BAKU, Azerbaijan, May 17. Hydrogen projects are likely to require specific blended finance solutions that have the ability to absorb some of the underlying project risks, Trend reports with reference to the European Investment Bank (EIB).
To help deploy these instruments in relevant projects, market feedback and the EIB experience indicate a need for targeted support from finance experts to help navigate the evolving offering of financing products.
“Such support would also help promoters position themselves for the right offering. Given the complexity and often long time-to-market times of hydrogen projects, the advisory resources should be sized and designed accordingly. Advisory support could also extend to hands-on project development assistance, particularly in the case of large, complex projects involving multiple players and value chain segments. In such contexts, the contribution of a neutral advisory partner could act as a catalyst and accelerate projects to facilitate certain decisions or project development activities. This type of assistance is already being provided under the Innovation Fund’s PDA (project development assistance) programme, under the New Entrants’ Reserve NER 300 PDA programme and could be further expanded in the coming years under the new InvestEU Advisory Hub,” reads the bank’s report.
Based on the EIB’s experience, such development assistance could be particularly relevant for large and complex hydrogen projects establishing new business models for which there are few precedents.
“For example, IPCEI projects, or the key “lighthouse” hydrogen projects could benefit. Due to the high risks, such projects may in the near term lie beyond the frontier of what is normally considered bankable. To help these projects, advisory support should also contribute to clear financial signalling and guidance to promoters and their partners to assist in adapting their operational and funding strategies accordingly. Integrated, comprehensive support instruments that encompass the entire value chain will be needed to bring down investment barriers, catalyse investment, and enhance collaboration between financiers and hydrogen sector companies. All of these are vital components for the ambitious 2030 targets to be met and the hydrogen ecosystem to mature,” the report says.
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