The front-end engineering design (FEED) contract was awarded to a joint venture (JV) between the Spanish and Chinese companies, and will encompass the design of the 400,000-tonne green hydrogen plant and subsequent conversion to ammonia.
The Yanbu Green Hydrogen project plans to combine 10GW of wind and solar power, and 4.4GW of electrolysis to produce 2.5 million tonnes of green ammonia per year for export.
The facility will be located in Yanbu Industrial City on the Red Sea coast, a key hub for Saudi Arabia’s hydrogen ambitions.
The project’s first phase is scheduled to come online in 2030.
The 10-month FEED study will conclude with the JV submitting an EPC proposal to ACWA Power, outlining a full construction plan in line with the project’s ambitious schedule.
It would represent the single largest green hydrogen project in the world, with double the capacity of the 2.2GW Neom plant, which is currently under construction in Saudi Arabia. ACWA is a one-third owner of the development.
However, delivering a project of this scale presents major commercial and financial challenges. Neom’s $8.4bn financial close –70% over its original price estimate – was only possible due to a unique structure: US industrial gas major Air Products acted as the sole offtaker and EPC contractor.
In contrast, the Yanbu project, which is twice the size, has yet to secure a similar level of commitment. Given Air Products’ recent statements about pivoting to lower-risk projects and de-emphasising green hydrogen, replicating the Neom model may prove difficult.
ACWA has already signed a memorandum of understanding with Edison, TotalEnergies, Zhero Europe and EnBW to assess market demand and feasibility of exporting large volumes of green hydrogen from Saudi Arabia to Europe.
EnBW is also expected to be a development partner on the first phase of the development.
It comes as Saudi Arabia looks to establish itself as a major hydrogen producer to retain its status as an energy exporter.
“The rapid pace of development on the Yanbu green hydrogen project is a clear demonstration of our commitment to supporting the Kingdom’s long-term energy security while also taking a leadership role in the global transition to sustainable energy,” ACWA Power CEO, Marco Arcelli, said.