Black & Veatch in focus
BPME talks to Youssef Merjaneh, Managing Director, Black & Veatch EMEA to discuss the firm’s achievements in the Middle East, key markets, and the opportunities and challenges that exist in the energy segment today
Tell us about Black & Veatch (B&V)’s history in the MENA region – what are some of your key achievements to date?
Black & Veatch is an employee-owned engineering, procurement, consulting, and construction company; we undertake most engineering in-house. Black & Veatch has a more than 100-year legacy, our Dubai-based MENA business has been active for more than 30 years.
Black & Veatch in MENA has delivered power and oil & gas projects in all of the GCC states and beyond. Our MENA client base is broad, spanning national power generation and distribution companies, independent power producers, developers and petrochemical companies. As these sectors seek to reduce CO2 emissions, we have the proven expertise to help them decarbonise conventional power assets and develop and integrate renewables and alternative fuels infrastructure.
Which markets in the MENA region are the most important for B&V from a growth and expansion standpoint? What are the specific opportunities you are targeting?
One of our clearest differentiators is having green hydrogen engineer, procure, construct (EPC) experience. At a time when many green hydrogen projects are small and nascent, we are actively delivering three live green hydrogen projects on an EPC or EpCM basis. That translates into more than 365 megawatts (MW) of new electrolyser capacity, and encompasses the ACES Delta Hub, which enables previously unattainable utility and industrial scale storage of renewable energy – 220MW stored as hydrogen in salt caverns.
A major strength is having engineering capabilities across the multiple technologies and disciplines necessary for green hydrogen projects. This is exemplified by a UK project where we are supporting electrolysis of hydrogen with renewable energy, transferring the hydrogen for long-term storage in salt caverns, then supplying the hydrogen to a gas turbine to generate electricity to supply to the grid.
We are in dialogue with several potential MENA clients about how we can bring this real-world experience to bear in support of their green hydrogen projects.
What is B&V’s view of the energy sector in the MENA region, what are the opportunities and challenges that exist with regards to the energy transition?
The MENA’s energy sector outlook is strong. Although the region is not homogenous, it includes countries with some of the world’s highest per capita demand for energy, and this is likely to continue. There is also a genuine commitment to decarbonise energy infrastructure.
For many MENA countries, the economics for renewables are advantageous with very favourable irradiation resources coupled to strong wind resources allowing cost-effective generation of renewables.
So, the opportunities lie in developing the renewable energy generation and storage infrastructure required, and adapting the grid to deal with renewables’ intermittency and more decentralised generation assets.
The challenges are numerous but any large-scale move to renewables needs the development not just of battery storage assets but also major developments in green hydrogen and green ammonia storage infrastructure – which offers long-term storage of renewable energy.
Where green hydrogen is a major element of a decarbonisation strategy, water is another significant consideration. MENA is a largely arid region, but an abundant and reliable water supply is essential for green hydrogen production. High-purity water is one of the feedstocks needed for electrolysis. The quantity of water consumed differs depending on the application, but roughly 9,800 litres of demineralised and deionised water is required for each tonne of green hydrogen produced.
What role can green hydrogen and ammonia play in the region’s energy transition? What infrastructure is needed to kickstart broader impact in the MENA region?
Green hydrogen needs to be seen as more than just a fuel or feedstock, it is currently the best available technology for long-term renewable energy storage. Hydrogen’s role as a way to store green energy long-term is as important as its role as a low-carbon fuel, or low-carbon feedstock in industrial processes. Lithium-ion batteries store energy for eight hours, iron and zinc for 100 hours; insufficient duration for critical seasonal shifting. Green hydrogen offers seasonal green energy storage, limited only by storage capacity.
Green ammonia – used as a hydrogen or energy carrier – offers new possibilities when it comes to facilitating the use of green hydrogen trade corridors. Hydrogen’s low volumetric energy density, and extremely low boiling point make it challenging – technically and economically – to develop large-scale hydrogen storage and transportation infrastructure. Green ammonia can be cracked to produce hydrogen, although this has yet to be achieved at commercial scale.
Ammonia offers desirable characteristics as a hydrogen carrier: it can be liquefied under mild conditions; it is more dense than hydrogen – more hydrogen can be stored in liquid ammonia compared to liquid hydrogen with the same volume; and proven methods of storing and transporting liquefied ammonia at scale are available.
What learnings from working on green hydrogen and ammonia projects in other markets can support B&V with projects in the MENA region?
Decarbonisation is ushering in new ways to produce hydrogen, which has heralded an abundance of new projects – many first-of-a-kind in terms of location, scale, configuration and technology – and new entrants into the hydrogen market. This has the potential to increase the risk profile for green hydrogen projects, making bankability more challenging.
We have seen that success depends upon selecting a contracting model appropriate to a specific project. This enables smooth interfacing, integration and risk mitigation for the owner, and other stakeholders.
Because delivering green hydrogen and ammonia projects at scale is a developing area, detailed and quality Front-End Engineering Design (FEED) is key to reducing project risk, thus reducing cost and enhancing bankability. A detailed FEED will also enable identification of the most appropriate contracting model.
Due to the lower resultant project definition, a basic FEED typically results in accurate EPC cost only when it includes a higher contingency to account for unknown unknowns. To avoid exceeding estimated total installed costs on budget overruns, this contingency can be in the nominal range of 30 percent. A detailed FEED defines the project clearly in the earliest phases, reduces the level of risk and uncertainty – and thus contingency. The total installed cost will likely be lower when considering the execution plan of shifting substantial risk to the EPC, equipment vendors and technology suppliers, as they price unknown unknown risk highly.
A proven EPC partner – with a high degree of technical expertise – can undertake the technical and financial due diligence on equipment vendors necessary to minimise their own exposure to risk when selecting the most appropriate technology supplier, thus reducing the overall risk for investors. We are also seeing performance of certain elements of a project, electrolysers for example – or the firing of 100% hydrogen – being taken out of the EPC wrap and retained by the OEM due to the novel nature of many schemes.
