Zhero, a green energy venture co-founded by ex-ACWA Power CEO Paddy Padmanathan, is developing green hydrogen and green ammonia projects in Africa and the United States.
"We are looking at developing green ammonia and green electrons at scale. We have started work on a project in the southern part of Africa, two in the US, and one in the northern end of Africa - all at 100,000 tonnes per year to 200,000 tonnes per year scale," said Padmanathan while speaking at a webinar organised by Project Finance International (PFI).
Out of the four, two projects would target only green hydrogen production, while two would produce green ammonia, he said.
Padmanathan, who is also the vice-chairman of Zhero, said green hydrogen would cost double the fossil fuel version and transporting green ammonia is not the most efficient solution. Still, there is a market that is willing to pay that premium.
He said: "Japan, [South] Korea, and California are paying significant levels of subsidies that would accommodate all those conversions. It is not a massive market, but a market that is reasonably big enough for several big plants and as we build more big plants, costs will start reducing."
The first few projects would command a premium but eventually drive costs down while bringing more capacity into the system and encouraging innovation and entrepreneurship, he noted.
Padmanathan pointed out that supply chain is the main challenge for green hydrogen projects rather than demand or finance.
Surging global demand for solar panels, wind turbines, electrolysers and other components has resulted in delays and shortages.
He observed that while gigawatt-scale electrolyser capacities have been announced, little has happened.
"It's a chicken or egg situation. Everybody is waiting to get orders before starting to build factories. They (downstream suppliers) want to see the contract signed with the demand dates, but it's difficult to sign contracts without the supply being secured."
The NEOM project in Saudi Arabia, he continued, secured supply of electrolysers from De Nora, which will supply the initial units from their Vietnam manufacturing facility but is also building a factory in Saudi Arabia.
The way ahead
Padamanthan said his bets are on electrolyser technology making a leap from alkaline to solid oxide bypassing Proton Exchange Membrane (PEM) technology.
On the cost of rare minerals, he said, "cost of all minerals spiked during 2022, but there is compelling evidence that by 2025/2026, they should start coming down. We are seeing evidence of prices stabilising."
He said that the initial demand crunch has led to more supply coming onstream, and the global recessionary environment is now pulling back on demand, positively affecting component availability.
Zhero's co-founders include two ex-senior executives from SNAM, Marco Alverà and Alessandra Pasini as CEO and President, and Enrico Vitali, a former managing partner of law firm Tremonti Vitali Romagnoli Piccardi e Associati. The Australian mining to new energy giant Fortescue Future Industries (FFI) is one of its investors.
(Writing by Sowmya Sundar; Editing by Anoop Menon)