Interview: Marco Arcelli, CEO, ACWA, on the long-term potential for fuels to become traded commodities
In the global energy transition, to what extent do you see a balance taking place between renewables, conventional power and green hydrogen?
MARCO ARCELLI: These systems are not mainly about replacing existing capacity; they are responding to rapid demand growth. In that context, the priority is speed, scale, affordability and security of supply. Renewables – particularly solar and wind – are increasingly the first-choice option, not for ideological reasons but because they are the fastest to deploy, the lowest cost and the simplest to scale. As a result, they are set to account for the majority of new capacity, with the exact mix varying by country depending on available resources. To ensure system stability, renewables are typically complemented by gas-fired combined-cycle generation. Gas provides flexibility, fast ramp-up and reliability, while enabling the retirement of higher-emission oil-and coal-fired assets. In many fast-growing economies, this renewables-plus-gas mix can meet most power demand. Beyond power generation, green hydrogen becomes essential for sectors that are harder to decarbonise, including heavy industry, chemicals, refining, shipping and aviation. While electrification will play a role, hydrogen provides an alternative where direct electrification is not feasible, supporting deeper decarbonisation across the wider energy system.
Which partnerships do you see as most effective for ensuring scalability, cost competitiveness and long-term sustainability?
ARCELLI: By sharing development risk, pooling expertise and bringing in diversified equity partners, projects can reduce development costs and the cost of capital. Partnerships enable better project design, access to specialised capabilities and the use of best-in-class technical and financial solutions. The result is lower delivered energy costs, which is critical in markets where affordability and social impact are as important as decarbonisation. On the financing side, blending commercial capital with institutional and development finance has proven effective. Multilateral and development finance institutions help mitigate risk, extend tenors and in some cases, provide concessional funding, supporting faster deployment at scale while keeping projects competitive.
What are the most pressing technical and commercial challenges to scaling hydrogen production and the fuel becoming a traded commodity?
ARCELLI: From a technical and cost perspective, supply-side challenges are increasingly manageable. The bigger issues today sit on the demand and regulatory side. Industrial consumers need long-term clarity on policy, carbon pricing and sectoral regulation before committing to hydrogen investment with multi-decade horizons. In many markets, particularly in Europe and parts of Asia, evolving industrial policies, fuel eligibility rules and post-2040 decarbonisation frameworks have the potential to limit off-take contract durations. Shorter tenors constrain financing, even if production costs become more competitive in the future.
Hydrogen is closely linked to derivative fuels such as sustainable aviation fuel and methanol. These markets have strong long-term potential, but clear rules – especially around the treatment of biogenic or unavoidable CO₂ – are critical for investment today. As regulatory frameworks mature and demand-side signals strengthen, the pathway for hydrogen to become a traded commodity is more realistic – although some technical and infrastructure challenges remain, such as large-scale transport, storage and conversion to derivatives that are not yet fully resolved. Volumes may remain limited this decade, but depending on regulatory and demand-side developments, it is plausible that export corridors and industrial clusters could take shape before 2035.
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