Monday’s close of the Clean H2 Infra Fund on €2 billion was a milestone for French manager Hy24 – a joint venture between Ardian and FiveT Hydrogen – as well as the world’s first pure-play clean hydrogen fund.
The fund was launched last October with a target of €1.5 billion. It initially had a €1.8 billion hard-cap, but “as projects are getting bigger and new geographies come into play, increasing the hard-cap to €2 billion made sense from a market standpoint, and our LPs were sharing this vision,” a Hy24 spokesperson explained.
Industrial investors have provided 50 percent of commitments for the fund, which was backed by more than 50 LPs from 13 countries in the Americas, Europe and Asia. Air Liquide, VINCI Concessions, TotalEnergies, Plug Power, Chart Industries and Baker Hughes were the fund’s industrial anchor investors, while AXA, Crédit Agricole Assurances, CCR, Allianz, CDPQ and JBIC were its financial anchor investors.
The Clean H2 Infra Fund has already invested more than €310 million in three European companies: German Hy2gen AG, H2 Mobility Deutschland and Spanish Enàgas Renovable. Its strategy is to invest along the entire renewable hydrogen value chain across the globe.
Hy24 expects that the fund’s €2 billion of equity will allow the deployment of up to €20 billion in total capex. This will happen through co-investments, debt and access to subsidy programmes linked to the energy transition, notably for the decarbonisation of industry and transportation, the spokesperson told Infrastructure Investor.
The fund is an article 9 fund under European SFDR regulations.
Clean isn’t always green
Clean hydrogen technology is still in early development, but the spokesperson told Infrastructure Investor that Hy24 wants to avoid undue technological risks in the scale-up period, to keep initial capex investments streamlined. The choice of anchor investors supports its strategy, given clean hydrogen can be produced in three ways, and one of the fund’s anchor investors, Air Liquide, is utilising all three techniques.
One technique is so-called blue hydrogen, where the hydrogen is stripped from natural gas and CO2 emissions are captured; another uses renewable energy to produce hydrogen through electrolysis. This is green hydrogen. Clean hydrogen can also be produced through biogas reforming.
Further hydrogen experience is found with anchor investors VINCI Concessions and TotalEnergies. They agreed in January 2021 to design, develop, build and operate the French Masshylia project in which a 40MW electrolyser based on solar energy will generate five tonnes of green hydrogen a day.
When it comes to geographies, Europe’s clear targets on the development of the hydrogen economy are attractive, according to the Hy24 spokesperson. However, the spokesperson said “the clean hydrogen tax credit in the Inflation Reduction Act certainly creates a new playing field and is likely to translate into a boom in the momentum for hydrogen projects in the US, in which of course Hy24 is considering investment. Spurred by the generous tax credits, project developers might be faster, riskier, bolder”.
The comparative immaturity of the asset class goes some way to explain why the manager has given itself until 2030 to invest the fund, with expected deployment to be completed in six years.
“The fund is contemplating projects which are still under development and/or that may include several expansion phases. While the fund is currently taking early-position to support these projects and make sure they materialise, our deployment curve follows projects’ maturity and capex requirements. We need to have funding available for further expansion, in terms of capacity, but also to integrate other parts of the value chain,” the spokesperson said.