Environmental

Green hydrogen

the next step in energy transition

The time is now right to develop the potential of hydrogen to play a key role in a clean, secure and affordable energy future. The world uses one hundred million tonnes a year of grey hydrogen for a range of products contributing to 4% of carbon emissions. We should be looking to convert that immediately to green. Green hydrogen is created using renewable sources of energy to isolate and collect hydrogen used for fuel. As energy transition gains speed, this is a significant step towards a future global economy less dependent on hydrocarbons.

Together with NEOM and Air Products, ACWA Power is developing the first large scale hydrogen production plant in the world. NEOM is an ideal location for the project because of its unique availability of wind, solar power and supplementary battery storage. This is critical to lowering the final cost of green ammonia to competitive price levels. The mega-plant will integrate 4 GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen, to then convert to liquid green-ammonia to transport and export to the world. The project is scheduled to be onstream in 2026. Based on proven, world-class technology, the facility will be a cornerstone in NEOM’s strategy to become a major player in the global hydrogen market.

Leveraging our first mover advantage in the at-scale green hydrogen space, we are already working with governments to develop similar at-scale green hydrogen projects. We have signed MOU agreements representing billions of dollars with the governments of the countries including Uzbekistan and Egypt for exploring opportunities to develop new green hydrogen projects in addition to starting long-term contract discussions with hydrogen offtakers in Austria, Korea, and Indonesia.

Leading and enabling energy transition

Climate change

At the heart of our strategy lies our publicly declared target to reduce the GHG intensity of our electricity production from our portfolio by 50% by 2030 compared to 2020, largely facilitated by a rapidly rising share of renewables generation capacity, reaching a 50/50 green-brown ratio by 2030. We are also committed to reaching net zero emissions from our portfolio by 2050.

Our emissions

We aim to meet our target by focusing our investments on renewables and transitional low CO₂ emitting assets, including capturing viable fuel-switch opportunities and increasing and optimising the energy efficiency of our portfolio.

We monitor, measure and report on our portfolio’s absolute Scope 1 and 2 emissions and the emission intensity and will continue to do so. While our targets are based on ACWA Power’s equity share in our projects, we will never lose sight of the total portfolio metrics and will continue to report them.

In conducting our emission calculations for 2022, we aligned with the most relevant internationally recognised GHG accounting and reporting standard for calculating and reporting emissions:

• GHG Protocol Corporate Accounting and Reporting Standard (WBCSD & WRI, 2004)
• GHG Protocol Scope 2 Guidance (WBCSD & WRI, 2015)

ACWA Power’s Scope 1 emissions include direct emissions from stationary fuel combustion from our thermal assets. ACWA Power’s Scope 2 emissions include indirect emissions from grid-supplied electricity as a source for our assets.

We excluded the Scope 1 emissions from owned transportation fleet (mobile fuel combustion emissions). Also excluded are the Scope 1 emissions from fuel consumption and the Scope 2 emissions from grid-supplied electricity and district heating/cooling consumption, both from owned offices. These emissions are expected to represent less than 5% of total Scope 1 and 2 emissions. However, ACWA Power will work towards estimating these emissions in future.

In 2022, the total (Scope 1 and 2) CO₂ emissions across all assets measured 74.9 million tonnes, of which ACWA Power’s share was 31.8 million tonnes.

Since 2021, we have calculated the CO₂ emission intensity of our gross electricity generation by including Scope 1 and Scope 2 emissions from electricity production. We have calculated the CO₂ intensity figure retrospectively for 2020 and 2019 using this same approach. We also calculate the CO₂ emission intensity of Reverse Osmosis (RO) water desalination as well as of thermal water desalination.

CO₂ emissions – Gross

CO₂ emissions – Scope 1

CO₂ emissions – Scope 2

ACWA Power’s low-carbon portfolio

To support our ESG strategy, and in line with our decarbonisation efforts, we are shifting our portfolio to renewables and other low-carbon technologies. We are doing this by increasing the share of renewables generation capacity to achieve a green/brown capacity ratio of 50/50 by 2030. Additionally, we have made the decision not to develop or invest in new coal or oil-fired power projects.

Sustainable and technologically advanced water management

We operate in water-scarce regions, such as the Gulf, where global issues such as climate change, population growth, industrialisation and water waste are likely to increase water scarcity in the future. But heavy dependence on desalination poses sustainability risks in itself, with cost and environmental impacts remaining key concerns. To address these challenges, more than two thirds of our desalination plants use world-class energy-efficient technology, namely seawater reverse osmosis (SWRO). As we grow our capacity, SWRO will be the sole technology used in our desalination plants. This will play a critical part in reducing water production costs significantly and contributing to our sustainability and ESG goals.

