Towards a Renewable Hydrogen Strategy for Mongolia

Annex A: Case Studies of Hydrogen Pilot Projects in Central Asia

Introduction

This Annex presents six case studies of pilot hydrogen production projects in Central Asia. Of these, four are located in Mongolia, with one in Kazakhstan and Uzbekistan respectively. The information provided in this Annex has been provided by the project developers through a questionnaire, and where possible supplemented by additional publicly available information. The OECD Sustainable Infrastructure Programme in Asia (SIPA) is very grateful to the project developers for their willingness to engage in this exercise, and for their thoroughness and openness with the information provided. The case studies presented in this Annex are for informational purposes only and the information presented here was up to date as of September 2024.

While it is not the purpose of this Annex to be analytical, a number of themes are worth highlighting for context. The first is that although all the pilot projects aim ultimately to export hydrogen or a hydrogen derivative, they are primarily structured in two parts, with the first part of the pilot focused on securing a domestic off-taker for demonstration and feasibility purposes; almost all the projects recognise that securing finance for a competitive export-oriented development strategy will be contingent in the first instance on demonstrating the technical and economic viability of low-carbon technologies in the domestic market.

The second is that there are a number of key technical and financial parameters missing from the case studies, which reflects the fact that while these pilot projects are ambitious, they generally remain in an early stage of development. The third is that, under appropriate policy conditions, all the pilot project developers are confident that they would be able to produce renewable hydrogen in the 2-3 USD/Kg range that the IEA and OECD consider necessary for the fuel to be competitive in hard-to-abate industries. The fourth and last item is that, in the cases of the Mongolian pilot projects, developers are targeting both the same export market and, more challenging, the same domestic industrial market.

Project 1: Sunsteppe Power/Wolfson Energy LLC, OECC

 

Name of project
Photograph or depiction of project	Location of project
	Umnugobi province, Mongolia
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	The total production is not finalised yet. However, Sunsteppe will tentatively produce 3MW of heat supply by H2
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Pre-feasibility study status
Start date (envisaged if not yet operational)	2026
Abatement cost tonne CO2 equivalent (tCO2-e)	Not available
Electrolyser production capacity	1.5 MW
Lifetime of each electrolyser	Hours/years
Electricity consumption each electrolyser	Not available
Key source(s) of demand	Industry and public agency Mine sites at remote areas
Industrial-site specific/centrally produced and distributed	Mining
Envisaged production cost target	Not available
Envisaged domestic demand	Not available
Total investment needs	Not available
Name(s) of firms involved	SunSteppe Power/ Wolfson Energy LLC, OECC.

Additional sources consulted: (Petro Matad Limited, 2024[1])

Introduction and project overview

SunSteppe Renewable Energy (SRE), a joint venture between Petro Matad Limited and partners, is developing Mongolia's first hydrogen demonstration project in the South Gobi region, Umnugobi province. The project aims for financial close by late 2024, with construction starting in Spring 2025 and commissioning set for Q1 2026. Situated near major coal and copper mining operations, SRE has signed an exclusive Memorandum of Understanding (MOU) to supply green hydrogen to Oyu Tolgoi, one of the world’s largest copper and gold deposits, as well as its associated camps.

The project's financing structure will consist of both equity and debt. Wolfson Energy and Petro Matad will provide equity, with the option to engage third-party equity financing under consideration. Debt financing discussions with potential lenders will take place in the future. While financing through technology providers is a possible option, no active discussions are currently underway, though this remains open for exploration as the project advances.

Skills, capacities, and local job creation

The project is expected to create employment opportunities across its phases, each requiring specific skills and experience. During development, energy project development and management expertise are critical. A team of nine has been hired, including Mongolian energy, financial, legal experts, and administrative staff. The construction phase will require an experienced Engineering, Procurement, and Construction (EPC) contractor familiar with hydrogen technology and energy facility construction. Over 100 jobs are expected, including positions for building the hydrogen plant, access road, transmission line, substation, and camp management. In the operational phase, experienced engineers and technicians will be needed for daily operations, with a permanent on-site workforce of 8-10 people managing hydrogen production.

Policy and regulatory considerations

The Mongolian government has demonstrated support for new energy resources through national laws and regulatory policies. While the current policy framework encourages green growth and energy diversification, the lack of specific hydrogen policies and strategies requires the development of a market and off-takers. The Ministry of Energy is currently assessing hydrogen policies and strategies, as awareness of hydrogen’s benefits is still emerging. The establishment of the Mongolian Hydrogen Council has played a key role in facilitating hydrogen project development.

