Saudi Arabia’s first sustainable guarantee issued to green hydrogen project at NEOM

Published on June 7, 2023

Saudi Arabia’s green hydrogen project being developed at NEOM received the Kingdom’s first sustainable guarantee from the British bank Standard Chartered, which agreed to extend funding support for its contractor Larsen & Toubro to build the necessary renewable energy infrastructure. 

Located at Oxagon, the world’s largest green hydrogen plant is being built by NEOM Green Hydrogen Co., which is an equal joint venture between ACWA Power, Air Products and the $500-billion giga-project.

Sustainable guarantees are issued by lending agencies for green projects that make positive contributions to the environment. 

The megaplant will produce green hydrogen at scale for global export in the form of green ammonia with a total investment of $8.4 billion. The project, which recently achieved full financial closure, is supported by 23 local, regional and international banking and financial institutions. 

In addition to limiting carbon emissions and promoting sustainable development in the Kingdom, this step will add to the country’s diversification efforts.   

“We are pleased to issue the first sustainable guarantee in the Kingdom of Saudi Arabia which supports the growth and development of green hydrogen. At Standard Chartered, we know that technological and financial innovation is critical in supporting the global transition towards a low-carbon economy,” said Mohammad Salama, Standard Chartered’s regional head of corporate, commercial, and institutional banking in the Middle East and North Africa. 

Standard Chartered said the sustainable guarantee will ensure that L&T receives the necessary financial support for the development of the wind and solar farms to support the green hydrogen generation in this project while meeting the bank’s environmental, social and governance standards. 

This comes after L&T won a $2.78 billion contract to establish the renewable energy generation, storage and grid infrastructure, from Air Products, which is the system-integrating engineering, procurement and construction contractor for the project.   

As part of the contract, L&T will engineer, procure and construct a 2.2 gigawatts alternating current photovoltaic solar plant, a 1.65 GW wind generation balance of plant and a 400 megawatt-hour battery energy storage system under the power elements package. 

Its subsidiary L&T Saudi Arabia is responsible for the design, local supplies, construction and commissioning of the renewable and grid packages while the international supplies will be handled by its other subsidiary LTIFZE. 

“Through such initiatives, we emphasize the power of partnerships in fostering sustainable development and practices. We remain focused on continuing to grow our green business in Saudi Arabia in partnership with and continued support from Standard Chartered as one of our key relationship banks,” said R. Shankar Raman, the chief financial officer at L&T Group. 

Source: Arab News

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