Why Green Hydrogen Struggles to Attract Eager Investors

2024-12-18 investment

Copenhagen, Wednesday, 18 December 2024.
Investors shy away from green hydrogen due to uncertain returns, revealing challenges in future energy ventures. Understanding these hesitations is crucial for advancing sustainable energy solutions.

Current Investment Climate

I’ve been analyzing recent developments in the green hydrogen sector, and the picture is quite mixed. While we’re seeing some major players take bold steps forward, like BP’s recent final investment decision on their 100MW Lingen plant in Germany [3][4], many investors remain cautious. The Lingen facility, which will produce up to 11,000 tonnes of green hydrogen annually when commissioned in 2027 [3], represents a rare example of confident investment in this space. This project received substantial support, with €125 million in combined funding from federal and state governments [2], highlighting how public backing often needs to catalyze private investment.

Investment Barriers

As a researcher in this field, I’ve observed that the primary hurdle is the investment structure itself. According to researcher Oliver Bugge Hunt, ‘Green hydrogen does not have an attractive investment structure’ [1]. This sentiment is reflected in current market dynamics where we’re seeing that even promising projects require significant government support to move forward. For instance, in emerging markets like India, achieving viable green hydrogen production requires a 75/2% average reduction in electrolyzer prices and a 26/2% improvement in efficiency [5].

Global Development Perspective

I find it fascinating how different regions are approaching this challenge. Take Mauritania, for example, where the EU is actively supporting green hydrogen sector development through infrastructure projects and vocational training [6]. This international cooperation model might offer valuable lessons for other markets. The key to unlocking investor confidence appears to lie in creating more predictable returns while reducing initial capital risks.

Bronnen

power-to-x investment hesitation