The Ministry of Energy has actively promoted hydrogen projects, including engaging with Japanese technology providers during the Prime Minister’s visit to Japan in September 2022. In 2022, Wolfson Energy LLA, in collaboration with the Ministry of Energy, also hosted a hydrogen workshop.

This project has received formal support from the Ministry of Energy, including a backing letter and an MOU.

Project perception of risk factors

Mongolia's abundant wind and solar resources reduce feedstock risks for energy projects. The land for the production site has been secured, and wind masts installed, using bankable wind resource data to minimise uncertainties.

Water presents a higher feedstock risk, but SRE’s experience has enabled the development of a robust mitigation strategy.

Internationally recognised hydrogen technology has been procured, ensuring reliability despite this being Mongolia’s first hydrogen project. Technology assessments by international consultants and reviews by debt financiers further mitigate risks.

While regulatory challenges may arise due to hydrogen’s novelty in Mongolia, the government’s support for new energy resources, including hydrogen, fosters confidence in an evolving regulatory environment.

Project 2: Euro Khan Sainshand ‘Hydrogen Hub’ Project

 

Name of project
Photograph or depiction of project	Location of project
	Sainshand, South Gobi Region
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	Phase one: 1.5Mt H2/year
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Phase two: 10Mt H2/year
Start date (envisaged if not yet operational)	Phase three: 20Mt H2/year
Abatement cost tonne CO2 equivalent (tCO2-e)	Pre-feasibility
Electrolyser production capacity	Not available
Lifetime of each electrolyser	Not available
Electricity consumption each electrolyser	Phase one: 10MW
Key source(s) of demand	Phase two: 100MW + 10MW
Industrial-site specific/centrally produced and distributed	Phase three: 200MW + 10MW
Envisaged production cost target	Not available
Envisaged domestic demand	Not available
Total investment needs	Pilot phase: Mongolian mining sector, primarily foreign operated
Name(s) of firms involved	Later phases: Steel industry in Inner Mongolia, China

Introduction and project overview

Euro Khan, a Mongolian firm with a diverse portfolio in mining, industry, energy, and investment, is leading the exploration of the "Sainshand Green Hydrogen Hub" project in the South Gobi Region of Mongolia. Currently in the pre-feasibility stage, the project benefits from its partners' expertise in renewable energy and hydrogen.

The project consists of two stages. The first stage would involve producing green hydrogen using curtailed renewable energy from the Sainshand Wind Farm, where Euro Khan has a wind farm. A 10MW electrolyser is planned, with a target of producing 1.5Mt of hydrogen annually for domestic mining sector off-takers. The first stage aims to supply green hydrogen to mine operators in Mongolia, with a focus on off-takers like Oyu Tolgoi, a copper and gold mine operated by Rio Tinto that is located close to the production site. Demand is anticipated from applications such as hydrogen power for housing and electricity within mining operations.

Stage two would see production scaled up and exported to industrial users in Inner Mongolia and China, primarily in the steel industry. This phase includes additional renewable and electrolyser capacity, with plans to produce 20Mt of hydrogen annually. The project will use 5-6 years of wind data from the Sainshand Wind Farm to support the selection of the production location.

Should the project be scaled, the developers envisage a final phase in which the project would expand supply chains to serve larger capacity customers, with production scaling to 20,000 TPA of H2, potentially reaching 100,000 TPA. The business case relies on access to cost-effective renewable electricity from Mongolia's solar and wind resources. Japan’s projected need to import over 15 mTPA of hydrogen by 2040 and China’s growing demand for green hydrogen highlight the market potential.

For the export-oriented scenario, the project envisions additional pipeline infrastructure to connect with the distribution network in Northern China. Economic viability for pipeline investment depends on guaranteed offtake, with a target of 40Mt per year. Rail transport is an interim solution, utilising existing connections to Erenhot, Inner Mongolia, and industrial sites. Ongoing rail developments between Sainshand and Tavan Tolgoi further improve transportation options, with associated costs of approximately USD 0.5/Kg H2 of H2 over a 500 km range, plus wagon acquisition expenses.

Key stakeholders in the project are members of the Mongolian Hydrogen Council, supporting hydrogen development in the country. The project addresses curtailed renewable energy, which results from grid integration constraints, by using excess power from the wind farm. Through an agreement, Euro Khan plans to purchase up to 15,000 MWhrs of curtailed power. The project aims for a production cost of USD 2/Kg H2.

Financing for the pilot phase is being pursued through international institutions like the EIB and EBRD, contingent on securing a domestic off-take contract.

