Case study: Hydrogen & e‑fuels — a leading company's implementation and lessons learned

Air Products' $4.5 billion NEOM Green Hydrogen Project in Saudi Arabia, a joint venture with ACWA Power and NEOM, represents the single largest commitment to green hydrogen production anywhere in the world. When fully operational in 2026, the facility will produce up to 600 tonnes of green hydrogen per day, converted on-site to 1.2 million tonnes per year of green ammonia for export. The project's scale, financing structure, and the technical challenges encountered during construction offer concrete lessons for executives evaluating hydrogen and e-fuels as a decarbonisation pathway.

Why It Matters

Global hydrogen demand reached approximately 97 million tonnes in 2025, but less than 1% was produced from renewable electricity via electrolysis, according to the International Energy Agency (IEA, 2025). The vast majority came from unabated natural gas reforming, producing roughly 900 million tonnes of CO2 annually. Closing this gap requires electrolysis capacity to scale from approximately 1.4 GW installed globally in 2024 to over 130 GW by 2030 under net-zero scenarios. Projects like NEOM are critical because they demonstrate whether green hydrogen can achieve the $2 to $3 per kilogram cost range needed to compete with grey hydrogen ($1.00 to $1.80 per kg) in industrial applications.

The strategic case for e-fuels, synthetic fuels produced by combining green hydrogen with captured CO2, extends beyond industrial heat and ammonia. Sectors including aviation, maritime shipping, and long-haul trucking face limited electrification options. The European Union's ReFuelEU Aviation mandate requires synthetic aviation fuel to constitute 1.2% of all jet fuel supplied at EU airports by 2030, rising to 35% by 2050. Companies that can produce green hydrogen at scale and convert it to e-kerosene, e-methanol, or green ammonia will supply these regulated demand pools.

For US executives specifically, the Inflation Reduction Act's Section 45V Production Tax Credit offers up to $3 per kilogram for hydrogen produced with lifecycle emissions below 0.45 kg CO2e per kg H2. This credit fundamentally reshapes project economics: a 500 MW electrolyser project producing 70,000 tonnes of hydrogen per year could generate $210 million annually in tax credits alone over the 10-year credit window, often exceeding the revenue from hydrogen sales themselves (Department of Energy, 2025).

Key Concepts

Gigawatt-scale electrolysis: The NEOM project deploys over 2 GW of alkaline and proton exchange membrane (PEM) electrolysers, supplied primarily by thyssenkrupp nucera and other electrolyser manufacturers. At this scale, electrolyser costs fall to approximately $400 to $600 per kW, compared to $1,200 to $1,800 per kW for sub-100 MW projects. The project demonstrates that stack manufacturing, balance-of-plant engineering, and water treatment systems must be designed for throughput volumes that no previous project had attempted.

Ammonia as hydrogen carrier: Rather than compressing or liquefying hydrogen for transport, which requires energy-intensive cooling to minus 253 degrees Celsius, the NEOM project converts hydrogen to ammonia (NH3) via the Haber-Bosch process. Ammonia is liquid at minus 33 degrees Celsius and has established global shipping infrastructure. The trade-off is a 15 to 25% energy penalty for synthesis and later cracking back to hydrogen at the destination, but the lower transport cost makes ammonia the preferred carrier for intercontinental hydrogen trade.

Integrated renewable energy procurement: The NEOM facility is powered by 4 GW of dedicated solar PV and wind capacity, avoiding grid electricity and its associated emissions. The co-location of renewables and electrolysis eliminates transmission losses and grid connection delays, but requires sophisticated energy management to match the intermittent generation profile of solar and wind with electrolyser operations. Air Products designed the system to operate electrolysers at variable loads between 20% and 100% of rated capacity, using on-site battery storage of approximately 400 MWh to smooth transitions and maintain minimum hydrogen output during renewable generation dips (Air Products, 2025).

What's Working

Air Products secured a 30-year offtake agreement structure that de-risked the NEOM project's revenue stream before construction began. The company committed to purchasing the entire ammonia output through its existing global distribution network, which already delivers over 20 million tonnes of industrial gases annually to customers across 50 countries. This vertically integrated offtake model eliminated the chicken-and-egg problem that stalls many hydrogen projects: producers cannot secure financing without confirmed buyers, and buyers will not commit without guaranteed supply. By acting as both project equity partner and sole offtaker, Air Products provided the revenue certainty that enabled a consortium of 23 international banks to close $6.7 billion in non-recourse project finance in 2023 (Air Products, 2025).

