Neom’s Green Hydrogen Project Regulates Strategy Amid Evolving Market Conditions

Saudi Arabia, 22 May 2025: Saudi Arabia’s $8.4 billion green hydrogen initiative in Neom, developed through a partnership between Neom, Air Products & Chemicals, and ACWA Power, is reassessing its rollout strategy in response to current market conditions and international demand.

The project, which aims to produce 600 tons of green hydrogen per day in the form of green ammonia, has so far secured one confirmed buyer. TotalEnergies has committed to purchasing approximately a third of the planned output. The remaining capacity has yet to attract firm off-take agreements.

Air Products, which committed to purchasing and distributing the full output globally, indicated on a May 1 investor call that investment in European receiving terminals is being paused. Incoming CEO Eduardo Menezes stated that this decision will hold "until specific regulatory frameworks are clear and we have firm customer commitments."

The consortium is now exploring potential domestic buyers within Saudi Arabia, including emerging industrial operations in the Neom area. Internal discussions are underway about adjusting the project timeline or scaling the development into smaller phases to better align with confirmed demand. Some of the major equipment, including electrolysers and storage infrastructure, has already been ordered, which may affect the scope of any future redesign.

The Neom project reflects wider industry challenges as green hydrogen remains more expensive than fossil fuel-based alternatives. While the project benefits from strong renewable energy resources and streamlined regulatory approvals within Saudi Arabia, the broader global market is still developing. Other projects in various regions have faced similar issues, with delays and re-evaluations common.

The project remains a key component of Saudi Arabia’s Vision 2030 goals, which include diversifying the national economy and investing in clean energy technologies. Its long-term progress will likely depend on the evolution of international regulatory support and further commitments from industrial buyers.