Hydrogen Production Costs in Oman to be Competitive

Cheap renewable electricity made possible by an abundance of solar and wind resources, alongside the availability of near limitless land blocks for development, will together enable the production of green hydrogen in Oman at a globally cost-competitive US$1.6/kg by 2030, according to a key report. The report, titled ‘Renewable Hydrogen from Oman: A producer economy in transition’, issued jointly by the International Energy Agency (IEA) and the Ministry of Energy and Minerals, ranks the Sultanate of Oman among the world’s leading producers and exporters of renewable hydrogen by the end of this decade.

“The country is well placed to produce large quantities of renewable hydrogen and hydrogen-based fuels,” the Paris based intergovernmental agency announced in its 54-page report. “Oman benefits from high-quality renewable resources (both solar PV and onshore wind) and a convenient location, well-placed to access the main import markets like Europe and Japan. The country also has vast amounts of land for large-scale project development, and existing fossil fuel infrastructure that can be directly used or repurposed for low-emission fuels. The country has extensive expertise in handling and exporting both LNG and ammonia that are directly applicable to renewable hydrogen and hydrogen-based fuels,” it further stated. Boding well for Oman is the presence of all of the key enabling conditions to become “one of the most competitive producers of renewable hydrogen”, according to the report. Together with projected reductions in the capital cost of electrolysers, Oman is well-positioned to produce renewable hydrogen for as low as US$1.6/kg by 2030, it said. Importantly, cheap renewable electricity is a “precondition for competitive hydrogen exports” from Oman, the report points out.

“Hydrogen production costs depend heavily on the costs of electricity generation. Ensuring that these are as low as possible will be a significant advantage for the competitiveness of hydrogen both domestically and abroad. Increasing project development and large-scale deployment of renewables can contribute to lowering the soft costs (i.e., non-equipment expenses associated with design, permitting, installation, and financing), having a major influence on the competitiveness of local electricity generation from renewables,” it explained. Oman is targeting the production of around 1 million tons/annum of renewable hydrogen by 2030, which will necessitate a staggering 50 terawatt-hours (TWh) of captive renewable electricity to meet this goal. Investments required to develop this capacity are estimated at around US$33 billion by 2030, comprising US$20 billion for captive renewable power dedicated to hydrogen production and US$13 billion for electrolysis and ammonia conversion, the report added.