UK-based Sustainable Capital has launched a €100m financial instrument through its Orestes vehicle dedicated to scaling up Europe's hydrogen economy.
The company is interested in mobility solutions technologies already singled out by the European Union as part of ‘Important projects of common European interest' (IPCEIs), mostly focusing on companies active in hydrogen valleys in Estonia, Germany, and the Netherlands.
“These three countries have the best-organized approach to the market,” Scott Levy, founder of Sustainable Capital, told pv magazine. He explained that hydrogen companies in these countries present a lower risk profile.
Levy is not considering the United Kingdom for now, as there are no UK companies with the IPCEI designation. “The UK has been allocating so little money that I don't believe the allocated money will make a substantial difference in the commercialization of the technologies.”
Sustainable Capital and Orestes are focusing on companies in the pre-commercialization stage.
“We are not talking about start-ups nor companies about to go IPO. We are looking at Stage 2 and Stage 3, companies that passed their proof of concept; they are at the technical development level,” Levy stated.
At least 50% of the portfolio will focus on hydrogen-powered mobility. “The primary focus is on increasing the efficiency of mobility solutions because that is the one where we have the most advanced business cases: delivery of hydrogen infrastructure, hydrogen refilling stations, hydrogen-powered drones or hydrogen-powered vehicles,” said Levy.
Orestes is also looking at the “most advanced companies in the electrolyzer market,” the companies closest to commercialization. They discarded, for now, long-term investments like hydrogen transport.
The new instrument will tackle companies active in the green and turquoise hydrogen business. Turquoise hydrogen uses a hydrocarbon feedstock as the source of hydrogen atoms, performing pyrolysis in the absence of air and water to form hydrogen and solid carbon.
Orestes shortlisted two companies and one project for its initial investments: energy storage technologies-focused Skeleton, autonomous transportation company AuveTech, and the production facility in Emsland, Germany, which converted an Audi plant into a hydrogen delivery process.
“These companies are on our initial list – but, of course, not exclusive – because they have demonstrable product deliveries and, as such, a relatively shorter roadmap to commercialization,” said Levy.
Orestes also considered a series of ESG metrics, the companies' balance sheets, and business ratios. The portfolio is classified as Article 9 and is Orestes' third offering.
“Investment in hydrogen is going to be bigger than the space race. There are billions and trillions on the budget. The numbers are ridiculous,” added Levy.
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