Hydrogen developers caught between offtake flexibility and project bankability

Including termination clauses, price resets and rights of refusal in offtake agreements may limit the debt capacity a project can raise, banks warn at a recent conference

Flexibility in hydrogen purchase agreements may be attractive to offtakers but could have an impact on project bankability, cautioned bank representatives speaking at the recent World Hydrogen Mena conference. “For a bankability perspective, it is very easy—long-term contracts, at a fixed price, and a high-quality offtaker would be the ideal,” says Allan Baker, global head of power at France’s Societe Generale. He acknowledges that this is difficult in a nascent market, raising the UK’s contract-for-difference support scheme for low-carbon hydrogen production as an example of the kind of “soft support from government” that can underpin projects prior to the development of a traded market.