Paris-based fund Hy24 aims to invest in Mena hydrogen equipment-makers

The region is potentially one of the best places for green energy generation, executive says

A hydrogen tube trailer in Zaragoza, Spain. The gas is expected to become a critical fuel as economies and industries transition to a low-carbon world. Bloomberg

Hydrogen fund manager Hy24 is building a fund that will invest in equipment and technology companies serving in the hydrogen supply chain, including in the Mena region.

The Paris-based company hopes to raise an amount in the high “three-digit” million euros depending on market appetite, Pierre-Etienne Franc, its chief executive, told The National.

“The Middle East and North Africa is one of the places where you get the best resources for oil and gas but [is] also potentially one of the best places for green energy generation and the only way to unlock it is to convert it into [a] transportable form,” Mr Franc said.

“We will support any initiatives that those countries push for the development of hydrogen … because this is a place where you can get a lot of investment appetite."

Pierre-Etienne Franc, chief executive of Hy24, speaks at the Abu Dhabi Hydrogen Investment Forum at The Abu Dhabi Global Market. Ryan Lim / The National

There may be investments through the fund into companies that are going to localise production assets or manufacturing assets, Mr Franc said.

“It’s not going to be a centralised manufacturing strategy for electrolysers, it’s going to be multilocal."

Green hydrogen production involves a process in which an electrolyser uses electricity to separate water molecules into hydrogen and oxygen. This enables the capture and storage of hydrogen, which can then be used as a fuel source.

Hydrogen is expected to become a critical fuel as economies and industries transition to a low-carbon world.

French investment bank Natixis estimates investment in hydrogen will exceed $300 billion by 2030.

It comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas.

Companies have announced investments in the Mena region and its manufacturing capabilities and “we will be looking if we can be a part of that”, Mr Franc said.

Electrolyser manufacturing capacity reached nearly 11 gigawatts in 2022, according to the International Energy Agency.

The realisation of all the projects in the pipeline could lead to an installed electrolyser capacity of 170 gigawatts to 365 gigawatts by 2030, the agency has said.

Hy24, which is backed by large companies such as TotalEnergies and Baker Hughes, raised €2 billion ($2.1 billion) to invest in green hydrogen projects last year.

Last week, the fund, along with Singaporean sovereign wealth fund GIC, announced an equity investment of $115 million in green hydrogen company InterContinental Energy, which is developing a portfolio of green hydrogen projects in Australia and the Middle East.

Through the investment, Hy24 aims to “walk the talk” on its investment goals as InterContinental has “advanced” sites, agreements and projects, Mr Franc said.

The UAE, the Arab world’s second-largest economy, aims to achieve hydrogen production of 1.4 million tonnes annually by 2031. This is to increase to 15 million tonnes every year by 2050.

Oman, the largest non-Opec oil producer in the Middle East, aims to produce at least a million tonnes of renewable hydrogen a year by 2030 before stepping up capacity to 3.75 million tonnes by 2040 and 8.5 million by 2050.

Despite hydrogen’s growing popularity as a potential solution in hard-to-abate sectors such as steel manufacturing and shipping, critics have cast doubt over the feasibility of the energy source given high costs and the absence of a proper market for the commodity.

“If you're serious about climate, you have no choice [but] to shift grey to green hydrogen for the existing demand,” Mr Franc said.

“The only question is, what are the regulatory or the voluntary driving forces that move those customers to accept to shift? And the delta cost is not so huge because part of it is going to be paid by … policymakers,” he said.