BP buys hefty stake in $30bn renewable mega-project in Australia - article for CityAM - 15.06.22

BP has snapped up a chunky stake in a massive renewable energy project in Australia for an undisclosed fee – becoming the operator of what could potentially be one the largest renewable projects in the world says Nicholas Earl.

It has acquired a 40.5 per cent holding and Asian Renewable Energy Hub (AREH) in Pilbara, Western Australia, which aims to produce green hydrogen and green ammonia for the domestic Australian market and export to major international users.

Developing the project to full capacity could cost $30bn, but when complete AREH is expected to be capable of producing around 1.6m tonnes of green hydrogen or 9m tonnes of green ammonia every year from it’s 6,500km site.

Green hydrogen is a renewable energy source, produced by splitting water by electrolysis, and is a key feature of Australian plans to meet climate targets.

There are also plans to develop onshore wind and solar power generation in multiple phases to a total generating capacity of up to 26 gigawatts (GW) – the equivalent of producing over 90 terawatt hours per year.

For context, the proposed nuclear power plant Sizewell in the UK will provide 3.2GW of power.

BP backs hydrogen to power energy transition

The investment makes BP the largest shareholders in AREH, and bolsters its plan to capture a 10 per cent share in core hydrogen markets globally.

The energy giant expects hydrogen to account for 10-15 per cent of global energy by 2050 and is looking into several other large-scale hydrogen and ammonia export hubs around the world.

AREH is also being backed by InterContinental Energy (26.4 per cent), CWP Global (17. per cent) and Macquarie’s Green Investment Group (15.3 per cent).

The site will also provide power to local customers, in what is the largest mining region in the world.

This is around a third of all electricity generated in Australia in 2020.

At full capacity, AREH is expected to abate 17m tonnes of carbon in domestic and export markets annually, which would equate to roughly 0.5 gigatonnes (of carbon savings over the lifetime of the project.

Anja-Isabel Dotzenrath, BP’s executive vice president of gas and low carbon energy, said:

“We believe AREH can be a cornerstone project for us in helping our local and global customers and partners in meeting their net zero and energy commitments. It will also serve as a long-term clean energy security contributor in Asia Pacific, helping countries such as South Korea and Japan to decarbonize.”

AREH remains in development stages, with BP expects it to begin generate power in 2029, when the first phase of 4 gigawatt of renewable power will get online.

The two other phases of 6GW of green hydrogen and 14GW of ammonia for exports, would be developed over the next decade.


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BP buys hefty stake in $30bn renewable mega-project in Australia - CityAM - 15.06.22
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Pilbara, Western Australia

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