HSBC's UK Arm Partners with Hygen for Green Hydrogen Project Financing
Key Ideas
- HSBC UK has finalized a multi-million pound funding deal to support Hygen, a green hydrogen project developer based in Oxford, for capacity expansion at its Birmingham production site.
- Hygen aims to scale up to 500MW of low-carbon hydrogen production capacity in the UK and is part of HydraB, which includes transport-focused companies like Ryze and Wrightbus, providing a route to market.
- While the deal signifies progress in green hydrogen financing, the sector is still considered risky for many lenders due to cost and offtake pressures.
The UK arm of HSBC has made a significant move by signing its first deal to finance a green hydrogen project developer. This deal involves providing funding to Hygen, a company based in Oxford, to support the expansion of its Birmingham production site and other projects in the UK. Hygen has ambitious plans to increase its low-carbon hydrogen production capacity to 500MW in the country. What makes Hygen an attractive investment is its association with HydraB, a holding company that includes Ryze and Wrightbus, known for their focus on hydrogen transportation solutions. This partnership provides Hygen with a clear pathway to reach the market. Despite this positive development, the article highlights that the green hydrogen sector still poses risks for lenders, mainly due to the high costs involved and uncertainties about offtake. While HSBC's move is commendable, it also sheds light on the challenges that the industry faces in attracting financial support for transitioning to green hydrogen production.