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Energy

From betting on hydrogen to data centres: how the Emirates change horses

The state-owned Masdar Group was developing huge solar fields for electrolysis, but has now decided to allocate them to the super energy-intensive needs of artificial intelligence. For green hydrogen, this is yet another sign of crisis: there is no demand and projects are in trouble. Even in the Persian Gulf

by Sissi Bellomo

3' min read

3' min read

Artificial intelligence as a lifesaver, so as not to dissipate investments that were intended for the now faded dream of green hydrogen. The largest developer of renewable energy plants in the United Arab Emirates - the state-owned Masdar group, also known as Abu Dhabi Future Energy Company - is trying to change course, directing its projects at the service of another electron-hungry sector: that of data centres, which despite the doubts that are emerging (see the article above) still seems capable of providing satisfaction, also from an economic point of view.

"In the original plans,' explains Masdar's CEO, Mohamed Jameel Al Ramahi, interviewed by Reuters, 'I was to generate 6 Gigawatts (per year, ed.) of renewables to produce about 350,000 tonnes of green ammonia,' the chemical compound often used to facilitate the transport of hydrogen by 'binding' it to nitrogen molecules.

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However, the company has decided to use the huge photovoltaic field in the desert - costing $6 billion - that it had planned to power electrolysis for another purpose. And the super energy-intensive data processing centres needed for the AI are an ideal candidate.

The UAE is riding the wave in the sector with a series of initiatives, including with US partners, which have accelerated after Donald Trump's recent visit to the country. In May, OpenAi announced the Stargate Uae project with Oracle, Nvidia and Cisco, a 5 GW mega data centre covering an area of about 25 square kilometres with planned start-up in 2026. Emirates Integrated Telecommunications Co PJSC, better known as Du, is planning another facility with Microsoft Corp. The Emirates will also be the first country in the world to provide the entire population with a ChatGpt Plus subscription.

From Masdar's point of view, the conditions are right for good business. The same cannot be said for green hydrogen, which after a period of great enthusiasm is again going through (for the umpteenth time in history) a phase of disillusionment.

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Almost everywhere in the world, the dream comes up against reality, which is made up of costs that are still too high - even in the countries of the Persian Gulf, which enjoy record solar radiation - as well as technical complexities, including those related to safety, in the transport and storage phases.

In addition there are widespread delays in regulation and in Trump's US a drastic reduction in subsidies to the sector. Demand does not take off, all the more so in such a framework. And projects are increasingly cancelled, even after work has started and in some cases even when they enjoy state funding.

Masdar has taken note of this. And it is still in time to try to react, pointing towards the new (alleged?) Eldorado of data centres for AI. 'Today,' Al Ramahi acknowledges, 'green hydrogen is under pressure and the market is shrinking, a lot of people who were committed to this sector have now withdrawn. We have not. But we also have to respect global dynamics: if I want to produce green ammonia, who will take it today?".

In neighbouring Saudi Arabia, however, there is no more time to change course. The huge plant to produce hydrogen and green ammonia with a capacity of 2.2 GW in the futuristic city of Neom - one of the cornerstones of the Vision 203o project - is now more than 80 per cent built, with costs, moreover, rising to USD 8.4 billion from the USD 5 billion planned at the time of the investment decision (Fid) in May 2023. But customers - the so-called offtakers - are in short supply.

TotalEnergies alone is contractually committed to purchasing 70,000 tonnes per year of green ammonia, about one third of total production, Bloomberg reported last May. All the rest, in order not to lose the financing from the banks, has had to be 'shouldered' by Air Products, the US partner of the Saudi Arabian ACWA Power and Neom Green Hydrogen Company: when the plant comes into operation, expected in 2027, finding out who to sell it to is not likely to be easy.

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