LONDON, UK: Octopus Renewables Infrastructure Trust (ORIT) has agreed to invest up to £5m into HYRO Energy Limited, a new joint venture between ORIT (co-invested alongside another fund managed by Octopus Energy Generation, Sky (ORI SCSp)) and Renewable Energy Systems (RES).
HYRO Energy has been established to develop green hydrogen electrolysis projects in England, Scotland and Wales for industrial offtake/consumption.
HYRO intends to develop c.700MW of green hydrogen electrolyser capacity by 2030. HYRO will leverage the decades of renewable development experience of RES and the investment capabilities of ORIT and Sky, along with Octopus Energy Generation’s strong relationships with potential industrial end-users of the green hydrogen, and their ability to supply green electricity.
HYRO’s strategy is aligned with the UK’s wider decarbonisation ambitions, with the UK Government targeting the construction of 10 GW of low carbon hydrogen capacity by 2030, with at least 5GW of that target being green.
HYRO’s three initial pipeline projects totalling c.30MW of electrolyser capacity have been included on the UK Government’s shortlist for the first round of allocations to receive ongoing revenue support under the Hydrogen Production Business Model, which aims to bridge the operating cost gap between low carbon hydrogen and high carbon fuels. The Department for Energy Security and Net Zero aims to award contracts to the successful projects in Q4 2023.
ORIT and Sky, which are investing on the same terms, will each own 25% of HYRO and will have the exclusive rights to provide further development funding beyond each fund’s initial £5m commitment, as well as preferential rights to fund the construction of the electrolyser projects.
Phil Austin, Chairman of Octopus Renewables Infrastructure Trust plc, commented: “This partnership with experienced renewables company RES is our first investment into the green hydrogen sector – an exciting, vital and fast-growing part of the net zero economy.
It adds further technological diversification and provides the potential to significantly contribute to future decarbonisation and the reduction of greenhouse gases in hard-to-electrify industries where green hydrogen will be the fuel of the future. The investment marks ORIT’s fourth developer investment and provides even more value for the future expansion of our proprietary pipeline.”
Chris Gaydon, Investment Director at Octopus Energy Generation commented: “Green hydrogen is expected to become a critical part of the energy transition. Whilst electrification should be the preferred solution to decarbonisation wherever possible, there are some sectors of the economy, including heavy industry, where this is not always possible, and green hydrogen has a huge role to play here.”
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