Project framework conditions and feedstock needs

The developers anticipate that water demand will be met by two groundwater aquifers, though their sustainability remains uncertain. The project’s water requirements are modest compared to major mining operations, with an estimated 12 litres of ionized water needed per kilogram of H2 and annual consumption projected to produce 10Mt of H2. The project plans to rely on private investment for water infrastructure, avoiding publicly funded sources and collaborating with water authorities during pre-feasibility.

Transporting H2 requires significant infrastructure due to its low energy density. Initially, H2 would be transported using 350 to 700 bar compression. The developers calculate that Sainshand’s rail access offers a transport cost of USD 0.50/Kg H2 over 500 km, including wagon costs. Oyu Tolgoi, Mongolia’s largest mine, is a potential major consumer of H2 and oxygen, with electrolysis producing 9 kg of O2 for every kg of H2. A new rail link from Sainshand to Tavan Tolgoi expands the distribution of compressed H2 and O2.

While pipelines offer the lowest operating and capital costs, at USD 0.60/Kg H2 for a 300 km pipeline, they are less flexible and require large point-to-point volumes. A 10 NPS pipeline can deliver up to 40,000 tpa of H2 at 70 bar, and pipelines can serve as storage with compression rates of 20 to 70 bar.

Additional renewable energy capacity, including wind and solar, is necessary as production scales. Existing wind infrastructure and planned expansions will support this growth. A collaboration agreement, such as the MOU between Euro Khan and the Sainshand Wind Farm, underscores the project's focus on strategic partnerships. Targeting non-governmental customers helps secure funding, with access to curtailed power enhancing flexibility and aligning with economic viability.

Skills, capacities, and local job creation

Euro Khan plans to leverage its global engineering partnerships, including collaborations with firms like Fichtner & Co, to manage the design, maintenance, and operation of electrolysers and hydrogen handling equipment. With extensive experience in managing wind turbines and large-scale solar installations, Euro Khan brings significant expertise.

Precise job numbers will be determined following the pre-feasibility study, but larger capacities are expected to create at least 100 jobs across various functions. In the initial phase, infrastructure expansion will focus on hydrogen production, storage, and necessary water infrastructure enhancements.

Policy and regulatory considerations

The government has expressed support for green hydrogen projects through a new revival policy within a mid-term program. This initiative focuses on assessing the capacity of renewable energy sources in Umnugobi, exploring technical solutions for substations, transboundary ultra-high voltage power transmission lines linked to the North-East Asian Integrated Energy Network, and green hydrogen production using solar and wind resources.

During the OECD SIPA Roundtable, government representatives acknowledged challenges, noting that the Law of Development policy and planning creates legal barriers to developing a comprehensive national hydrogen strategy. The absence of such a strategy creates uncertainty around the government's support for green hydrogen development, with the current policy seen as too general and ambiguous.

Project perception of risk factors

Securing renewable supply beyond the curtailed energy from the Sainshand Wind Farm presents a moderate challenge, requiring the identification of additional sources and negotiation of agreements for consistent supply. The technologies involved, including electrolysers, wind, and solar, are well-established and advancing.

Attracting quality offtake contracts is crucial for securing funding in the project's early stages. Regulatory uncertainties pose a significant risk due to the lack of prior regulation, requiring careful navigation of legal frameworks. Additionally, occupational Health and Safety (OH&S) risks must be addressed with robust safety measures and protocols as part of regulatory oversight.

Project 3: MAK-UNICO Hydrogen Production and its Derivatives Project

 

Name of project
Photograph or depiction of project	Location of project
	Demonstration plant will be located in the Eastern Region of Mongolia, in Dornod province.
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	Demonstration plant
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Phase I – Dimethyl ether (DME) – 189,000 metric tonnes/year
Start date (envisaged if not yet operational)	Phase II – H2 – 39,000 metric tonnes/year
Abatement cost tonne CO2 equivalent (tCO2-e)	The demo plant capacity figure indicated above are based on the scoping study. The actual capacity to be optimised and finalised through the pre-feasibility study development based on economic parameters, market size and considered potential technology portfolio.
Electrolyser production capacity	Pre-feasibility study will end in March 2024
Lifetime of each electrolyser	In September 2022, a decree to form a working group from the office of Mongolian President were issued. The working group includes
Electricity consumption each electrolyser	Not available
Key source(s) of demand	(Working group established)
Industrial-site specific/centrally produced and distributed	August 2023 (Pre-feasibility study contract signed)
Envisaged production cost target	The project development concept includes Carbon Capture Storage (CCS-Phase I) and Carbon Capture Utilisation Storage (CCUS – Phase II) technology integration. Emitted CO2 from the process plant is to be stored in nearby geological formation or supplied for Enhance Oil Recovery application, which the emission of CO2 to the atmosphere is completely prevented.
Envisaged domestic demand	Not available
Total investment needs	Not available
Name(s) of firms involved	Not available

