ACWA Power, partly owned by the sovereign Public Investment Fund, expects NEOM green hydrogen project’s cost to be higher than the original estimate, the Saudi-listed company said in its earnings call presentation for 2022.

The higher cost will be due to additional work scope, cost inflation since inception and rising project financing costs, including interest, the presentation said.

The project company, NEOM Green Hydrogen Company (NGHC), is equally owned by ACWA Power, Air Products and NEOM Company, to develop, operate and maintain a green hydrogen and green ammonia facility in NEOM City.

According to the presentation, the total investment cost is $8.5 billion, funded by 74 percent non-recourse project financing and 26 percent equity.

The dry financial close was achieved on 1 March 2023, for non-recourse project financing via $5.9 billion senior and $0.5 billion mezzanine debt.

In the presentation, the Saudi utility developer said that “meaningful opportunities” exist for higher than base case returns (post-power purchase agreement land lease, higher ammonia output, optimised OPEX, etc.)

NGHP comprises the end-to-end setup and operation of a green hydrogen and green ammonia facility in NEOM under a 30-year green ammonia offtake contract with Air Products.

(Writing by D Madhura; Editing by Anoop Menon)