UAE state-owned clean energy developer Masdar has called on policymakers in Europe to implement policies and offer more incentives to drive demand for low-carbon hydrogen as it struggles to secure long-term offtake deals at prices that make projects bankable.

Regulations do not provide sufficient incentives or penalties to enable projects to charge offtakers a premium for a green product, Mohammad el-Ramahi, chief green hydrogen officer at Masdar, told the FT Hydrogen Summit in London.

“When we develop a large-scale project, one of our biggest challenges is long-term committed offtake agreements,” he said. “No one is willing to sign that long-term committed offtake at the targeted price that makes the project economically viable, despite our intention to take a big chunk of the risk from the equity point of view and from margins, from returns.”

1 mn t/yr – Masdar’s 2030 target for green hydrogen production

Masdar would be willing to accept an internal rate of return of 6–7pc “just to be able to push and accelerate a large-scale green hydrogen project”, he adds.

Ramahi reiterates Masdar’s target to achieve green hydrogen production of 1mn t/yr by 2030. In 2021, when the target was set following extensive market surveys, it equated to 5pc of the global market. Since then, demand projections have doubled to more than 40mn t/yr, leaving Masdar’s target production at “less than 2.5pc” of the global market, he says.

Ramahi also highlights the importance of developing the right infrastructure to enable hydrogen exports into Europe, with planning taking into account the medium used to ship the molecule.

---

Author: Stuart Penson