Green hydrogen is bankable, with caveats

One of the key elements of the nascent hydrogen economy, particularly the green elements of it, relates to the bankability of it. And I was fortunate this week to spend quite a bit of time with senior figures from the banking community to answer just this question is green hydrogen bankable?

We gathered in Sandton, a remarkable part of your Johannesburg one of the most prosperous places in the country if not the entire continent of Africa, surrounded by international banks, brokerages and all the panoply of global finance

The conference itself was something of a statement for the continent in showing that Africa wants to be part of the New Energy Transition and has got resources on the political will to enable this to happen. 

As with the World Hydrogen Congress last October it was slightly surprising that some of the agencies talking about promoting the hydrogen-supply-chain in the UK were notable by their absence.

The discussions were not without incident, however, as what is euphemistically known as ‘loadshedding’ occurred, with frequent interruptions due to power outages and there was some comment, firstly about the nature of the utility responsible and whether hydrogen, in the form of fuel cells could provide an answer.  I’ll make some calls!

Historically for the wind sector, which faced similar dilemmas two decades ago and for which there was only effectively one bank which would trust such a nascent sector. The message coming over loud and clear from corporate finance was that the money is there.

We understand the energy transition, we have the money, and we will back you.

This is not an isolated message

I heard similar sentiments emanating from the City of London last year, during a rather bullish session and Bishopsgate.  They told me, the moderator, look, we made this happen for the oil and gas sector in the 1970s. And that was difficult to put platforms in the North Sea wasn't universally acclaimed, and we underwrote it - and made it made it happen.

That's not to say caveats don't exist, we need to keep the projects robust, on track and make sure that one key message that I stress was, make sure that the offtake is known right from the outset.

Areas such as warranties. Step in rights and engineering capabilities are all deliverables which can be trouble shot within the project and portfolio at an early – and ongoing basis.

With that in mind, the resounding message from the green hydrogen bankability session, was that yes, albeit it with caveats for an innovative and sector still finding its ways forwards.

The opportunity, as was repeatedly stressed throughout the week is there.

Feel free to join me and over 2000 sector stakeholders:  Business Opportunities for the Hydrogen Economy