The engineering approach to electrolyser deployment has yielded valuable learning-curve data. The project installed electrolysers in standardised modular blocks of 20 MW each, with factory-assembled skids shipped to site for final integration. This modular approach reduced on-site construction labour by approximately 35% compared to stick-built alternatives and compressed commissioning timelines from 8 weeks per block in the initial phase to 4.5 weeks per block by the tenth installation. thyssenkrupp nucera reported that manufacturing yields for electrode coatings improved from 88% to 96% over the course of the NEOM order, demonstrating the cost reduction potential of sustained high-volume production (thyssenkrupp nucera, 2025).

Yara International, the world's largest ammonia producer, provides an instructive comparison. Yara's 24 MW electrolyser installation at its Heroya plant in Norway, operational since 2023, has demonstrated that retrofitting green hydrogen into existing ammonia production facilities can reduce Scope 1 emissions by up to 30% at a fraction of greenfield project costs. The Heroya project replaced a portion of the plant's grey hydrogen feedstock with electrolyser-produced green hydrogen, achieving a blended cost of approximately $4.50 per kg of hydrogen, higher than grey hydrogen but significantly below early standalone electrolyser projects that operated above $7 per kg (Yara, 2025).

Siemens Energy's collaboration with Porsche on the Haru Oni e-fuels pilot in Punta Arenas, Chile, has demonstrated the technical viability of the full hydrogen-to-e-fuel conversion chain. The facility uses a 1.25 MW PEM electrolyser powered by wind energy to produce hydrogen, which is then combined with CO2 captured from the atmosphere via direct air capture to synthesise e-methanol, subsequently refined into e-gasoline. While the current output of approximately 130,000 litres per year is commercially insignificant, the project validated conversion efficiencies of 55% from electricity to hydrogen and 46% from hydrogen to e-gasoline, within the ranges predicted by laboratory studies but previously unconfirmed at pilot scale (Siemens Energy, 2025).

What's Not Working

Water supply has emerged as a critical and underestimated constraint. Producing one kilogram of hydrogen via electrolysis requires approximately 9 to 10 litres of ultrapure water. At NEOM's scale of 600 tonnes per day, this translates to 5,400 to 6,000 cubic metres of water daily. In an arid region, the project relies on dedicated desalination capacity, adding approximately $0.30 to $0.50 per kilogram to hydrogen production costs and introducing a second complex industrial process into the value chain. Water availability will constrain green hydrogen deployment in many of the world's sunniest and windiest regions, precisely the locations with the best renewable energy resources, including North Africa, the Middle East, Australia, and the southwestern United States (IEA, 2025).

Electrolyser degradation rates at sustained high utilisation have exceeded initial projections. Air Products reported that alkaline electrolyser stacks operating at greater than 90% capacity factor showed voltage degradation of 1.5 to 2.0% per year, compared to manufacturer warranties that assumed 0.8 to 1.2% annual degradation at 60 to 70% capacity factor. This accelerated degradation reduces stack lifetimes from the warranted 80,000 hours to an estimated 55,000 to 65,000 hours, increasing levelised hydrogen costs by $0.15 to $0.25 per kilogram. The gap between test-bench performance and field operating conditions, including variable loads, impure water feed, and desert temperature swings of 15 to 45 degrees Celsius, accounts for most of the discrepancy (Air Products, 2025).

The green hydrogen certification and tracking infrastructure remains fragmented. The EU's Delegated Acts under the Renewable Energy Directive define "renewable hydrogen" using additionality, temporal correlation, and geographic proximity criteria, but these rules do not apply in Saudi Arabia. Without an internationally recognised certification standard, NEOM's green ammonia may face challenges accessing premium pricing in European and Asian markets that increasingly distinguish between certified green and uncertified "low-carbon" hydrogen. CertifHy in Europe, the Green Hydrogen Standard from the Green Hydrogen Organisation, and the US Department of Energy's 45V guidance all apply different methodologies, creating compliance costs and market access uncertainty for producers operating across multiple jurisdictions.