Introduction and project overview

The preliminary feasibility study, conducted between Mongolian firm ‘Mongolyn Alt (MAK) LLC’ and Japanese firm ‘Unico International Corporation,’ investigates the production of 'blue' hydrogen through coal gasification with carbon capture and storage (CCS). The study envisions a two-stage project, adapting as the hydrogen market develops.

Phase one focuses on producing dimethyl ether (DME) from syngas for domestic heating fuel, with CO2 captured and sequestered in nearby oil exploration sites. DME is a transportable, low-emissions fuel derived from coal. Phase two shifts to hydrogen production from syngas, targeting export markets. This phase integrates hydrogen production into the demonstration plant, with CO2 capture for potential sequestration, enhanced oil recovery, or methanol production.

The project is aligned with the government’s ambition to utilise coal for industrialisation and develop a hydrogen industry while addressing Japan's need for low-cost, low-carbon hydrogen imports. The project is closely affiliated with Mongolia's National Industrialisation Committee, established in May 2023, and supported by a dedicated Working Group led by the CEO of MAK.

The project's initial scope focused on evaluating H2 production from bituminous and brown coal to determine the best option for producing coal-based high-value products for domestic and export markets. While many OECD countries prioritise green hydrogen, Japan promotes 'blue' hydrogen from coal using CCS. The export-oriented second phase depends on keeping Mongolian H2 cost-competitive with established trade routes, particularly between Japan and Australia. Cost estimates from a similar project in Japan and Australia suggest H2 production from coal at USD 2.51/Kg by 2030, while the preliminary study projects Mongolian H2 production costs at USD 4.09-4.29/Kg.

Currently, MAK LLC finances working capital and costs, with plans to clarify investment needs and seek financing, including from international finance organisations, after the pre-feasibility study. UNICO presented preliminary investment needs during the 2023 Mongolia-Japan Business Forum, though these are still being optimised.

Project framework conditions and feedstock needs

The project's exact water consumption will be determined during the pre-feasibility study. The demonstration plant site is approximately 10km from the Kherlen River, and MAK considers the water supply sufficient for the pilot phase. Previous internal studies by MAK in 2012 focused on coal liquefaction and provide insights into water supply solutions.

In addition to the Kherlen River, brown coal mine de-watering and hydrological studies indicate an adequate water supply for large-scale industrial operations with minimal environmental impact. The project is exploring the use of water recovered from de-watering brown coal in hydrogen production.

Electricity for the project is expected to come from the Choibalsan combined heat and power plant, with planned expansions. Brown coal from Mongolia’s Eastern region will be the primary feedstock, with quantities to be determined in the pre-feasibility study. Gasification of brown coal for DME and hydrogen production uses proven processes, though supplier selection and detailed engineering design are ongoing tasks for later project phases.

Skills, capacities, and local job creation

The demonstration plant will require a skilled workforce in engineering, supply chain management, business administration, and human resources, with the exact number of employees to be determined during the pre-feasibility study. Training for prospective employees will be available at the Choibalsan National Vocational Training Centre.

The project is expected to create both direct and indirect jobs in Dornod province, particularly in Choibalsan.

In the second phase, focused on hydrogen export to East Asian economies, transportation infrastructure development will be critical. The planned expansion of a railway in Eastern Mongolia will enable transport to China via the Jinzhou seaport, facilitating further shipment by sea and supporting regional economic development and connectivity.

Policy and regulatory considerations

The is closely aligned with the National Industrialisation Committee. The project leader advocates for the creation of a national hydrogen strategy to support the growth of domestic hydrogen production and use in Mongolia, reinforcing its commitment to aligning with national industrial goals and promoting sustainable economic development.

Project perception of risk factors

The demonstration plant is located in eastern Mongolia, near a 1.7-billion-tonne brown coal reserve. Global demand for hydrogen, including blue and green varieties, is significant and expected to grow as the hydrogen market develops. However, in Mongolia, the use of CCS/CCUS for Enhanced Oil Recovery (EOR) or geological storage is untested, and regulatory frameworks for these applications are lacking.

