Climate Insider Brief:
- BNP Paribas and CIBC have committed to financing HH2E AG’s 100-megawatt green hydrogen production plant in Lubmin, Germany, marking a key step towards the project’s final investment decision, expected by October 2024.
- HH2E AG has requested loans exceeding €200 million, with BNP Paribas forming a debt syndicate and CIBC managing an equity raise, both expected to conclude by the end of the year.
- HH2E aims to scale the project to a 1-gigawatt capacity by the end of the decade, with advanced talks underway with larger investors, including Norway’s Equinor ASA, to support this expansion.
BNP Paribas SA and the Canadian Imperial Bank of Commerce (CIBC) have committed to backing one of Germany’s most ambitious hydrogen initiatives. The project, spearheaded by the startup HH2E AG, represents a significant milestone in the country’s drive towards clean energy and sustainability.
HH2E AG is progressing towards a final investment decision for its 100-megawatt green hydrogen production facility, set to be located in the Baltic port of Lubmin. The decision is expected by October, with the involvement of BNP Paribas and CIBC indicating that the project is seen as financially viable.
A spokesperson for HH2E confirmed the involvement of BNP Paribas as a debt adviser, responsible for forming a debt syndicate to finance the initial stages of the project. Concurrently, CIBC is managing an equity raise process. Both financial efforts are anticipated to conclude in the fourth quarter of 2024.
While specific financial details remain undisclosed, sources familiar with the matter revealed that HH2E has requested loans exceeding €200 million (approximately US$222 million). This financial backing is crucial as green hydrogen, produced using renewable energy sources, is essential for Europe to meet its climate targets and reduce reliance on fossil fuels, particularly in energy-intensive industries like steel production. Despite its potential, the hydrogen market is still nascent, with only 5% of the capacity projected to be operational by 2030 having reached final investment decisions, according to BloombergNEF data.
The HH2E project in Lubmin is poised to be one of Germany’s largest electrolyser facilities and has gained financial traction due to strong government support for the hydrogen sector. Germany is investing heavily in developing one of the world’s first and largest hydrogen networks as part of its strategy to achieve net zero emissions by 2045.
Looking ahead, HH2E is seeking to expand its project to a 1-gigawatt capacity by the end of the decade. To achieve this, the startup is in advanced discussions with potential large-scale investors, including Norway’s energy giant, Equinor ASA.
Current investors in HH2E include U.K.-based private equity firm Foresight Group Holdings Ltd., which holds a 55% stake, and HydrogenOne Capital Growth Plc, which has a minority interest. The involvement of BNP Paribas and CIBC in the financing of the project not only underscores the bankability of HH2E but also highlights the growing momentum behind green hydrogen as a cornerstone of Europe’s future energy landscape.
As Germany continues its race towards net-zero emissions, the success of projects like HH2E’s could have far-reaching implications, paving the way for other hydrogen ventures across Europe and solidifying the continent’s leadership in the global energy transition.
SOURCE: BNN Bloomberg
Featured Image: Credit: Angel Garcia/Bloomberg
