Key insights from World Hydrogen UK

Market Insight

Last week, the Centrus team attended World Hydrogen UK, where industry leaders convened to explore the latest trends and challenges shaping the hydrogen landscape.

The discussions surrounding the investment and funding dynamics for hydrogen projects in the UK underscore a complex interplay of excitement, caution, and the critical need for supportive frameworks to bridge the gap towards tangible commitments.

The hesitancy to invest heavily in green hydrogen, despite its recognised potential, highlights the indispensable role of robust off-taker agreements, government revenue support mechanisms, and innovative financing strategies in securing project bankability and investor confidence. These elements are not only pivotal for individual project viability but also for the broader sector’s growth, signaling a strategic push towards aligning policy, industry, and financial sectors.

5 key takeaways from World Hydrogen UK:  

  1. Ambitious Targets: The UK government has set an industry-leading target of achieving 10GW of hydrogen capacity by 2030, with a significant portion derived from low-carbon electrolysis. This ambitious goal positions the UK as a global frontrunner in hydrogen innovation, leveraging robust policy frameworks and international collaborations to drive market growth and supply chain development.
  2. Policy Imperatives:  There’s a unanimous consensus on the critical role of government policies in facilitating the formation of stable off-taker agreements. Policy frameworks that encourage long-term contracting and provide mechanisms to mitigate off-take risks are essential for fostering investor confidence and project bankability. Cross-party support and alignment across various government implementation strategies are imperative for policy effectiveness. 
  3. Enhancing Project Bankability: Despite increasing interest in green hydrogen, stakeholders remain cautious about committing to large-scale projects. The key challenge lies in securing revenue support mechanisms and viable off-take contracts to enhance project bankability. Supportive policies and innovative financing mechanisms are crucial for scaling up hydrogen projects and ensuring their commercial success. 
  4. Alignment Challenges: Aligning the duration and terms of project finance with off-take contracts poses a significant challengeProjects often require long-term financing, yet securing off-take agreements that align with these terms can be complex. This misalignment introduces risks to the project, underscoring the need for innovative solutions to bridge the gap between financing and off-take requirements.
  5. Priority of Uses: While large-scale industrialisation offers economies of scale, the transportation sector presents diverse off-take solutions, catering to both light and heavy-duty vehicle markets. 

As the UK strives to lead in hydrogen innovation and application, a collaborative effort to address investment challenges, align policies, and implement sector-specific strategies is paramount. 

Centrus is proud to have supported a number of hydrogen projects (with clients such as DBE Energy and NGN/CKI) and will continue to support our clients and new investors over the coming years.

For further insights on navigating the evolving hydrogen landscape and leveraging investment opportunities, please reach out to David Craig, Myrto Charamis or Barney Harris.

Myrto Charamis, Director – Centrus

Myrto brings a wealth of experience in London listed investment companies investing in infrastructure assets including renewables, battery storage and energy efficiency. With over 25 years of experience, her career has encompassed roles in leading investment banks in the UK and pivotal corporate finance positions in the US and Europe.

David Craig, Director – Centrus

David has over 20 years of energy, utilities and infrastructure experience sitting across all sides of the transaction table as advisor, lender and principal sponsor. Prior to Centrus, David worked for leading firms both in the UK (pwc and Lloyds Banking Group) and most recently in Sydney for KPMG and Pacific Partnerships, the investment arm of the CIMIC Group, Australia’s largest infrastructure contractor.

Barney Harris, Assistant Director – Centrus

Experienced in business planning and treasury management as well as managing and advising on clients’ derivative portfolios, Barney joined Centrus from the Gresham House Capital Market Team, where he focused on financing solutions across the Real Asset sectors. Prior to this, Barney was at Deloitte for 5 years, working primarily with clients listed on overseas stock exchanges.