London hydrogen fund looks Stateside as UK falls behind on green subsidies
A London-listed green hydrogen investor has confirmed it will pivot towards opportunities in the US, to make the most of an increasingly favourable financial environment for green energy projects in the country.
Richard Hulf, co-founder and managing partner of Hydrogen One Capital (Hydrogen One), told City A.M. that the investment fund was already looking at new possibilities Stateside.
This included an upcoming visit to New York in the spring, where Hydrogen One will investigate assess companies and products to invest in.
He said: “We are turning our attention to the US, and we have got a number of initiatives going on around the Gulf of Mexico.
“There are some very large projects there, which are taking the very large coastline and setting up green hydrogen projects – with water and desalination coming from the from the Gulf itself, with large banks of electrolysers.”
His comments follow the unveiling of the US Inflation Reduction Act, which was signed by the Biden administration last August.
While ostensibly designed to tame inflation, the act provides significant opportunities to invest in renewables, with subsidies for new low and zero carbon projects set up in the country.
The bill will raise $738bn (£596bn) – including $391bn of committed spending on clean energy – making it the largest piece of federal legislation ever to address climate change.
It also features hefty production tax credits to help US manufacturers accelerate production of solar panels, wind turbines, batteries, and process key minerals.
Unlike UK and European companies, which would have to set up shop in the US to be eligible for the benefits of the Inflation Reduction Act, Hulf’s fund can move more nimbly – picking opportunities in foreign markets from its London base.
Contrasting the approach of hydrogen producers with his fund, he said: “We’re a global fund. We will just invest directly into those companies and projects.”
Hulf warned the latest reforms in the US could make the UK “relatively less attractive” but that he had no plans to abandon projects in the country.
The managing director also praised the UK’s contracts for difference system which has enabled the country to assemble one of the largest wind farm infrastructures in Europe – which hydrogen could utilise in the future.
He said: “The technical base and the expertise in the UK is world leading, especially in terms of technology.”
Hulf also confirmed that Hydrogen One still considered France, Germany and the Nordics to be key markets for the company.
This includes its latest investment in the Thierbach Project in Germany, which it announced today.
The project aims to construct an industrial-scale green hydrogen production plant, which will serve customers across the energy, transportation and industrials sectors.
Thierbach is projected to have the capacity to produce around 6,000 tonnes of green hydrogen per year.
UK under pressure to match hydrogen ambitions with action
Hydrogen One was set up two years ago and managed to raise £107m at its first fundraiser in July 2021 and a further £20m at a follow-on event in early 2022.
It has made 10 investments in hydrogen companies in the UK and Europe from energy producers to equipment and small part manufacturers – spending around £110m in the process.
Two companies it supports are producers, utilising electrolysers on site to produce green hydrogen.
The fund has also backed seven other companies that manufacture engineered components such as electrolysers, fuel cells, pipes and are involved in the transportation of hydrogen.
This includes Sunfire, a German hydrogen equipment specialist which revealed to City A.M. earlier this month it would have to consider US opportunities if the EU did not match the Inflation Reduction Act.
We will have to consider the US if we do not see Europe respond in time…
Nils Aldag, chief executive, Sunfire
The EU is scrambling to match the US and its green energy pledges, with the EU reportedly considering softening its rules for public subsidies alongside speeding up permits for renewable projects.
This could help the EU meet the ambitions of its REPowerU plans, which are designed to reduce its reliance on Russian fossil fuels by driving up green energy generation to 40-45 per cent of the continent’s energy mix by 2030.
This includes 200GW of hydrogen generation over the coming decade – aiming for 10m tonnes of production and 10m tonnes of imports.
In the UK, the response to the Inflation Reduction Act has been more muted despite its own highly aggressive generation targets for domestic renewable production over the coming decades.
Downing Street has set a target of 10GW of hydrogen generation by the end of the decade including both green hydrogen and blue hydrogen.
Currently, the UK generates less than 1GW of hydrogen energy and leading domestic player ITM Power has suffered a highly turbulent year – publishing three profit warnings in the past eight months.
However, the publication of Tory MP Chris Skidmore’s net zero review earlier this month suggests there could be more pressure in Westminster on the government to compete with the US.
In his report, Skidmore labelled net zero as the “economic opportunity of the 21st century” and called on the Prime Minister to boost investment in green energy projects.
| Company | Segment |
| Sunfire | Supply Chain |
| HiiROC | Supply Chain |
| Bramble | Supply Chain |
| Elcogen | Supply Chain |
| Thierbach Project | Production |
| Gen 2 | Production |
| HH2E | Production |
| NanoSun | Storage and Distribution |
| Strohm | Storage and Distribution |
| Cranfield | Applications |