Efficient transportation of hydrogen to international markets is critical, requiring careful consideration of logistics, such as railway gauge selection and minimising boil-off gases during transport. Developing additional liquid hydrogen storage and transport technologies will be essential to meet global market demands and ensure project viability.

Project 4: Gobi H2 project

 

Name of project
Photograph or depiction of project	Location of project
	South Gobi region of Mongolia, within the footprint of existing Elixir Energy methane production operations (NOMGON project). The site is proximate to major mine operations in Mongolia (Oyu Tolgoi and Tavan Tolgoi), which are anticipated to be initial off-takers. Located around 400km from Baotou in Inner Mongolia, the project is situated close to the site where China is developing a hydrogen hub, linking the project to potential industrial off-takers in northern China.
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	Not available
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Pre-feasibility study complete, Front-End Engineering Design (FEED) stage commenced. As of August 2023, project contracting engineering consultancy to conduct next stage of feasibility study with an anticipated duration of 12-18months for completion.
Start date (envisaged if not yet operational)	Not defined, but as of August 2023, FID anticipated FEED stage would be finalised in Q4 2024 or Q1 2025. As of September 2024, no publicly available information has been released regarding the start date.
Abatement cost tonne CO2 equivalent (tCO2-e)	Not available
Electrolyser production capacity	Not available
Lifetime of each electrolyser	Not available
Electricity consumption each electrolyser	Not available
Key source(s) of demand	During phase one of operations, focus on mining operators in Mongolia (South Gobi region), primarily multinationals with shareholder and/or regulatory incentives for decarbonisation.
Industrial-site specific/centrally produced and distributed	During phase two of operations, expansion business plan contingent upon offtake agreements with industrial clients in northern China.
Envisaged production cost target	The project estimates green hydrogen production costs at approximately USD 3 per kilogram but has not provided a detailed cost breakdown.
Envisaged domestic demand	Not available
Total investment needs	Not available
Name(s) of firms involved	Stage one: USD 110-130 million

I Additional sources consulted: (AECOM, 2023[2])

Introduction and project overview

The Gobi H2 project is a partnership between Elixir Energy, with over ten years of experience in Mongolia, and Japan’s Terras Energy, which is 85% owned by Toyota Tsusho and 15% by SoftBank. The project is located in the South Gobi region, near Elixir Energy's existing methane production area (NOMGON project) and aims to produce green hydrogen using wind and solar energy. It will include renewable energy generation, battery storage, green hydrogen production, and offtake facilities, targeting the rapidly growing Chinese hydrogen market.

The project has completed a pre-feasibility study with international energy consultancy AECOM and is progressing to the Front-End Engineering Design (FEED) stage as of August 2023, pending the securing of engineering consultancy services. Sound detection and ranging (SODAR) towers used during the pre-feasibility study validated the business case and provided critical data for financing negotiations. The project initially targets domestic hydrogen production for the Mongolian mining sector, with plans to export to China for industrial applications in subsequent phases.

Off-take agreements are pending, with ongoing discussions about domestic and Chinese market demands. The project leverages proximity to existing and planned infrastructure, including China's hydrogen hub in Baotou, positioning it strategically for expansion. Challenges remain in water resource management, requiring the development of processing-related infrastructure.

The Gobi H2 project has not disclosed specific demand projections, or the level of Chinese demand needed to proceed with financial decisions or expansion. The project estimates green hydrogen production costs at USD 3 per kilogram but has not provided a detailed cost breakdown.

Domestic demand is expected mainly from Mongolia's mining sector, driven by multinationals' decarbonisation efforts. The project requires pre-agreed off-take contracts before making a final investment decision and has not indicated plans to use Contracts for Difference (CFDs).

The project is engaging with end-users in Mongolia and China and may explore hydrogen derivatives like ammonia, though specifics are not provided. Initial pilot phase investment is estimated at USD 110-130 million, with detailed breakdowns and expansion needs unclear. The project seeks additional external financing, primarily through equity, from sources such as the Mongolian Green Finance Corporation and multilateral banks like the ADB.

Project framework conditions and feedstock needs

The Gobi H2 project is assessing its water requirements, considering insights from nearby mining operations on access, processing, and waste management. While confident in resource adequacy, the project recognises water as a potential risk due to social and political sensitivities in the Gobi region. Plans include co-locating water supply with the hydrogen production facility to streamline operations.

The project will rely on on-site electricity from wind and solar sources. Two scenarios for grid integration are being considered: 1) storing excess renewable energy in batteries or 2) integrating it into the grid. Investment requirements for grid integration depend on capacity upgrades and the development of a new CHP plant.

