Neom’s Giant Hydrogen Project Stalls Amid Buyer Shortage, Faces Slowdown

• Saudi Arabia’s $8.4 bn Neom green-hydrogen plant may scale back after failing to secure enough international buyers, exposing hurdles for the nascent fuel market.

Saudi Arabia’s showcase green-hydrogen venture at Neom—once hailed as a guaranteed success story—has hit an unexpected snag: it cannot find enough customers for the fuel it plans to export as green ammonia. Developers have signed up just one firm buyer, TotalEnergies, for roughly a third of planned output, leaving more than half of the 600-ton-per-day capacity without takers.

The $8.4 billion complex is a three-way joint venture between Neom, Air Products & Chemicals and ACWA Power. When financing closed in 2023, Pennsylvania-based Air Products agreed to purchase the entire output and resell it worldwide. Yet on a May 1 investor call, incoming CEO Eduardo Menezes acknowledged that the company is delaying investment in European receiving terminals “until specific regulatory frameworks are clear and we have firm customer commitments.”

With export prospects dim, the consortium is now courting domestic offtakers, including heavy industries planned for the Neom region itself. But demand inside the kingdom remains uncertain, prompting internal discussions about scaling the project down or building it in smaller phases so capital is released only after sales contracts are signed. Major equipment—electrolysers, storage tanks and pipelines—has already been ordered, complicating any redesign.

The setback highlights the broader challenge facing green hydrogen: high production costs and a still-nascent market. Although the Neom plant enjoys abundant solar and wind resources and has cleared Saudi Arabia’s notoriously brisk permitting process, its fuel still costs far more than fossil-based alternatives. Across the globe, many similar projects have been shelved or postponed for the same reason.

For Crown Prince Mohammed bin Salman, the news is another complication for Neom, the $1.5 trillion desert megaproject already grappling with budget cuts and shifting timelines. Unless regulators in Europe and Asia finalise robust incentives—and corporate buyers lock in long-term contracts—the hydrogen dream that was meant to power Saudi Arabia’s economic transformation may arrive later, and at a smaller scale, than the kingdom once envisioned.