2024-03-27 14:31:47
Hy24 is a French investment company launched in 2021, entirely dedicated to the deployment of the decarbonized hydrogen economy.
Hy24which is the result of a joint venture between Ardian[1]a world leader in private investment, and industrial expert FiveT Hydrogen[2], today manages the largest global fund dedicated to the development of the infrastructure that the sector needs to structure itself. By investing, in France and internationally, in large-scale projects and technologies with a lasting impact on industry and society, the company wants to participate in the deployment of hydrogen, an essential vector of the energy transition. , thus aligning with France’s ambition and its revised national hydrogen strategy, soon to be ratified.
Pierre-Germain Marlier, Investment Director of Hy24’s infrastructure team, explained to Techniques de l’Ingénieur the investment strategy implemented by Hy24 to source and invest in large-scale hydrogen projects .
What is Hy24’s ambition?
Pierre-Germain Marlier : Hy24 is a fund manager which is currently deploying a fund dedicated to hydrogen infrastructure which amounts to 2 billion euros, and which is currently raising a second fund dedicated to hydrogen equipment and technologies. The infrastructure fund invests in companies and projects producing hydrogen and its derivatives (sustainable fuels, ammonia), transport, hydrogen distribution, up to end applications such as green steel production and mobility heavy (investment in networks of hydrogen stations or captive fleets for example).
The equipment fund will support the structuring of companies which will have to produce at scale the technologies we need to carry out infrastructure projects.
The fund dedicated to infrastructure, which is part of my scope, aims to support projects that make sense for Hy24, for our investors (LPs), for the energy transition, and for customers. Our objective is to support these industrial projects for a minimum period of seven to ten years, and they are intended to continue their operation for several decades after our exit. Our interest is therefore that these projects generate long-term value, even after our exit. This is why we target assets that will have strategic value and increased competitiveness, even ten years from now.
How can this strategic value that you mention materialize?
This notion of strategic value can take several forms: companies and projects have preferential access to a renewable resource, to the electricity distribution network, to distribution networks such as pipelines to supply customers, but also proximity to customers, ports, but also the solidity and experience of the management teams… These are all these factors which will guide our investment decisions, in addition to the financial criteria, of course, and the criteria for reducing CO2 emissions since our funds are aligned with the European taxonomy, and categorized Art 9 of the SFDR regulations.
How do you position your activity in relation to national strategies developed around hydrogen?
On the one hand, we cannot wait until strategies are fully published and executed before taking action. But on the other hand, it is difficult for us to position ourselves on assets as long as there is not a certain stability, at the strategic and regulatory level, and in terms of the impulses given by governments.
Take for example accounting for renewable energy. We have waited for years for Europe to clearly publish the rules on how to source renewable electricity so that the hydrogen we produce complies with European regulations.
We anticipated, and started working on certain projects, although with some uncertainty regarding this regulatory scope.
At Hy24, we have teams dedicated to regulatory monitoring to implement it in projects and to be able to act and invest while taking into account the regulatory agenda.
Afterwards, as in all projects relating to heavy industry, we are obliged to work in advance of the phase, because it often takes several years between the initial idea and the actual realization of these projects.
What is specific about the French hydrogen strategy?
The French strategy on hydrogen is specific to the role that is currently given to nuclear power. The challenge today is to know whether nuclear power will become contingent for the development of the hydrogen sector. Today, it is clear that nuclear power has and will have a key role in the French energy mix. The question that will arise is that of competitiveness, particularly in relation to our European neighbors.
We see that the government is pushing to make nuclear power an energy vector for the production of carbon-free hydrogen. As an investor, we take into account the different options for producing carbon-free or low-carbon hydrogen, without ignoring the costs inherent to the chosen solution, and the implementation times. Nuclear power in France is not a strategy, it is one of the solutions in the mix, with immense decarbonization potential, but we will not be able to rely solely on this solution. France’s strategy cannot therefore only be summed up as a relaunch of nuclear power but must plan to accelerate the deployment of renewables and consider importing a part of its energy from countries where green energies are the most competitive ( Northern and Southern Europe, countries around the Mediterranean).
This is not a discovery: there are countries where wind and solar power are more competitive than in France, and hydrogen makes it possible to transport these green energies across the oceans, particularly for the needs of Europe. Having the possibility of importing (and the associated infrastructure) seems healthy to me, even when we have significant domestic ambitions. This can also allow France, beyond its domestic demand, to seek growth, by positioning itself both as a producer but also as a gateway for imported renewables to the rest of Europe. Ultimately, the goal is to have the choice, a mix of options that can be adapted according to different market conditions and for the needs of the energy transition.
Can white hydrogen become a solution for countries, like France, which have underground reserves?
We look at everything that happens around white hydrogen with the same approach as for the rest, that is to say by keeping as many options as possible open. We do not draw hasty conclusions on the costs of white hydrogen versus hydrogen produced with electricity from nuclear and renewables. We must therefore look, study, try to understand what volumes are involved. Is it a fossil resource but decarbonized, renewable over time? We are currently investigating these issues, with no final verdict at this time.
One of the questions concerns in particular the degree of purity of the hydrogen that can be extracted from the ground and ultimately, the cost associated with the extraction and purification of white hydrogen.
The environmental impact and social acceptability of extractive activity is also an important issue that must be addressed.
Do you think the current international context is conducive to the development of an industrial decarbonized hydrogen sector?
The current period seems very important to me, it is today that we must be able to demonstrate that we can use hydrogen on a large scale in different market segments and key sectors such as steel or refining by example. With the conflict in Ukraine, Europe and France have realized that our dependence on Russian gas is undermining our sovereignty. Without integrating environmental issues into our strategy to replace Russian gas, the risk is to create a new dependence, on LNG for example, which we will import in greater quantities from the Middle East or the United States, and to slow down our transition to renewable energies, particularly in the form of hydrogen. It is in this sense that the current period is decisive for making hydrogen a competitive energy vector, which is reshuffling the cards of the global geopolitical game.
On the infrastructure aspect, could you give us an example of an investment made by Hy24?
We recently invested in a company called H2 Green Steel, which is developing an industrial-scale green steelworks in Sweden, which will be operational at the end of 2026. It will produce more than 5 million tonnes of “green” steel per year. The latter will be 90% carbon-free compared to that which is currently produced by coal-based blast furnaces.
This new “integrated” steel production site will run entirely on green hydrogen that H2 Green Steel can produce thanks to the abundant resources available in Sweden. The country has inexpensive electricity and hydroelectricity makes it possible to compensate for the intermittency of renewable energies such as solar and wind. These two factors make it possible to set up factories of this type in this location, also considering that Sweden has numerous iron mines on its soil.
Also, the demand for green steel, particularly coming from European automotive industrial players, is increasingly strong. To meet their production objectives for Net Zero vehicles (scope 3), manufacturers must source green steel. It is the combination of all these factors which made it possible to finance this factory project, for more than 5 billion euros.
Front page image: Pierre-Germain Marlier, HY 24. Copyright Geraldine Aresteanu
[1] Ardian
[2] FiveT Hydrogen
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