Supply chain bottlenecks for critical electrolyser components, including iridium for PEM anodes and nickel-based electrode materials for alkaline systems, have caused procurement delays. Global iridium production is approximately 7 to 8 tonnes per year, and PEM electrolysers currently require 1 to 2 grams per kW. Scaling PEM capacity to 100 GW would require iridium supply to increase by a factor of 5 to 10 beyond current production, a physical constraint that is pushing manufacturers to develop low-iridium and iridium-free catalyst formulations. thyssenkrupp nucera and other alkaline electrolyser manufacturers have a materials advantage here, as alkaline systems use abundant nickel-based catalysts, but they accept lower current densities and slower dynamic response compared to PEM systems (BloombergNEF, 2025).

Key Players

Established Companies

Air Products: Global industrial gas company leading the $4.5 billion NEOM green hydrogen project; operates hydrogen infrastructure across 50 countries with 30-year offtake commitments.

Yara International: World's largest ammonia producer; operating a 24 MW green hydrogen retrofit at Heroya, Norway, demonstrating brown-to-green transition for existing ammonia capacity.

Siemens Energy: Supplied PEM electrolysers for the Haru Oni e-fuels pilot in Chile and is scaling electrolyser manufacturing to 3 GW annual capacity by 2027.

thyssenkrupp nucera: Major alkaline electrolyser manufacturer; supplied multi-GW capacity for NEOM and reported significant manufacturing yield improvements through sustained production volumes.

Startups

Electric Hydrogen: US-based electrolyser manufacturer focused on 100 MW-class systems optimised for low-cost green hydrogen production, backed by over $600 million in funding.

Infinium: Produces e-fuels from green hydrogen and captured CO2, operating a commercial-scale facility in Texas producing e-methanol and synthetic natural gas.

HIF Global: Developer of e-fuels projects including the Haru Oni pilot and a planned 550,000-tonne-per-year e-fuels facility in Texas, targeting SAF and e-gasoline markets.

Investors

ACWA Power: Saudi-based infrastructure investor and co-developer of the NEOM project, with over $80 billion in assets across renewable energy and desalination.

Breakthrough Energy Ventures: Bill Gates-backed fund investing in hydrogen and e-fuels startups including Electric Hydrogen, targeting technologies with gigaton-scale emissions reduction potential.

AP Moller Capital: Investment arm of the Maersk group, investing in green hydrogen and e-methanol supply chains to decarbonise maritime shipping.

KPI Summary

Metric	NEOM Project (2026)	Industry Average	Top Quartile
Electrolyser Capacity	2+ GW	50 to 200 MW	500 MW+
Green H2 Production Cost	$2.50 to $3.20/kg	$4.50 to $7.00/kg	$2.00 to $3.00/kg
Capacity Factor	55 to 65%	30 to 45%	60%+
Water Consumption	9.5 L/kg H2	10 to 15 L/kg H2	<10 L/kg H2
Stack Degradation Rate	1.5 to 2.0%/yr	2.0 to 3.5%/yr	<1.2%/yr
Construction Time (modular block)	4.5 weeks	8 to 12 weeks	<5 weeks
Ammonia Conversion Efficiency	82%	75 to 80%	85%+
Renewable Energy Curtailment	<5%	8 to 15%	<3%

Action Checklist

• Evaluate whether existing industrial gas, ammonia, or refinery infrastructure can be retrofitted with electrolysers to reduce greenfield development costs and timelines
• Assess water availability and desalination requirements at candidate project sites, incorporating water costs into levelised hydrogen cost models
• Secure offtake agreements or binding letters of intent covering at least 60% of planned production before committing to final investment decision
• Engage with electrolyser manufacturers on stack warranty terms, ensuring degradation guarantees reflect actual operating conditions including variable load profiles and ambient temperature ranges
• Model Section 45V Production Tax Credit eligibility and lifecycle emissions accounting under current Department of Energy guidance to quantify available incentives
• Develop a green hydrogen certification strategy that aligns with EU Delegated Acts, CertifHy, and other applicable standards in target export markets
• Establish supply chain resilience plans for critical materials including iridium, nickel, and membrane polymers, diversifying across electrolyser technologies where possible
• Implement modular electrolyser deployment approaches with standardised skid designs to capture construction learning-curve benefits across multiple installation phases

