BP Poised to Take Major Stake in Pilbara’s Asian Renewable Energy Hub

BP is reportedly close to taking a 30 per cent equity stake in the Asian Renewable Energy Hub (AREH), a massive project that could see 16 gigawatts of onshore wind and 10 gigawatts of solar used to produce vast amounts of green hydrogen and ammonia.

The rumoured deal, reported in The Australian on Monday, would see the UK-based oil supermajor become the lead developer of the AREH, which is estimated to cost around $36 billion.

Investment crucial to drive project forward

The AREH, which encompasses 6,500 square kilometres of land in the East Pilbara region of Western Australia, aims to position Australia as a major clean energy exporter. The megaproject is one of several similar initiatives working to achieve oil and gas industry scale in order to drive down the future cost of green hydrogen. It is expected to begin generating electricity by 2027.

The cost and scale of such ambitious projects are prohibitive and, without the support and investment of governments and industry, are unlikely to get off the ground. Project backing by a supermajor such as BP could provide a significant boost to the AREH’s chances of becoming a reality.

The AREH is currently led by InterContinental Energy and CWP Global, with Vestas and Macquarie also invested in the project.

The news of BP’s potential investment comes as the company continues its push into clean energy, with a target to develop 50GW net of renewables by 2030, and take major positions in both green hydrogen from wind and solar and the blue variety from abated gas.

The oil giant is currently experiencing a profits boom amid surging oil and gas prices, and some have called for the company to direct proceeds towards the acceleration of its clean energy ambitions.

BP’s reported move to invest in the AREH would be a significant step in that direction, but the company has yet to confirm or deny the stake.

AREH Controversy

As with any complex project, the road to developing the AREH has not been without controversy, with initial proposals rejected by the West Australian Government last July amid concerns over the environmental impact.

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The project would create “clearly unacceptable” disruption to tidal movements and impact the habitats and life cycles of native species, Australia’s Environment Minister Sussan Ley’s office said at the time.

The consortium behind the project has since revealed it will work to amend those plans so the renewable energy project can go ahead.

The West Australian Government last week flagged plans to set a renewable hydrogen target, which would require a percentage of the electricity generated in the South West Interconnected System (WA’s main electricity grid) to be fuelled by renewable hydrogen. This is in conjuction with the state’s Renewable Hydrogen Strategy, with ambitions of creating up to 100GW of renewable hydrogen capacity by 2030.

While the AREH’s capacity is designated mostly for export markets, the project will undoubtedly serve as blueprint for emerging renewable hydrogen production projects.