Leading hydrogen infrastructure investment fund Hy24 has called for a “massive” regulatory push globally to unlock investment in the clean hydrogen economy and scale up the industry at the pace needed to contribute meaningfully to net-zero targets.

Hy24 is a joint venture between investment platform FiveT Hydrogen and asset manager Ardian. It is backed by major players from across the hydrogen value chain, including TotalEnergies, French industrial gases giant Air Liquide, construction firm Vinci, fuel cell company Plug Power, services firm Baker Hughes and equipment manufacturer Chart Industries.

“We are already seeing private pledges and investments into the technology that reflect the urgency of the fight against climate change. What we need now is for policy to ensure an adequate mobilisation of private capital which will enable its full power engagement, so that the hydrogen boom can truly take off,” says FiveT chairman Pierre-Etienne Franc—who will also lead Hy24—in an interview with Hydrogen Economist. “The issue is not the money. The money is there, and we know financial markets have a lot of money available to try to invest.”

“The issue is not the money. The money is there and we know financial markets have a lot of money available to try to invest,” Franc, FiveT Hydrogen

Franc says investment funds are exposed to the risk that regulation and policy will not be executed fast enough over the next five years to underpin hydrogen infrastructure projects.

“The execution of an irreversible, predictable and progressive shift [in regulation and policy] is not coming fast enough, and that is the risk we have,” he says.

Hydrogen is recognised as the missing link required to build a carbon-free energy system, with direct uses across energy-intensive industries and mobility, as well as being a key vector for storing and transporting clean energy, Franc says. “Its deployment at scale is now imperative to advance the climate agenda.”

Franc notes that announcements during last month’s Cop26 climate talks from a coalition of 28 companies across financial services, mining, energy and industry could account for more than 25pc of the European Commission’s 2030 target of 40GW of electrolyser capacity.

Transport focus

Hy24 recently gained regulatory approval to enter the market and is confident of reaching its target of €1.5bn ($1.7bn) by the summer of next year. At least two initial investments are already being finalised.

The fund plans to bet heavily on hydrogen use in the transport sector. “This fund will be the first and probably only major hydrogen fund which has 50pc of its scope dedicated to the transport industry,” Franc says.

Subject to the successful closing of the fund, Hy24 should be capable of investing €800-900mn in hydrogen transport infrastructure over the next six years. It will be a minority investor alongside other partners and with government support, implying total investment in the selected projects of €4-6bn, Franc says.

€800-900mn – Potential Hy24 investment in transport sector over next six years

“And of course, we have got to choose between the US, Europe [and] Asia,” he says. “Of course, a big part of the investment will be in Europe, but it is really dependent on the quality of the regulation and the policy support to make it happen.”

Outside of transport, the rest of the fund will be invested upstream in projects such as power-to-X, power-to-hydrogen and export projects.

Hy24 is targeting “double digit plus” average returns, but Franc accepts that returns will vary by project.

“We need to be cautious because the fund plays the role of an ecosystem player, so we will invest in a blend of many different projects, in many different geographies with many different risk profiles. Some will have very high returns and some will have lower returns.”

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Author: Stuart Penson