Sun Powered Green Hydrogen - A Comparative Analysis from the Kingdoms Of Morocco and Saudi Arabia

The renewable energy sector, particularly the solar PV generation, is to play a key role in the energy transition and decarbonization process and the green hydrogen production is a subsequent element of this decarbonization process as a clean energy carrier. When power output from these renewable installations exceeds the grid requirements, instead of stopping the energy generation, that power surplus can be used to produce hydrogen by electrolysis process. Despite being a technically simple process to produce via electrolysis, fuel cost and equipment are the two most significant economical elements to consider as part of the LCOH equation and act as economical boundary conditions. Combining an in-depth analysis while applying the financial modeling toolbox, this project has evaluated specific conditions for solar PV installations in Morocco and Saudi Arabia markets in terms of a techno-economic analysis for a potential investment for green hydrogen production in 2021 as well as near future projections in 2023 and 2025. The most potential application of green hydrogen production and usage is to decarbonize heavy industries (e.g., cement and steel) that cannot be electrified but this will require an extensive transport infrastructure with low-cost incidence for the green hydrogen to be an economically viable solution. Near future projects will require public funding in the form of grants or tax redemption to scale up to economical maturity. After carrying out a detailed financial modeling and a discounted cash flow valuation model, the resulting LCOH for Morocco is $3,2695/kg while Saudi is $1,5757/kg as of the end of 2021 with a projected reduction to reach $2,3678/kg and $1,4417/kg respectively in 2025, which means that by 2025 both countries will be below the $1,5-2,5/kg green hydrogen threshold, on a competitive level with fossil fuels, enabling both countries to grasp unique commercial opportunities to lead the implementation of a green business models towards a hydrogen economy, and eventually a net zero world. The paper will elaborate on the rational driving the need for green hydrogen, will elaborate on the geopolitical framework supporting this emerging business and dives in with the techno-economic analysis while creating a 2023-2025 look-ahead.