In desalination we have achieved an energy consumption reduction of 87% since 2009. We have gone through three phases to accomplish this: the first phase, from 2009 to 2012, entailed moving away from thermal coupling to seawater reverse osmosis (SWRO) and this enabled us to reduce the Specific Power Consumption (SPC) from 22 kWh/m³ to 6.5 kWh/m³; the second phase, up until 2017, was a period when we improved our design and operations such that we reduced our SPC to below 4 kWh/m³; during our most recent phase, up until now, the market has experienced significant increases in the price of energy and yet, with our paradigm shift in design, membrane analysis and big data analytics, we have kept the SPC at a level of only 3 kWh/m³. In fact, we have recently launched Taweelah 3 IWP, the very first RO plant partly using renewable energy source and we designed the Rabigh 3 IWP, the first plant in Saudi Arabia to be built on a pressure centre design.

To further our technological improvements in water desalination, ACWA Power collaborates with the King Abdullah University of Science and Technology (KAUST). The partnership aims to prioritise research in water quality monitoring and system performance modelling using several KAUST research centres.

We continue to improve the measurement and reporting of our water performance by integrating internal reporting systems for water metrics.

Waste management

ACWA Power has an integrated waste management procedure to manage hazardous and non-hazardous waste. This ensures minimal impact on the environment and that local and international regulatory requirements are satisfied. The ideal way to reduce the stress on disposal systems is to reduce the amount of waste that is produced, so our emphasis is on reduction, reuse and recovery before disposal.

To develop our integrated waste management system, we have identified the level or levels at which the highest values of individual and collective materials can be recovered, thereby saving material production, resource cost and energy.

Unfortunately, in 2022, we had two notable spillages: the Shuqaiq IWPP, not an ACWA Power project but managed by NOMAC, had a spill of 330 m³ due to an accident of external origin; in addition, ACWA Power’s CEGCO decommissioning project in Jordan had a 145 m³ of spill.

We also experienced an increase in fly ash from our Rabigh Power Company project but this was due in part to the fact that some accumulations from 2021 were included in the data.

These were regrettable incidents but essentially isolated occurences and do not fundamentally undermine our progress, nor alter our commitment to totally sustainable and pre-emptive waste management.

Management of environmental impact and risk

ACWA Power is committed to operating with minimal environmental risk and impact, not only to safeguard the health and safety of our workforce and communities, but also to reduce our impact on the environment. We actively prioritise efficiency across our operations to ensure that any environmental impact and risk is managed responsibly.

Environmental and Social Impact Assessments (ESIA)

For all new assets, we commission independent consultants to conduct Environmental and Social Impact Assessments (ESIA) during the feasibility assessment, development and acquisition phases to ensure minimal environmental and social impact. ESIAs identify and assess potential environmental impacts resulting from the project’s construction and ongoing operational activities.

Actionable mitigation and management measures are implemented based on ESIAs to avoid or minimise environmental impact. Our ESIA scope includes air quality, marine water, sediment and ecology, waste management, soil and groundwater, terrestrial ecology, noise, traffic, cultural heritage, community health, safety and security, workers’ conditions, and occupational health and safety.

Since 2010, ACWA Power has had an Environmental Management System (EMS) that meets the requirements of the ISO 14001:2015 standard, which has been certified to the ISO 45001 standard, an occupational health and safety standard designed to enable organisations to control risks and improve operational health and safety performance.

Compliance with these standards is regularly monitored and supervised by independent environmental consultants.

Sustainable procurement

We consider the environmental, social and economic consequences of our procurement practices and raw material sourcing. Our Procurement policy and the supporting procedures set out how the procurement process operates, its application standards and clarifies the roles and responsibilities of those involved in procurement.

In addition, the policy extends to any third-party organisations spending ACWA Power funds, ensuring that any organisations with which we collaborate, such as contractors, also consider their environmental, social and economic impact in their procurement practices.

Innovative green technology

We continued to prioritise green technology and innovation as key to unlocking growth.

Cooperation with King Abdullah University of Science and Technology (KAUST)

ACWA Power has partnered with KAUST to pursue goal-oriented research aimed at achieving further cost efficiencies in producing desalinated water and generating solar power. In 2021, a Master Research Agreement (MRA) between ACWA Power and KAUST was signed to officially launch the ACWA Power Centre of Excellence for Desalination and Solar Power (KAPCOE).

The MRA provides the necessary foundation for long-term research, development and innovation by the ACWA Power and KAUST partnership. The Centre aims to accelerate the adoption of emerging technologies by providing a platform for testing water treatment processes — ultimately aimed at developing best-in-industry plant optimisation tools — and pursuing goal-oriented research on sustainability and cost efficiencies in desalination.

Under this collaboration, the first pilot plants to improve the desalination process are already operational, while a solar PV pilot plant is under construction.

As part of its remit, the Centre will also explore new cutting-edge technologies, such as world-class plant optimisation tools, biofouling, sensor development and evaluation, and processes to reduce carbon footprint. The Centre will further prioritise research in water quality monitoring and system performance modelling.

While creating synergies through KAUST’s theoretical knowledge and ACWA Power’s market expertise, the Centre will also invite other strategic industry partners to participate in the future.

In February 2022 KAUST and ACWA Power reached new formal agreements to improve seawater desalination processes further, as well as monitor and predict desalination plant operations.