The CEO of ACWA Power, Paddy Badmintan, confirmed in an interview with Al Arabiya that in addition to the company’s hydrogen project in the Kingdom, the company is looking to expand in similar projects in two other countries.
He explained that these projects are the same Size of the NEOM Green Hydrogen ProjectHe said, “It will be a huge project. Every project we are working on has the same size, which is 240,000 tons of green hydrogen. For information, currently the best source of energy is converting hydrogen into liquid ammonia. So the project we are looking at is similar in nature and size to the NEOM project.” “.
He expected the second, third and fourth projects to appear, respectively, in the coming years, pointing to the years 2027 and 2028, with the results of the projects appearing in 2028. He said: “There are many growth opportunities for ACWA Power.”
Challenges
Regarding the supply chain disruptions, the CEO of ACWA Power said: “We have not been affected yet, we have major projects under construction so that the contract is approved and signed and many materials are arranged early, but with time we may face some challenges on Especially with regard to logistics and the supply of some goods and services, but at the moment we do not face any significant challenges.”
He continued, “Frankly, we faced a very difficult period during the Corona pandemic, at that time we faced many challenges, but we were lucky to be able to move forward with our projects. And in the year 2021 we started operating 10 projects in Saudi Arabia and the UAE.”
He added that over the past few years, the company has delivered between 5 and 10 projects every year, and no changes are expected in 2022, as some projects will start operating while others will be financially closed.
Badminton also said, “We expect to build distinctive projects this year.. Some of them will be completely built, such as the NEOM green hydrogen project, which is one of the very special projects for us.”
NEOM project
Regarding the NEOM project, the CEO of ACWA Power said: “This project is very special, and I expect that it will bring other hydrogen projects behind it when it starts converting green hydrogen into liquid ammonia in the year 2026, and we are committed to this date.”
He continued, “The production of more hydrogen will equal the amount of hydrogen produced by the small factories that exist today. The volume of production is large. I am talking here regarding 240 thousand tons of green hydrogen annually, and this is a large number.”
On the other hand, he said, “We are a profitable private company, of course we do strategic business that changes the world but at the same time makes profits.”
“We expect this project to be profitable when we start selling green hydrogen in 2026,” he added.
Funding sources
With regard to financing, Badmantan said, “Finally, we have good financing currently by using the credit lines and the funds available to us to invest in projects in the coming years. What is supposed to be considered in the process of financing these projects, is that 20% of these financings are shares, While the rest is debt, so 80% is financed through debt, which means that there is a great need for debt always.For example, in the green hydrogen project, the financing exceeds $5 billion in debt, so every project we do is two billion.Every year we need regarding $10 billion of debt. debt, so there is always huge funding required for these projects.”
“The good factors for us are through the debt structuring that we use, when we finish preparing the project details, we put a long-term financing plan for it, usually for 20 years, so we pre-determine the interest rate over the period, so we are not affected by the increase in interest rates for the projects that It has already started, but for new projects, we will borrow at high interest, and then we may reverse this increase in fees that we will calculate in the projects, which will eventually reflect inflation. But in general, our projects are protected from continuous interest hikes because we determine the interest at the start of each project.”