ACWA Power is pursuing green hydrogen even as global demand remains weak and regulations are still taking shape. The company’s $8.4 billion NEOM Green Hydrogen Project, a joint venture with NEOM and Air Products, is nearing completion, with production expected to ramp up in 2027, Arcelli said. The plant in northwestern Saudi Arabia will convert wind and solar energy into hydrogen, which is then turned into ammonia for export.
Currently, Saudi Arabia’s hydrogen strategy is based on exports, but key projects like the NEOM Green Hydrogen plant have secured only a fraction of their planned offtake. Analysts say the kingdom may need to reorient toward domestic industrial demand to sustain growth in the sector.
The company is also developing a second hydrogen site in Yanbu, which Arcelli said will be “twice the scale” of NEOM’s.
While ammonia is mainly used in agriculture, it is a key carrier of hydrogen, seen as vital to decarbonizing emissions-intensive sectors like steel, shipping, and heavy transport.
While Arcelli is bullish on green hydrogen’s long-term potential, he acknowledged the near-term outlook is limited. “The market in 2030 probably will not be very big,” he said. “But the market in 2040 will be very big.”
A major concern is upcoming European rules that would disqualify certain types of hydrogen after 2040, narrowing the investment window.
Green hydrogen would benefit from a new narrative, Arcelli argued, not just as a decarbonization tool, but as a hedge: Unlike gray hydrogen — made from natural gas and subject to price volatility — green hydrogen offers fixed prices over decades. “We can offer the same price for the next 25 to 30 years,” he said, noting that Saudi green hydrogen could have been cost-competitive during Europe’s recent energy shocks.
For now, ACWA’s strategy is to move one project at a time, locking in offtake contracts before deploying capital. The company’s assets under management have already doubled in size in the past three years, and plans to double again by 2030.
