Green Hydrogen Offtake Agreements
Hydrogen offtake agreements that balance the interests of producers, consumers, funders and investors alike will be critical to the bankability and commercial viability of individual projects and the sector as a whole.
Offtake agreements for early-stage hydrogen projects require a high degree of trust and risk-sharing between producers and buyers.
Parties need to agree on a regime for certifying the ‘green’ origin of the hydrogen traded under an offtake agreement and mitigate the risk of greenwashing with clear requirements specifying relevant ‘green’ certifications required under an offtake agreement.
Offtake agreements to regulate the technical specifications and standards ensuring the hydrogen can comply with the off-taker’s requirements.
Creditworthiness of the parties to an offtake agreement crucial to the investment and bankability assessment of a project.
Risk allocation in a hydrogen offtake agreement to ensure risks such as force majeure, changes in laws or regulations and the hydrogen standards to meet international bankability standards
In the absence of a widely accepted market practice for pricing hydrogen, parties to hydrogen offtake agreements will need to consider the pricing model that works most effectively for their specific project.
Finance for the Green Economy
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