Standard Chartered issues first-ever green guarantee to Larsen & Toubro in Saudi Arabia

Image: Twitter/NEOM

Standard Chartered has issued the first-ever green guarantee for Larsen and Toubro (L&T)’s work being done for NEOM Green Hydrogen Company (NGHC) in Saudi Arabia.

The green guarantee is issued for L&T Saudi Arabia’s work on design, local supplies, construction, and commissioning of the renewable and grid packages while the international supplies will be handled by LTIFZE, both subsidiaries of L&T, as per a statement by the lender.

The green hydrogen project aims to produce hydrogen from renewable energy sources and will support the reduction of carbon emissions, in line with Saudi Arabia’s Vision 2030.

The launch reflects the bank’s commitment to supporting sustainable projects and promoting the development of green technologies in the region.
R Shankar Raman, CFO L&T Group said, “Through such initiatives, we emphasise the power of partnerships in fostering sustainable development and practices. We remain focused on continuing to grow our green business in Saudi Arabia in partnership with and continued support from Standard Chartered as one of our key relationship banks.”

The sustainable guarantee issued by Standard Chartered will see L&T receive the necessary financial support for the development of wind and solar farms to support the green hydrogen generation in this project while meeting the bank’s environmental, social, and governance (ESG) standards.

The green hydrogen project is expected to play a significant role in reducing carbon emissions and promoting sustainable development in Saudi Arabia. It will also contribute to the country’s ongoing efforts to reduce its dependence on oil.

Mohammad Salama, regional head of Corporate, Commercial, and Institutional Banking, MENA, Standard Chartered, said, “We are pleased to issue the first sustainable guarantee in the kingdom which supports the growth and development of green hydrogen. At Standard Chartered, we know that technological and financial innovation is critical in supporting the global transition towards a low-carbon economy.”

Green hydrogen project

L&T’s power transmission and distribution work has crossed critical project milestones for the power elements and grid packages at the world’s largest green hydrogen plant being built by NGHC.

Located at Oxagon in Saudi Arabia’s region of NEOM, NGHC is an equal joint-venture by ACWA Power, Air Products, and NEOM. NGHC is setting up a mega plant to produce green hydrogen at scale for global export in the form of green ammonia with a total investment of $8.4bn. Supported by 23 local, regional, and international banking and financial institutions, the project has now achieved full financial backing and construction is moving forward.

“NGHC is excited to be leading the global energy transition and having the right partners is essential in making this happen, so we are thrilled to be working with Larsen & Toubro on our green hydrogen generation, grid infrastructure, and storage”, said David R Edmondson, CEO of NGHC.

Additionally, L&T has been working to establish the renewable energy generation, storage, and grid infrastructure, from Air Products, the system-integrating EPC contractor and exclusive off-taker of green ammonia to be produced from the project. Project work has already commenced and work done including surveys, design, and engineering, the establishment of temporary facilities, and procurement of long lead items.

The value of the packages awarded to L&T aggregates $2.779bn, as per a company statement.

Under these contracts, L&T will engineer, procure, and construct a 2.2 GW photo-voltaic solar plant, a 1.65 GW wind generation plant and a 400 MWh battery energy storage system under the power elements package. The scope also includes the Energy Power Monitoring System (EPMS) for the complete network.

Commenting on the development, T Madhava Das, whole-time director and senior executive vice president of Utilities, L&T said, “We are proud to be associated with the project that will integrate 4GW of renewable energy to enable the production of up to 600 tonnes of carbon-free hydrogen per day.”

Wolfgang Brand, vice president of NGHC from Air Products, expressed satisfaction with the progress made towards the world’s largest green hydrogen production facility in NEOM. “We are pleased to commence the full execution of this lighthouse project and are proud to work with our partner L&T in their ambition to produce carbon-free hydrogen using renewable energy,” said Brand.