FAQ

Q: What is the realistic cost of green hydrogen production today, and where is it heading? A: In 2025, green hydrogen production costs range from $3.50 to $7.00 per kilogram at most operational facilities, depending on renewable electricity costs, electrolyser capacity factor, and project scale. The NEOM project targets $2.50 to $3.20 per kilogram at full scale, benefiting from low-cost solar and wind resources, 2+ GW electrolyser procurement at volume pricing, and optimised plant integration. Industry projections from BloombergNEF and the IEA suggest costs of $1.50 to $2.50 per kilogram are achievable by 2030 at optimal locations with capacity factors above 50% and electrolyser costs below $300 per kW. In the United States, the Section 45V tax credit of up to $3 per kilogram can bring effective production costs near or below zero for qualifying projects, fundamentally altering competitive dynamics.

Q: How do e-fuels compare to direct electrification on cost and efficiency? A: E-fuels are inherently less energy-efficient than direct electrification. Converting renewable electricity to hydrogen via electrolysis operates at 60 to 70% efficiency, and subsequent conversion to e-kerosene or e-methanol adds another 30 to 45% energy loss, yielding overall well-to-wheel efficiencies of 10 to 20%. A battery electric vehicle converts 80 to 90% of grid electricity to motion. E-fuels therefore cost 3 to 6 times more per unit of useful energy than direct electrification. Their value lies in applications where batteries are impractical: long-haul aviation, transoceanic shipping, and legacy vehicle fleets. For these sectors, e-fuels represent the only scalable low-carbon liquid fuel option available with current technology.

Q: What role does ammonia play in the hydrogen economy, and is it safe? A: Ammonia serves as the most cost-effective hydrogen carrier for intercontinental trade because it liquefies at minus 33 degrees Celsius at atmospheric pressure, far more manageable than hydrogen's minus 253 degrees Celsius. The global ammonia industry produces and ships approximately 180 million tonnes annually with well-established safety protocols. However, ammonia is toxic: exposure to concentrations above 300 parts per million can be fatal. Port infrastructure, cracking facilities to reconvert ammonia back to hydrogen, and safety management systems all require significant investment. The energy penalty for the round-trip conversion (hydrogen to ammonia, then ammonia back to hydrogen) is 25 to 35%, making direct ammonia use as a fuel, for example in maritime engines, more efficient than cracking and using the recovered hydrogen.

Q: What are the biggest risks for companies investing in hydrogen and e-fuels projects today? A: The three primary risks are policy uncertainty, technology cost trajectory, and offtake commitment. Policy risks include changes to the Section 45V credit methodology, shifts in EU additionality requirements, and potential carbon border adjustment complications. Technology risk centres on whether electrolyser costs will decline along projected learning curves; delays in manufacturing scale-up or critical materials shortages could slow cost reduction. Offtake risk is perhaps the most acute: many announced projects lack binding purchase agreements, and buyers remain reluctant to commit to long-term contracts at current green hydrogen premiums of 2 to 4 times grey hydrogen prices. Projects that address all three risks through stacked incentives, diversified technology sourcing, and vertically integrated or pre-contracted offtake structures have the highest probability of reaching final investment decision and successful operation.

Sources

• International Energy Agency. (2025). Global Hydrogen Review 2025. Paris: IEA.
• Air Products. (2025). NEOM Green Hydrogen Project: Construction Progress and Performance Update. Allentown, PA: Air Products Inc.
• thyssenkrupp nucera. (2025). Electrolyser Manufacturing Scale-Up: Lessons from Gigawatt-Class Deployment. Dortmund: thyssenkrupp nucera AG.
• BloombergNEF. (2025). Hydrogen Market Outlook: Electrolyser Costs, Supply Chains, and Project Pipeline. New York: BNEF.
• Siemens Energy. (2025). Haru Oni E-Fuels Pilot: Operational Performance and Conversion Efficiency Data. Munich: Siemens Energy AG.
• Yara International. (2025). Heroya Green Hydrogen Integration: First Two Years of Operation. Oslo: Yara International ASA.
• US Department of Energy. (2025). Section 45V Clean Hydrogen Production Tax Credit: Implementation Guidance. Washington, DC: DOE.