Clean Hydrogen: The Investment Case and Project Development Best Practices

Introduction

Interest in clean hydrogen production and utilization has never been more extensive in the transition to clean energy in the market. This training course will explain the business-focused perspective on clean hydrogen investment opportunities and project development considerations. It will examine how the growth of clean hydrogen will impact both the renewable power and natural gas industries by drawing on international examples. You will have a clearly explained, business-focused perspective on the competitive context of hydrogen across its various use cases. This course is intended for those seeking a time-effective, wide-ranging and independent perspective on the investment case for opportunities and project development best practices within the rapidly growing market for clean hydrogen.

Objectives

After the completion of this course, participants will be able to:

• Takeaway a raised comprehension of the fundamentals of investment case and project best practices within the hydrogen market
• Gain a clear value-based understanding of clean hydrogen market opportunities
• Demystify terminology, metrics, and other complexities you will encounter in clean hydrogen operations
• Discover the key project shaping and assessment issues for hydrogen projects
• Obtain and apply agile best practices and innovative methods throughout the development of the project
• Examine the key variables and assumptions that impact the investment case for hydrogen (illustrated using a basic investment model in Excel)

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS Teams/ClickMeeting.

Who Should Attend?

The course is ideal for participants working across hydrogen projects across the entire hydrogen value chain, working in commercial, technical, regulatory, policy, strategy-related, and planning functions. It is also aimed at personnel of organizations working across the production, transportation, and supply/sale of hydrogen in one or multiple geographies.

• Anyone interested in the green hydrogen business
• Project developers
• Equipment Manufacturers
• Oil, Gas, and Petrochemical sector companies
• IPPs and utilities
• Business Development and Product Development Managers
• Transport sector companies and port operators
• Policymakers and regulators
• Investors and lenders

Course Outline

Day 1: Shaping the Business Case for Hydrogen

Project Shaping (choosing the right project)

• What does good project shaping look like – understanding the context
• Understanding the ‘Roots of value’ and comparative advantage versus the competition
• The importance and delivery of good stakeholder alignment
• Establishing good project governance

Investment case shaping (technical, commercial, political, and organizational context)

Technical Context

Technology risk in clean hydrogen processes Comparing the ‘deliverability’ of competing for clean hydrogen solutions, in particular, ‘green’ vs. ‘blue Operating requirements for green and blue clean hydrogen Efficiency, equipment life, and other factors: from key metrics to business impacts

Commercial Context

Competition and Collaboration – Stakeholders – from Partners to Investors Co-ordination - Supply chain - End-to-end value chain considerations, including options for transporting hydrogen Consumers - Marketing - Competitive and market entry considerations Continuity - Scale-up and Sustainability - Options to enhance revenue and share costs - scaling and multiple business streams

Political Context

Government policy and regulatory provisions Market Creation - Price certainty - contract for differences (CFD) temporary adjustment payment (TAP) Access to cheaper finance - Regulated Asset Base - Grants Carbon Credits Planning applications - permits

Organizational Context

Strategic alignment Project governance process and front-end planning Project delivery capability Project development considerations; including location, access to land, grid connectivity, and supply chain complexity

Day 2: Develop the Investment Case for Hydrogen

Fundamentals of Investment Analysis - (choosing the right Investment Case)

Understanding economic analysis

 Introduction to the key economic indicators NPV, IRR, Payback, and Capital Efficiency How they are calculated and their use in investment case approval

Focusing on the assumptions - Using a ‘score’ model for assumptions - an approach based on the presenter's subject matter expertise of preparing and presenting investment cases Sanctioning the project - The final investment decision point Capex - The estimated capital costs of the project Operating Start-up - The plans for making the project operational Revenue - The expected net income stream for the project Endurance - The anticipated life-time of the project

Other Considerations

Assessing less tangible and intangible benefits Sensitivity and scenario analysis, and identifying the competitive advantage Life Cycle - Residual Value and Decommissioning Financing options- corporate, investment partners or banks Government and regulatory factors - grants, revenue support, and investment vehicles

Creating a base case and alternatives – Steam Methane Reforming with and without Carbon Capture at 50% and 90%+ Step by-step creation of a basic investment model for a clean hydrogen project Develop on a simple excel template a worked example.

Day 3: Project Development Best Practices and Hydrogen Characteristics Project Front End Planning (setting up the project to be done right)

What are the key elements of good front-end planning (reference the CII Project Definition Rating Index - PDRI)

The importance of project team development and functionality Assuring project cost, schedule, operability outcomes, and benefits Technology development Piloting technology development and scaling up Applying ‘Agile’ project practices as part of traditional ‘waterfall’ projects Supply Chain implications Accessing Infrastructure Securing Commercial Supplies and Offtakes, Political Support Local government permitting and as investment partners Regional/National regulation for creating and sustaining markets. Financing Learning from historical gas business development parallels Leveraging green investment opportunities.

Day 4: Basic examples of Hydrogen Project Development and Investment Cases Effective use of an investment model

Adapting the model for specific technical, business, political and organizational contexts Adaption of the basic investment model for a variety of purposes; to cover financing alternatives; to cover regulatory requirements - tax incentives and grants Test competitiveness by assessing the competitive advantage versus the alternatives and competitors Scenario and sensitivity analysis as part of assessing options and risk. Presenting the investment case for executive approval as part of the organisation's project and investment governance process. Assuring the quality of the investment case - what does a good funding request look like? Clean Hydrogen from Electrolysis of Renewable Energy in Refining Clean Ammonia based on Electrolysis from Hydrogen Clean Steel using Hydrogen

Day 5: Regional and Specific examples of Hydrogen Projects and Investments

The UK Hydrogen Strategy for 2030 – 5-10 GW H2. Large Scale Blue Hydrogen Large Scale Green Hydrogen Transportation – Buses Industrial – Whiskey Refining Transportation – Trucks Power from Gas Offshore v Onshore Hydrogen Middle East export of Green Ammonia Carbon Capture and Storage.