Assessment of Economic and Environmental Impacts of using Green Hydrogen Gas for Generating Electricity in the KSA

Abstract

The energy sector in the Kingdom of Saudi Arabia (KSA) faces serious challenges regarding its current energy mix and energy policies. These challenges are even more complex in the sphere of electricity generation. Where on one side, these challenges are attributed to the fast-growing domestic demand for electricity. While on the other side, KSA depends extensively on traditional fossil fuels for generating electricity and hence facing high rates of carbon dioxide (CO2) emissions. To address these challenges, the Kingdom’s 2030 vision opted for economic diversification and decarbonization by encouraging the transition towards using green hydrogen gas for electricity generation as a clean energy source. This attempt has been associated with measures addressing rationalization of the demand side for electricity. The objective of this paper is to explore the economic and environmental viability of using green hydrogen gas for generating electricity in KSA. Working toward this objective, an economic assessment has been applied to five hypothetical cases or scenarios to identify the most cost-effective (least expensive) to run the turbine generator at net zero CO2 emission. In addition, an assessment of the environmental impact has been applied to the same five hypothetical cases or scenarios to identify the most environmentally friendly i.e., help effectively to reduce or minimize the CO2 emissions. The findings of this assessment reject the economic viability of the transition towards using green hydrogen gas for electricity generation in the KSA, where the calculations of the five cases registered an inverse relation between the NPV and the use of green hydrogen gas in electricity generation. These findings confirm the environmental variability of this transition, where the calculations of the five cases registered a positive relation between decarburization and the use of green hydrogen gas in electricity generation. Based on these findings, the economic ramifications and viability of this transition require a thorough investigation addressing economic and non-economic aspects.