Water scarcity, infrastructure gaps threaten Central Asia hydrogen plans

Central Asia's ambitious plans to develop a low-carbon hydrogen industry are facing mounting challenges as water scarcity, infrastructure deficits and unclear export routes undermine investor confidence and project viability, industry experts told Platts, part of S&P Global Energy.

Kazakhstan's goal to produce more than 2 million metric tons per year of low-carbon hydrogen is becoming increasingly uncertain, with several high-profile projects stalling, Asylbek Jakiyev, chairman of Kazakh oil and gas lobby group PetroCouncil, said in an interview on March 19.

"Several big projects for the low-carbon hydrogen production rolled out in Kazakhstan during the last few years have fallen into oblivion," Jakiyev said.

However, others are progressing, albeit on delayed timelines.

Among the most notable is German developer Svevind's $50-billion Hyrasia One green hydrogen and ammonia project, which will use 40 GW of wind and solar generation to power 20 GW of electrolysis, producing 2 million mt/year of hydrogen.

The project is progressing "according to market conditions," a company spokesperson told Platts March 30. The project announced in 2021 originally targeted the construction of 30 MW of electrolysis starting in 2026.

"We anticipate updates within the next year or two," the company said.

Svevind has completed pre-front-end engineering design and value engineering work, along with studies for logistics, water intake and desalination. It has carried out on-site meteorological measurements over four years, which are ongoing, it said.

The next step is to conduct an FEED study, which is contingent on securing offtake agreements.

"We've made great strides in evaluating export routes, with both western and eastern options looking promising thanks to our proximity to [...] the port of Kuryk in Kazakhstan," the spokesperson said.

Svevind is also exploring connections to gas and oil pipelines to Europe and Asia, the spokesperson said, along with potential power supplies for data centers and other industries in the region.

Elsewhere, Saudi developer ACWA Power completed the first phase of a green hydrogen project in Chirchiq, Uzbekistan, in January, enabling initial production capacity of around 3,000 mt/year.

The $88-million project, launched in November 2023, is being implemented in two stages.

However, weak local demand, infrastructure constraints and concerns over water availability are limiting project ambitions.

Water shortage worries

Water availability is emerging as a critical bottleneck across the region, where all countries face deteriorating water security. In Kazakhstan, per capita water availability has fallen 21% since 1999, with only 42% of resources effectively usable due to losses and inefficiencies, World Bank data showed.

The situation is expected to tighten further as glacier-fed rivers -- key to regional supply -- continue to shrink and seasonal flows become more volatile.

Svevind is seeking to minimize the impact on water resources.

"Water scarcity is a concern, primarily from an ecological standpoint, as the project will produce its own desalinated water sourced from the Caspian Sea, ensuring minimal impact on local drinking water resources," the company said. "We are aware of the increasing visibility of criticism relating to water usage and declining sea levels, and we are actively addressing these concerns through sustainable practices."

Official estimates show Uzbekistan could face an annual water deficit of 15 Bcm by 2030, constraining renewable hydrogen production that requires substantial water volumes for electrolysis.

Export constraints

The region's landlocked geography compounds these difficulties, limiting access to key hydrogen demand centers in Europe and Asia.

While Kazakhstan has potential export routes via the Caspian Sea, high logistics costs and inadequate infrastructure are expected to constrain expansion plans in the coming years, Jakiyev said.

Uzbekistan faces steep challenges as a landlocked country with weak local demand and constrained export logistics, a source in the Uzbek energy industry said in an interview on March 16.

Gray hydrogen focus

Current production in the region remains focused on "gray" hydrogen manufactured from natural gas.

Uzbek oil and gas company Saneg recently launched an industrial-scale gray hydrogen facility with Air Products at the Fergana Oil Refinery using steam methane reforming, backed by a $140-million asset deal.

Saneg has no plans to invest in green hydrogen production, the company said March 18.

"It is doubtful that [green] hydrogen, which is going to be more expensive, will be in high demand locally," Jakiyev said.