The technology strategy for the project is in the process of being finalised, upon the receipt of feedback from global industry leaders.

Skills, capacities, and local job creation

In its initial stages, the Gobi H2 project plans to use local transport infrastructure, possibly by road, to deliver hydrogen to mining sector clients. Specific arrangements are pending. For expansion, the project will require new investments in pipeline infrastructure for hydrogen transport between Mongolia and China. The project is consulting multilateral development banks, including the Asian Development Bank (ADB), to support trade connectivity-related infrastructure investments.

Policy and regulatory considerations

The Gobi H2 project has neither sought nor received public funding. However, it is navigating the licensing and permitting process with the support of partners experienced in Mongolia’s renewable energy and methane industries. The project submitted a regulatory report on green hydrogen development to Mongolia's Ministry of Energy. Acknowledging the absence of standards for electrolysers and green hydrogen in Mongolia, the project intends to work with the government to create the necessary regulations.

Project perception of risk factors

The Gobi H2 project views the construction of the pilot plant as dependent on securing an offtake contract, primarily targeting mining companies. Securing a guaranteed market for the hydrogen before substantial investment in infrastructure and operations aims to mitigate financial risks.

Project 5: The HYRASIA ONE project

 

Name of project
Photograph or depiction of project	Location of project
	Mangystau in Western Kazakhstan
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	By 2032, HYRASIA One will produce 2 million tonnes of green hydrogen or 11 million tonnes of green ammonia
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Feasibility
Start date (envisaged if not yet operational)	2032
Abatement cost tonne CO2 equivalent (tCO2-e)	Not available
Electrolyser production capacity	20 GW of electrolyser capacity
Lifetime of each electrolyser	Not available
Electricity consumption each electrolyser	Not available
Key source(s) of demand	Not available
Industrial-site specific/centrally produced and distributed	Not available
Envisaged production cost target	Not available
Envisaged domestic demand	Not available
Total investment needs	With a projected total capital expenditure ranging from USD 40-50 billion, the company plans an initial investment of USD 5-6 billion, with an FID slated for 2026.
Name(s) of firms involved	Svevind Energy group

I Additional sources consulted: (Svevind Energy Group, 2024[3])

Introduction and project overview

The HYRASIA ONE project, led by the German company Svevind, is a large-scale renewable energy initiative in Mangystau, Western Kazakhstan. It plans to establish a 40 GW wind and solar energy complex with 20 GW of electrolyser capacity, producing either two million tonnes of green hydrogen or 11 million tonnes of green ammonia. The project also includes a new desalination plant.

An Investment Agreement was signed with the Kazakh government in October 2022. The pre- Front-End Engineering Design (FEED) stage and Environmental and Social Impact Assessment are scheduled from 2023 to 2026. Pre-FEED work and geological surveys began in June 2023, with construction set for 2027 and full production by 2030. Full operational capacity is expected by 2032.

The HYRASIA ONE project aims to establish Kazakhstan as a key player in European and Asian markets through large-scale green hydrogen production, focusing on both export and domestic use. The project is expected to boost industries like fertiliser manufacturing, chemicals, and cement while promoting regional trade and energy diversification. It will integrate solar and wind energy, hydrogen production via electrolysis, conversion plants, and an export terminal near the port of Kuryk.

With capital expenditures projected at USD 40-50 billion, an initial investment of USD 5-6 billion is planned, with FID expected by 2026. The Investment Agreement with the Kazakh government seeks to attract further investment.

Project framework conditions and feedstock needs

The project's primary feedstocks are solar, wind, and water. Located in an area with high wind speeds and high-quality solar irradiation, detailed resource data has not been disclosed. Water will be sourced and desalinated from the Caspian Sea. A 20 GW electrolyser capacity is planned, supported by a new desalination plant.

Approximately 34,000 square kilometres are reserved for surveys, with 50 square kilometres allocated for the industrial site. The project aims to develop a 40 GW solar and wind farm alongside 20 GW of electrolysis capacity. Information on grid capacity and energy demand remains undisclosed, but electricity generation and hydrogen production will be co-located.

Skills, capacities, and local job creation

The project is expected to create 1,800 permanent jobs and 3,500 during construction. The region's expertise in oil and gas export provides a foundation for transitioning to green hydrogen production. Located near the port of Kuryk on the Caspian Sea, the project will establish a transportation network with a daily capacity of 32,000 metric tonnes, utilising rail, ships, or pipelines. However, limitations to the current transportation network, as outlined below, pose risk to efficiency of export integration.

