UK supermajor BP is taking over operatorship of the US$36 billion Asian Renewable Energy Hub (AREH) in Pilbara, Western Australia, which the company is hailing as one of the world’s largest renewables and green hydrogen energy hubs.

The AREH project supports development of up to 26 gigawatts of combined wind and solar power generation capacity and, at full scale, it could produce 1.6 million tonnes per annum of green hydrogen or 9 million tpa of green ammonia.

BP on Wednesday agreed to acquire a 40.5% stake in and to become operator of the AREH, which intends to supply renewable power to local customers in the largest mining region in the world and also produce green hydrogen and green ammonia for the domestic Australian market and export to major international users.

Financial terms of BP's investment were not disclosed.

AREH has plans to develop onshore wind and solar power generation in multiple phases to a total generating capacity of up to 26 GW — the equivalent of producing over 90 terawatt hours per year, which is around a third of all electricity generated in Australia in 2020.

Substantial energy demand and carbon emissions

BP hailed the Pilbara as a globally competitive and energy intensive mining region with substantial energy demand and carbon emissions.

At full capacity, AREH is expected to abate around 17 million tpa of carbon in domestic and export markets, which would equate to roughly 500 million tonnes of carbon savings over the lifetime of the project.

“AREH is set to be one of the largest renewable and green hydrogen energy hubs in the world and can make a significant contribution to Australia and the wider Asia Pacific region’s energy transition,” said Anja-Isabel Dotzenrath, BP’s executive vice president of gas and low carbon energy.

“It truly reflects what integrated energy is — combining solar and onshore wind power with hydrogen production and using it to help transform sectors and regions.

“It also reflects our belief that Australia has the potential to be a powerhouse in the global energy transition, benefitting from both its existing infrastructure and abundant renewable energy resources.”

Cornerstone project

Dotzenrath added that BP believes AREH can be a cornerstone project for the company in helping its local and global customers and partners in meeting their net zero and energy commitments.

It will also serve as a long-term clean energy security contributor in Asia Pacific, helping countries such as South Korea and Japan to decarbonise.

When fully developed, AREH could provide significant net renewable generating capacity for BP as well as making a material contribution to its strategic aim to capture a 10% share in core hydrogen markets globally.

“This is an incredibly exciting development, and we are looking forward to working closely with our partners… as well as the Nyangumarta people,” said BP Australia president Frederic Baudry.

First proposed eight years ago, the AREH project has been developed to date by partners that currently comprise InterContinental Energy, CWP Global and Macquarie Capital and Macquarie’s Green Investment Group.

Under the terms of agreement, BP will acquire a 40.5% interest in the project and will assume operatorship from 1 July 2022, subject to approvals.

The other partner shareholders in AREH will continue to be InterContinental on 26.4%, CWP Global on 17.8% and Macquarie on 15.3%.