According to the latest survey by the German Alternative Investments Association (BAI), around 57% of the 110 institutional investors surveyed are planning to expand their current exposure to infrastructure equity.
In addition to the sectors that have been established for years – such as wind energy or photovoltaics – plants for the production, storage and distribution of hydrogen produced from renewable energies (H2) or derivatives derived from it (e.g. ammonia (NH3)) are also becoming the focus of investment. There is no doubt that the use of this energy source obtained from electrolysis can help to reduce CO₂ emissions from fossil sources, e.g. in industrial production processes, but also in the transport sector.
Major lighthouse projects, such as the construction of a direct reduction plant planned by thyssenkrupp Steel Europe AG in Duisburg for the production of steel with green electricity and hydrogen or the ambitions of RWE AG to build a 100 MW electrolyser in Eemshaven in the Netherlands, are bringing dynamism to the discussion about the energy transition.
Infrastructure funds looking for suitable investments
Some infrastructure fund products focus on this sector – to varying degrees of intensity. A few of these are specialized thematic funds that exclusively allocate capital to such investments. The others are planning hydrogen investments as an addition to a portfolio that can be assigned to the heading "Energy Transition".
From an investor's perspective, the following questions arise in connection with investment screening, among others:
- How are production and customer markets developing, which will have an important influence on the future price of "green hydrogen"?
- How plannable is the profitability of such plants (in some cases initially supported by public subsidies) in terms of performance and current income?
- How can the technological speed of innovation be estimated, e.g. of electrolyzers, which is particularly important for the exit of a plant
Future demand as an important price-influencing feature
In particular, there are different forecasts for the future development of demand for hydrogen. In a study, the Institute of Energy Economics at the University of Cologne gGmbH (EWI) evaluated and compared various forecasts, including those of the National Hydrogen Council and the Fraunhofer Institute for Systems and Innovation Research by sector.
According to the report, estimates of consumption across all sectors range from 20 to 84 TWh/a in 2030 and from 227 to 842 TWh/a in 2045.
From an investor's point of view, the different assumptions within the individual sectors, such as in the process sectors of iron and steel production, are particularly interesting. Here, the estimates for 2045 differ significantly (38 to 75 TWh/a), as well as for electricity generation from hydrogen (137 to 200 MWh/a).
An outlook on road-based freight transport (3.5 t trucks > ) is doubly interesting. On the one hand, truck manufacturers must develop suitable vehicles that are ready for the market and scale them economically in production, and on the other hand, an (investment-intensive) network of filling stations must be maintained. According to Hydrogen Mobility Europe (H2ME), there are currently about 86 hydrogen filling stations in Germany, about 163 in Europe and another 63 are to be opened in the future.
The future demand forecasts in the transport sector for 2030 and 2045 are also far apart (0 to 18 TWh/a and 0 to 123 TWh/a, respectively). From the point of view of investors, this is associated with a certain uncertainty as to whether the use of the technology will prevail or be worthwhile.
Economic scaling necessary during ramp-up
In order to achieve more investment security, the pilot projects that make a lot of sense from a climate protection point of view must pass the market ramp-up, i.e. the next scaling stages for commercial use must be achieved.
An important prerequisite for this is also that hydrogen can be transported from the producer to the consumer. A significant milestone could be the hydrogen core network, which was approved by the Federal Network Agency in October 2024 at the request of the transmission system operators. The planned total length of the network is approx. 9,040 km and 56% is to consist of repurposed natural gas pipelines. The investment costs amount to approx. 18.9 billion euros and are to be financed by the private sector. The hydrogen core network is intended to connect central potential hydrogen sites, e.g. large industrial centres, power plants, storage facilities as well as generation plants and import corridors.
The current plans envisage that the implementation of the grid expansion measures will be completed by 2032.
All in all, the extent to which the hydrogen ramp-up in Germany and Europe will result in meaningful investment opportunities for investors depends on many factors that cannot yet be assessed with a high degree of certainty from today's perspective.
