OIES Podcast – Hydrogen Financing
In this Podcast David Ledesma discusses with Stephen Craen, Visiting Research Fellow OIES, the challenges facing the financing of future hydrogen projects as it is expected that a substantial amount of capital will need to be invested in green hydrogen production to meet the 2050 net zero targets. Based around an ‘Archetype’ world scale hydrogen export project, where 1 GW solar power is used to make green hydrogen which is converted to 250,000 tpa green ammonia for export with a capital cost in the region of USD 2 billion, the podcast discusses how ‘efficient financing’ can make an important contribution to minimising cost and making projects cost competitive. Stephen Craen argues that lenders and investors will look to precedents when assessing the nascent green hydrogen sector and the foremost will be LNG and offshore wind, which both represent large-scale, technically complex projects. Commercial structures of the green hydrogen business are expected to borrow concepts from offshore wind projects, particularly in relation to price, but also from LNG where this is relevant, such as take-or-pay contracts. In this podcast we discuss the key issues that will need to be addressed to make a green hydrogen export project bankable, concluding that commercial debt from either commercial banks or project bonds can help create competition.