due by 2030 to have a population of one million living and working amid the most cutting-edge technologies the planet has to offer, and welcoming visitors to a green tourism experience it claims will be unmatched anywhere on earth.
“This is going to be a land within a country, the size of Belgium, an economy on its own – an economy independent of hydrocarbons,” Terium says of the project that's expected to cost $500bn.
So, if Neom’s first green hydrogen joint venture will need 4GW of power capacity, how big a system will Saudi Arabia’s ‘living laboratory’ need overall?
Wind and solar the bedrock
“There’s a lot of uncertainty in that number,” says Terium, with the final total 10 years down the line dependent on factors such as how successful Neom is in attracting power-hungry industrial ventures to launch in its borders.
But in general terms, he sees the need to between five and 10 times the scale of the early joint venture – so 20-40GW.
With onshore wind and PV-based solar you can’t do that much wrong today.
The bedrock of that clean generation fleet, especially in the early days, will be onshore wind and solar PV, Terium makes clear.
“With onshore wind and PV-based solar you can’t do that much wrong today,” he said, citing prices he said could be as low as $15/MWh and $10/MWh respectively for the two sources.
Neom expects the bulk of its huge wind and solar fleet to be procured via competition, said Terium, who says he does not want to disclose the expected split between turbines and modules at this stage.
“The general strategy is that we believe in competition and markets. [For the generation] we will tender it out, a very common model [in wind and solar] where best prices can be achieved.”
The exception to the tender rule will be the Neom/ACWA/Air Products green hydrogen joint venture he said, where generation will be awarded as part of an overall package linked to the cost of hydrogen produced.
Wind and solar will get Neom to “maybe 60-70% coverage of our demand”, Terium expects, with some interesting thoughts on the remainder.
Battery storage is likely to play a big role, either at flexible demand-side domestic level in Neom’s homes and electric cars, or in large utility-scale deployments.
Pumped-hydro storage, geothermal and concentrating solar power could also be in the frame.
Perhaps most eye-catching is Terium’s mention of nuclear fusion power, which – while he is keen to stress is not under active consideration now – cannot be ruled out in the future for a project that needs to think in terms of the next 100 years.
“We can at least be aware [of developments in fusion]. Conventional nuclear power we don’t want, but fusion could be a potential.”
Terium adds that “the real breakthrough is going to be on the grid side,” with Neom prepared to deploy the best and latest technologies to make a 100%-renewable system operate effectively in a way that would be impossible in legacy networks.
In a project that is a flagship of the world’s largest oil exporter, the role of green hydrogen – the fuel tipped to eventually replace hydrocarbons – inevitably looms large.
In Terium’s view the big-hitters lined up behind Neom’s JV – the support of the Saudi government, and the proven industrial heft of Air Products and ACWA – give it a solidity unmatched among the plethora of green hydrogen mega-ventures announced around the world weekly.
“The word is announced – be very careful, there’s a lot of communication.”
Terium said green hydrogen initiatives are being touted as world-leading in some cases when they “haven’t even reached the pre-feasibility stage.
“We’re way beyond that. Our project is very concrete. I’ve not yet seen the type of commitment we’ve bought to the table.”
Terium adds: “One of the things [Saudi Arabia] has realised is that they have been a continuous, reliable supplier [of energy] to the world economy.
“Making the move to renewable energy they have to continue to play that role. Hydrogen is a key element of that.”
The options for green hydrogen export include as ammonia, as liquid hydrogen in carrier vessels, or even conceivably via a pipeline.
“If I look at where the natural gas in Russia [sent to Europe] comes from, it’s not that much closer than building a hydrogen pipeline for Neom through Egypt, North Africa and then all the way up into Europe,” Terium told Recharge, adding that experts believe it would be possible to use a significant amount of existing pipeline infrastructure to construct the colossal project.
But with plenty of massive green H2 initiatives announced in Europe itself, how can Saudi Arabia or Neom be sure the hydrogen produced there will be competitive?
Terium is tight-lipped over how cheaply Saudi Arabia might be able to produce green hydrogen, but says in the case of Neom, given the ultra-low prices of power production expected from wind and solar, “a big chunk of cost here on the electricity side” has already been accounted for, before the additional expenses of export are factored in.
But in the case of Europe, according to Terium, vast green hydrogen production is only possible from one source – offshore wind, which he said “is struggling” to get below €50/MWh ($60/MWh).
How many more wind turbines do you want in the North Sea?
“How many more wind turbines do you want in the North Sea? There are physical limitations.
“We’ve done the low hanging fruit [in Europe] which is close to the coast. if you want another 20-30GW offshore wind you need to go farther offshore – where it’s much more expensive.
“At the end of the day it is about the technical feasibility and the economics. How much renewable energy do you need, and at what cost can you generate it?”