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Finding finance for hydrogen-powered vessels
Obtaining finance for hydrogen-fuelled vessels is becoming easier, with more options available if a project can demonstrate revenue generation and low capex
Owners planning to order newbuild vessels ready to run on hydrogen need to source grants, funding and finance, which is readily available if projects can demonstrate profitability in the long term, according to panellists at Riviera’s Maritime Hybrid, Electric & Hydrogen Fuel Cell Conference.
Danske Bank senior manager of equity sales, Florian Melcher, said shipowners can consider equity-backed finance if they are building a fleet of vessels, or bank finance if the project is guaranteed to make money.
"Capital markets have an appetite for renewable energy, but not for companies that cannot show their future earnings," he said. Companies looking for bank finance need to demonstrate fair value, expected revenues and show there is a secondhand market for the object being financed.
Danske Bank senior account manager Tore Lundemo said leasing options could also be considered if there are agreements in place for long-term vessel charters and a ready fuel supply. "We need infrastructure in place to have the confidence to invest in hydrogen-powered vessels," he explained.
LH2 Shipping managing director Ivan Østvik provided a business case for hydrogen as an alternative fuel for newbuild vessels, using the world’s first liquid hydrogen-powered vessel Hydra, which started operating in Norway in 2023, as an example.
He agreed business cases are important when securing finance. "We needed a well-to-wake focus, and the green hydrogen supply," he said. Designing the ship and selecting the fuel depends on availability, technology, bunkering time and places, distance to sail and cost breakdowns.
Technology assessed included proton-exchange membrane fuel cells, solid oxide fuel cells, dual-fuel engines and generator sets. Fuel assessment includes storage requirements, energy density, availability, bunkering time, toxicity and safety considerations, said Mr Østvik. "PEM fuel cells are a good technology for some shipping applications."
Hydrogen Europe director for regulatory and market intelligence Grzegorz Pawelec considered the latest regulations and funding from the European Union (EU) in his presentation. He outlined financial sources for clean-hydrogen partnerships and demonstration projects, including bank auctions, innovation funds and FuelEU Maritime.
Mr Pawelec said the latest EU funding series opens in December 2024 and closes in February 2025 for fuel production, bunkering and supply for maritime applications. There are already pilot projects, with EU funding underway for newbuilds, and retrofits for electric power, liquid hydrogen and bioLNG on cruise and cargo ships.
Riviera’s Maritime Hybrid, Electric & Hydrogen Fuel Cell Conference took place in Bergen, Norway on 29-31 October 2024 and looked at key trends, regulations, class rules and the development of zero-emissions ecosystems.
Riviera’s Maritime Decarbonization Conference, Americas will be held in Houston, Texas, 4 December 2024. Click here for program information, tickets, or to register your interest in this industry-leading event.
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