KKR's Demand-Driven Approach: Paving the Way for Green Hydrogen Investments
Key Ideas
- KKR emphasizes the importance of focusing on demand, not just supply, to make sound investments in the transition away from fossil fuels, particularly in green hydrogen.
- The high costs and inefficiency of producing green hydrogen have hindered investment, but KKR is optimistic about its potential and has formed a joint venture to produce green hydrogen in Spain.
- Green hydrogen is lauded for its ability to reduce emissions in sectors like steel and chemicals production, as well as for providing a solution for storing renewable power.
- By shifting the focus from supply to demand, KKR aims to drive major investments in the green hydrogen sector, leveraging Spain's low electricity prices from renewable sources.
During the BloombergNEF summit in London, Emmanuel Lagarrigue of KKR highlighted the necessity of concentrating on demand rather than just supply when making investments in the shift away from fossil fuels. Lagarrigue expressed that a supply-focused mindset has led to detrimental consequences, particularly in the neglect of green hydrogen investments. Despite the challenges posed by the high costs and inefficiency of green hydrogen production, KKR remains optimistic about the clean fuel's potential. Their joint venture with Ignis Energia in Spain aims to capitalize on the country's abundant renewable energy sources to make green hydrogen more economically viable. Green hydrogen, produced by using renewable electricity to split water into hydrogen and oxygen, is seen as a promising solution for reducing carbon emissions in various industries and providing a means to store renewable energy. While the industry has faced setbacks and cancellations of projects due to financial challenges, KKR's demand-driven strategy seeks to reshape the investment landscape for green hydrogen, offering hope for a more sustainable energy future.