British oil and gas company BP plc announced it has agreed to buy a 40.5% stake and become operator of the Asian Renewable Energy Hub (AREH), a project that has the potential to join the world’s biggest producers of clean hydrogen. The company did not disclose financial information on the deal.
AREH, located in a remote region in Western Australia, is set to develop as much as 26 gigawatts of solar and wind power capacity that could produce 1.6 million tonnes of hydrogen from renewable sources.
The green hydrogen would be superchilled into 9 million tonnes of ammonia annually to allow for its ship transportation. The overall budget of the project is currently just over $30 billion.
InterContinental Energy and CWP Global, which co-founded the project, rely on BP to set the renewable energy project in motion. The Australian government has delayed the project because of concerns it may damage wetlands.
As BP tries to move from fossil fuels to green energy, AREH could support its goal to achieve a 10% share on the world’s hydrogen market, said Anja-Isabel Dotzenrath, BP’s executive vice president of gas and low carbon energy, as reported by Reuters. BP’s expectations are for hydrogen to take up 10%-15% of global energy by 2050 and is considering a few other large-scale hydrogen and ammonia export centers globally.
AREH “will not be the last one, but this is a very, very important project for us and I hope a clear signal that we want to establish ourselves in that market”, Dotzenrath also said.
The capital investment for the complete project is likely to reach tens of billions of dollars, BP said. The company’s goal is to begin producing renewable power at the energy hub by 2029, with a first phase of 4 gigawatt.
In the next 10 years, the two other phases of 6 GW of clean hydrogen and 14 GW of ammonia will come online, Dotzenrath said.
The government in Australia first put AREH’s plans to use 15 GW of green energy for hydrogen and ammonia on a fast track. It then set the project back over environmental concerns about the hub’s plan to increase power to 26 GW. Among the government’s concerns are “unacceptable impacts” on wetlands and bird species.
BP is working on addressing these concerns with a revised proposal, Dotzenrath said.
InterContinental Energy and CWP Global launched the project in 2014 and remain stakeholders together with units of Macquarie Group. Vestas – which had a 2% stake – has quit the project.
“By partnering with BP, we bring in a new level of engineering know-how and technical expertise, a track record of developing large and complex projects in remote locations, and deep experience in trading energy products globally,” CWP Global co-founder Alex Hewitt told Reuters.