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.
From relative obscurity a few years ago, Singapore-based InterContinental Energy now claims the mantle of the world’s largest renewable hydrogen developer, and co-developer of the world’s biggest green power plan, the 50GW Western Green Energy Hub (WGEH) in Western Australia, one of four megaprojects it is now advancing (see panel at foot).
With interests in projects that now tally to have a total potential of 150GW of wind and solar powering 10.5 million tonnes of green H2 production – a scale worthy of an Enel or an Iberdrola – chief commercial officer Philip Jones is unruffled by the suggestion that some might wonder how such an epic portfolio will be financed and built to serve a green hydrogen market that is unquestionably big on ambition, but which in truth is still far more vision than reality.
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.
Jones contends it is “not helpful” to talk specifics on price, either relative to other green H2 sources or to blue hydrogen produced using carbon-abated gas.
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.
As for InterContinental Energy’s price position with blue H2, or the grey variety made using unabated fossil fuels, Jones says: “I think focusing-in on what is grey’s price, blue’s price or green’s price is an over-simplification,” pointing out that any assumptions are at the mercy of market fluctuations such as the current spike in gas prices.
“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.
Jones says the projects will be open to different carriers, for example liquid hydrogen, depending on how the H2 economy evolves. That, he claims, is one of the advantages of the phased approach of the massive renewables build-out InterContinental Energy is envisaging.
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?
Think of these projects as four massive basins of energy.
“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
Ultimately, InterContinental Energy’s confidence is based on what it expects to be an eventual demand bonanza for green hydrogen and associated products address tough-to-decarbonise sectors of the world economy, with Jones citing International Energy Agency forecasts that 306 million tonnes of renewable H2 a year will be needed by 2050.
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.”
Commentators have raised questions both around the eventual scale of the demand for hydrogen, and the economics of large-scale renewable generation as a production source, but Jones is convinced the fundamental case is simple.
“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.”
InterContinental Energy was formed in 2014 by investment and strategy specialist Alicia Eastman, now the company’s president, and CEO Alex Tancock, a renewable energy industry veteran with the likes of E.ON and CWP.
InterContinental Energy is advancing four projects – three of them in the public domain and the fourth set to be another mega-development when it is unveiled, given the total 150GW portfolio cited.
The Asian Renewable Energy Hub (AREH)
Originally conceived as a renewable power source for Indonesia via a subsea cable, the $36bn AREH now aims to produce green hydrogen and ammonia from 26GW of wind and solar linked to 14GW of electrolysers in Pilbara, Western Australia.
Partners in the project include CWP Asia, wind group Vestas and Macquarie, with a plan to start production in 2027.
The AREH hit a setback earlier in 2021 when the Australian government rejected its plans on environmental grounds. ICE said then it would “engage further with the minister and her department as we continue to work on the detailed design and engineering aspects of the project”.
Green Energy Oman (GEO)
Unveiled in May 2021, GEO plans to build 25GW of wind and solar to turn the Middle East state into a global hub for green hydrogen and ammonia.
InterContinental Energy’s partners in GEO include Oman’s state energy company OQ, and Kuwait-based Enertech.
The consortium told Recharge the first phase of the project will account for about one-third of the capacity at an investment cost around $10bn. A final investment decision on the initial stage is expected in 2026 with first sales two years later.
The full 25GW renewable build-out, powering an expected 14GW of electrolyser capacity, is not envisaged until 2038.
Western Green Energy Hub (WGEH)
InterContinental Energy’s most ambitious plan – and a contender for world’s largest renewable energy project – was made public in July as the $70bn, 50GW WGEH broke cover, also in Western Australia. Partners in the project include CWP Global and the Mirning People, the latter representing the indigenous population.
The area is said to have an "optimal diurnal profile of windy at night and sunny during the day", with an expected 70% delivered capacity factor.
