Abu Dhabi hydrogen plant powers ahead

BP and Masdar will invite bids to build a $2bn (£1.2bn) 400MW hydrogen power plant in Abu Dhabi within the next few months, a BP executive has told the Wall Street Journal.

Clean tech investment giant Masdar joined with BP to launch joint venture Hydrogen Power Abu Dhabi back in January 2008, but the final decision to go ahead with the facility was delayed as the firms struggled to resolve technical issues.

But the scheme is now back on track and tenders to build the flagship project are expected to be invited before the end of the first quarter, with engineering, procurement and construction contracts due to be awarded by the third quarter.

Speaking to the WSJ on the sidelines of a renewable energy conference in Abu Dhabi, Paul Lyndon Bryant, director of Hydrogen Power Abu Dhabi, said the delays could ultimately prove beneficial to the project, explaining that bids are expected to come in below the initial $2bn price as a result of lower than expected raw material and equipment costs in the wake of the global financial crisis.

"2009 was a good time as a buyer and we see potentially that sweet spot extending. I think bids could come in below $2bn," he said.

The plant – the first of its type anywhere in the world – will work by converting natural gas into hydrogen and carbon dioxide. The hydrogen will then be burned, producing enough electricity to meet more than five per cent of Abu Dhabi's power demand, while the carbon dioxide will be pumped into depleted oil fields in the region to "push out" more oil, in a process known as enhanced oil recovery.

The plant will receive natural gas from Abu Dhabi National Oil Co, which will buy back the resulting CO2 for use in oil recovery projects. More than 90 per cent of the CO2 produced will then remain stored underground.

Masdar expects electricity generated from the hydrogen plant to be priced at about the same level as nuclear power and cheaper than solar power.