Policy and regulatory considerations

The Svevind project in Kazakhstan has received strong government support, designated as a landmark initiative for future investments. However, the developers face challenges due to the lack of regulatory frameworks for green hydrogen. Currently, hydrogen is classified solely as an industrial gas under grey chemicals regulation, complicating project approvals. Securing necessary permits is another major hurdle. As the project involves export activities, efforts are underway to meet international regulations, particularly for EU market access. Addressing these regulatory issues is essential for the project's progress.

Project perception of risk factors

Key logistical challenges may pose risks to the project’s success. Steep rail gradients in Iran could make transport slower and more expensive, while limited ferry capacity in Turkey may create bottlenecks, delaying or restricting the movement of green ammonia to Europe. These issues could affect the project's efficiency and its ability to meet European export demand.

Project 6: GH2 ACWA Power Project

 

Name of project
Photograph or depiction of project	Location of project
	Green Hydrogen Plant: located45 km away from Tashkent, in Chirchiq city. Bash 52 MW wind farm: located to the north-eastern part of Ayakagitma reservoir (depression), in Gijduvan district of Bukhara region. Green Ammonia Production: location near either the Navoiy or Sirdarya process plants.
Key technical and financial characteristics of project
Total foreseen annual production of H2 when operational (by phase if relevant)	3000 tonnes green hydrogen per year
Project status (pre-feasibility, feasibility undertaken, construction, operational)	Not available
Start date (envisaged if not yet operational)	Two Phased COD COD-1 for the HPA by 1st Sep-2024 COD-2 for the PPA by 1st Jan-2025
Abatement cost tonne CO2 equivalent (tCO2-e)	Not available
Electrolyser production capacity	20 MW electrolyser
Lifetime of each electrolyser	Not available
Electricity consumption each electrolyser	Not available
Key source(s) of demand	With National Power Grid of Uzbekistan (NEGU) for 25 years to backstop the purchase of 100% of the renewable energy produced and deliver through wheeling
Industrial-site specific/centrally produced and distributed	Not available
Envisaged production cost target	Not available
Envisaged domestic demand	Not available
Total investment needs	USD ~4 billion
Name(s) of firms involved	ACWA Power – 80%; UKS-20%

Additional sources consulted: (ACWA Power, 2023[4])

Introduction and project overview

In January 2023, Uzbekistan's Ministry of Energy and ACWA Power signed an agreement to develop a green hydrogen facility in Tashkent to reduce reliance on natural gas for fertiliser production. ACWA Power (ACWA), a Saudi-based developer with assets valued at USD 78.2 billion in 77 countries, has been active in Uzbekistan since 2019. The company is now focusing on green hydrogen and ammonia production to support Uzbekistan's industrial decarbonisation and align with the forthcoming Carbon Border Adjustment Mechanism (CBAM).

ACWA Power is developing two projects in Uzbekistan: a green hydrogen production facility and a green ammonia plant.

Green H2 Production: The hydrogen facility will be located 45 km from Tashkent, near the Uzkimyosanoat/MAXAM-Chirchiq-Navoi fertiliser plant. It will use a 20MW electrolyser to produce 3,000 tonnes of green hydrogen annually, with an estimated investment of USD 85-100 million and production expected to begin by late 2024. In addition to the hydrogen plant, ACWA Power will develop a 52 MW wind farm (WF) in Bash, Bukhara region, with a capacity of 80MW to supply power to the grid and support the hydrogen facility. This wind farm will be co-located with the ACWA Power Bash 500 MW WF that is currently under construction. The projects will be managed by a joint venture between ACWA Power and Uzkimyosanoat JSC (UKS), with ACWA holding an 80% stake and UKS holding 20%. UKS will handle licensing, permits, local engineering, land procurement, and secure 10% of the hydrogen offtake through its affiliate while facilitating grid connectivity. The joint venture, ACWA Power UKS Green H2, will oversee development, financing, construction, operation, and maintenance of the wind farm and related infrastructure. A 15-year Hydrogen Purchase Agreement has been signed with Uzkimyosanoat, a state-owned enterprise, and a Power Purchase Agreement has been signed with the National Power Grid of Uzbekistan (NEGU).

Green Ammonia Production: The green ammonia project will be executed in two phases, targeting the production of 500,000 tonnes of green ammonia annually, while reducing gas consumption by 0.6 million MW per year. The facility will be located near either the Navoiy or Sirdarya process plants. The project, estimated to cost USD 3.5-4 billion, includes the construction of 2 GW of renewable energy capacity and 1 GW of electrolysers. A Joint Development Agreement was signed in 2023. The green ammonia project accounts for most of the investment, with USD 1 billion in capital expenditure and USD 1-2 billion in operating expenses over 30 years. The project aims to attract USD 4 billion in foreign direct investment, though detailed cost breakdowns have not yet been disclosed.

