HH2E developed production sites for green energy, in particular hydrogen, leveraging renewable energy sourced from solar and wind farms. Its business model focused on industrial sites in Germany with long-term off-take agreements for large customers.
Prior to investment decisions, there is a need for an independent market verification of the price and volume assumptions for hydrogen and the relevant market factors. Similarly, a verification of renewable energy procurement agreements/assumptions is required.
E-Bridge offered to carry out a market assessment and due diligence for hydrogen off-take on German industrial sites. The assessment was carried out in two separate projects:
- Market verification and benchmarking as part of the Pre-Investment Decision Phase (immediately)
- Project specific market due diligence as part of the Final-Investment Decision Phase (in due time prior FID)
At the initial PID phase, we kept the report short and focused on a commentary on the price and volume assumptions with some supporting evidence. At the FID stage, we performed market due diligence. We used existing data and market insights rather than a new exploration of the market and our focus was on HH2E’s projects and products, not on a broad view of German energy market dynamics. We collected and reviewed publicly available data and information, performed an analysis of the status quo and the expected development of the hydrogen economy in the German industrial sector.
Within the two-step market Due Diligence, we reviewed on the revenue side price and volume assumptions as well as relevant market factors including procurement contracts for electricity from renewable energies. We analysed available price/volume agreements and customer data and benchmarked them to market levels. An assessment of the historical and future development of the cost price development of renewable hydrogen including THG certificates was performed. The Due Diligence process comprised an assessment of regulatory issues and risks around the production of renewable hydrogen, a preparation of the identified Red Flags and risks as well as the preparation of the Due Diligence report and feedback discussions with HH2E. Finally, the identified commercial risks and opportunities for HH2E’s hydrogen production and off-take were highlighted and presented.