The Climate Fund has decided to provide a 10 million euro capital loan to P2X Solutions Oy for the construction of a green hydrogen production plant. The capital loan includes an additional incentive tied to emission reductions.
Combating climate change requires accelerating the energy transformation, in which the hydrogen economy plays a vital role. Green hydrogen produced with renewable energy is expected to meet a quarter of global energy needs by 2050. A widespread increase in demand for hydrogen is forecast for the 2020s, and transitioning to a hydrogen economy will not be possible without sufficient hydrogen production. P2X Solutions will build an industrial-scale green hydrogen production plant in Finland. This plant will use water electrolysis to produce hydrogen from renewable electricity and also process the hydrogen into synthetic fuels, such as synthetic methane.
The cumulative emission reduction potential created by P2X will be approximately 2.7 million CO2e tonnes over a period of ten years, if the company’s scale-up plans are realised. The annual emission reduction potential of the Climate Fund’s investment target, the company’s first 20 MW green hydrogen production plant, is estimated at roughly 35 ktCO2e annually. If the plan is realised, it will also have a positive impact on the development of the overall Finnish hydrogen market and enable Finland to keep pace with European hydrogen development.
The hydrogen economy requires significant financing in the early stages of production and infrastructure construction. P2X’s solution is no different and the company has raised an extensive financing base from both the private and public sectors. The company aims for total financing of approximately 70 million euro in its launch phase. The Ministry of Economic Affairs and Employment has granted the company 25,8 million euro in energy aid for the construction of the production plant, and in December P2X announced it has raised 20 million euros of equity.
The CEO of P2X Solutions, Herkko Plit, was very happy with the Climate Fund’s decision: ”The state plays a significant role in the creation of a hydrogen economy in Finland. The 10 million euro capital loan from the Climate Fund and the 25,8 million euro in energy aid from the Ministry of Economic Affairs and Employment, which was a requirement for the capital loan, sends us a strong message of the state’s belief in our operations and ambition to achieve a cleaner future. Building our first green hydrogen production plant is an important step towards emission reductions and a carbon-neutral Finland.”
Climate Fund CEO Paula Laine provided some background for the hydrogen-economy-promoting investment decision: “Green hydrogen offers an emission-free alternative for areas that are challenging to electrify, such as heavy transport and industry. P2X has succeeded in putting together a credible financing package for launching its production activities. The Climate Fund’s financing terms include a specific sustainability incentive, with a conversion term that rewards P2X according to the growth in agreed hydrogen production volumes.”
P2X Solutions is a company established in 2020 which aims to be the first industrial producer and distributor of green hydrogen for industry and transport in Finland. The company is preparing the construction of an industrial-scale green hydrogen production plant. The production plant will utilise Power-to-X technology, which produces green hydrogen from renewable electricity through water electrolysis. The company’s first 20 MW plant will produce hydrogen for industrial use and also aims to open the market for the use of hydrogen in the transportation sector in Finland. In industrial use, green hydrogen can replace grey hydrogen produced with fossil fuel. Hydrogen and carbon dioxide recovered from industrial processes can additionally be refined into synthetic fuels to replace fossil transport fuels.
The solution is estimated to entail a cumulative emission reduction potential of 2.7 Mt CO2e over ten years, with the first production plant estimated to achieve annual emission reductions of 35 ktCO2e. It has major potential especially in energy solutions for heavy transport. The project also promotes the creation of a hydrogen market in Finland and the development of new hydrogen solutions at various stages of the value chain. Competitive wind power and green hydrogen will also create new export opportunities for Finland on the European energy market.
According to the company, the Climate Fund’s investment will have a direct and significant impact on achieving the emission reductions and an accelerating effect on the development of the whole Finnish hydrogen market. The Climate Fund’s EUR 10 million funding will be used to cover the investment requirements for the first green hydrogen production plant.
The interest on the Climate Fund’s capital loan is market based and priced according to the EU’s reference interest rate table. In other words, the Climate Fund is entitled to the market rate on its capital loan. The capital loan includes a conversion right according to which the Climate Fund has the right to convert part or all of the loan to shares in P2X Solutions Oy. The terms of the capital loan also include an emission reduction incentive. According to the incentive, achieving the company’s hydrogen production targets and the efficient use of waste heat generated in the production process will have a favourable effect on the company’s conversion terms.
Paula Laine, CEO, the Finnish Climate Fund, tel. +358 40 535 9911, email@example.com
Herkko Plit, CEO, P2X Solutions, tel. +358 50 4620788, firstname.lastname@example.org
The Finnish Climate Fund is a Finnish state-owned special-assignment company. Its operations focus on combating climate change, boosting low-carbon industry and promoting digitalisation. The Climate Fund invests in large-scale projects in which the fund’s investment is crucial to enable the project’s realisation in the first place, on a larger scale or earlier than it would with funding from elsewhere.
P2X Solutions is a Finnish pioneer in green hydrogen and Power-to-X technology. The company’s vision is to produce green hydrogen and refine it into synthetic fuel with cost-effective methods. P2X Solutions promotes the creation of a hydrogen market comprehensively and innovatively in all segments of the value chain.