Details regarding foreign and domestic demand, as well as Levelised Production Costs, are yet to be disclosed.

Project framework conditions and feedstock needs

For the Green Hydrogen Project, renewable energy and water will be the primary feedstocks. Specific details about water requirements or supply are not yet disclosed. The project intends to expand the existing Bash Wind project, generating 52 MW, which will deliver 175 GWh to the national grid. This electricity will be directed to the Hydrogen Production Unit. The produced green hydrogen will be sold to the Uzkimyosanoat green urea plant

The Green Ammonia Project will require approximately 2 GW of renewable energy sources and 1 GW of electrolysis capacity, which will be developed as part of the project, to produce 500,000MT of green ammonia. It is not specified whether the renewable energy facilities will be co-located with the green ammonia plant or if energy transmission will occur via the national grid, similar to the Green Hydrogen Project. The water requirement for this project is estimated at around 4,500 m³/day, primarily for use in electrolysis.

Skills, capacities, and local job creation

The Green Hydrogen and Green Ammonia projects are expected to create jobs in both construction and operational phases.

The Green Hydrogen Project will generate approximately100 jobs during construction. Up to 50% of the workforce will be recruited locally during peak construction. During the operational phase, approximately 16 new jobs will be created at the wind facility and 10 new jobs will be created for green hydrogen productions. The co-location of the Bash 52 MW WF and the Bash 500 MW WF will enable a total of 35 to 40 workers to be engaged in the operation and maintenance of both wind farms.

The Green Ammonia Project is projected to generate around 3,000 jobs during its four-year construction phase and an estimated 200 to 250 jobs sustained over its ten-year operational phase.

Existing infrastructure will be leveraged and retrofitted to support Green Hydrogen production. Green Ammonia Project may require additional infrastructure, such as grid strengthening, which are included in the project scope. Although transportation infrastructure for fertilisers is already in place, new infrastructure components, including storage, fabrication yards, and other facilities, will be essential.

Policy and regulatory considerations

The establishment of a conducive regulatory environment for the project required collaboration among government stakeholders. Building on the achievements of Phase 1, further developments, such as the establishment of an International Renewable Energy Certificates (iRECs) market, have been initiated. Government support was crucial in overcoming challenges associated with the newness of the industry. The commitment of top leadership has been instrumental in creating an enabling environment for the continuation of these projects.

Project financing, risk allocation, and overall project structuring presented challenges that were addressed with the support of policies from the Ministry of Energy and the Ministry of Industry and Information Technology of Uzbekistan.

Project perception of risk factors

Impact assessments and mitigation approaches have been conducted by ACWA Power for various factors, including terrestrial ecology, air quality, noise and vibration, soils, geology, groundwater and surface water, traffic and transportation, infrastructure and utilities, archaeology and cultural heritage, landscape and visual amenity, shadow flicker, solid waste and wastewater management, socioeconomics, community health and safety, and security, as well as labour and working conditions and influx impact assessment.

Examples of key risks and their corresponding mitigation strategies include:

Habitat Loss: Construction activities such as clearing and excavation pose a risk to vegetation and wildlife, potentially degrading regional ecosystems. To mitigate this, a 30-meter buffer zone will be maintained around wind turbines and substations, and construction footprints will be limited for access roads and substations to minimise disruption.

Air Quality: Dust and pollutant emissions from construction activities can negatively impact both vegetation and wildlife. To address this, a Biodiversity Management Plan has been developed, outlining impact assessments and mitigation strategies to protect the environment and surrounding communities.

These measures are designed to minimise environmental impact and ensure responsible project development.

References

[4] ACWA Power (2023), Bash 52MW Wind Farm Republic of Uzbekistan: Environmental & Social Impact Assessment Volume 2 - Addendum to the Bash 500MW WF ESIA.

[2] AECOM (2023), Gobi Green H2 Prefeasibility Study, https://aecom.com/au/projects/gobi-green-h2-prefeasibility-study/.

[1] Petro Matad Limited (2024), Petro Matad Limited Operational Update, https://markets.ft.com/data/announce/full?dockey=1323-16439481-5TDTQH3AKNPG7UR7F088D307FA.

[3] Svevind Energy Group (2024), About Hyrasia One, https://hyrasia.one/the-project.