CLIMATE TARGETS FOR CLEAN ENERGY & EV INFRASTRUCTURE: THE INVESTMENT CHALLENGE

The Essential Role Of Hydrogen

The government has laid out its plans to power the whole country entirely by clean electricity by 2035. But while electricity will be the primary source of energy, there remain many sectors where electrification is not suitable, making the supply of low carbon alternatives essential to achieving net zero targets1

Working with industry, the government is aiming for 5GW of low carbon hydrogen production capacity by 2030 for use across the economy.2 With virtually no low carbon hydrogen produced or used currently, particularly to supply energy, this will require rapid and significant scale up from where we are today.

Some applications for decarbonisation, such as industrial heating, may be virtually impossible without a supply of hydrogen, and many experts have argued that these are the cases where it should be prioritised, at least in the short term.

Yet there is also a significantly less talked about usage for hydrogen, that being as fuel cells in vehicles. In a hydrogen fuel cell, the clean burning compressed gas is converted first to electricity and then powers the bus, train or even aircraft or ship engine.3 So the likely mainstream solution may be hybrid vehicles that can either take electric power from a direct source, or generate it from hydrogen combustion.

Electric Vehicles And How To Charge Them

Transport is one of the highest emitting industries in the country, and while the exact mix is yet to be determined it is clear that grid-powered and hydrogenpowered EVs will rapidly replace fossil fuel engines. The sale of new petrol and diesel vehicles will be banned from 2030, and by 2035 all vehicles will have to run with zero

1 https://www.gov.uk/government/publications/netzero-strategy

2 As set out in the Government’s Ten Point Plan for a Green Industrial Revolution: https://www.gov.uk/ government/publications/the-ten-point-plan-for-agreen-industrial-revolution/title

3 Hydrogen trains are being rolled out throughout Europe, are part of EC and UK government policy – mainly in partnership with electric. Alstom launched the first hydrogen train in 2018. ZeroAvia is developing hydrogen fuelled aircraft to address this high-polluting of mode of transport emissions. This means that developing charging infrastructure is critical to the success of the EV transition.

However, recent figures from the Department of Transport have revealed that on average only 800 new chargers are being added to the public network per month – a that rate needs to increase to 3,130 a month (roughly 100 per day), if the government is to meet its target of 300,000 devices nationwide by 2030.4

Autumn 2022 saw a watershed moment in the UK EV market, with Britain’s millionth plug-in electric car registered. The EV infrastructure investment challenge to meet this rapid growth in demand is considerable. One key analyst reports that with more EVs coming to market, revenues from EV charging of passenger cars alone will surge to about £7 billion in the UK and £43 billion across Europe in 20305. Hardware and related fulfilment services will account for some 45% of this market through 2030 – around £3.15 billion. Financing techniques for decarbonisation

But how will this be paid for? The diversification of technology e.g. hydrogen fuel cells, can help make this challenge more surmountable, but it is clear publics funds alone will not be sufficient to create the clean and green infrastructure required to transition to net zero.6 It will require a combination of public and private sector finance. Smart specialist finance solutions, offered by private sector financiers, can

4 https://www.thisismoney.co.uk/money/electriccars/ article-11675107/UK-needs-increase-monthly-EVcharger-installation-288.html

5 https://www.adlittle.com/en/insights/ viewpoints/electric-vehicle-charging-uk-andeurope#:~:text=After%20many%20years%2C%20 the%20patience,a%20CAGR%20of%20 approximately%2025%25.

6 https://www.mckinsey.com/business-functions/ operations/our-insights/global-infrastructureinitiative/voices/leveraging-infrastructureinvestment-to-meet-net-zero-goals; https:// cleanenergynews.ihsmarkit.com/research-analysis/ cop26securing-financing-for-a-global-netzerotransition-by-2050.html make investment financially sustainable.

Smart financing is offered by specialist financiers who have a deep understanding and knowledge of the industry and relevant technology, and can enable the acquisition of technology and equipment for competitive advantage in a financially sustainable way, tailored to an organisation’s specific business and cash-flow needs. Specifically, smart finance makes investments possible and affordable by aligning costs with revenues.

Additionally, it offers three major advantages over generalist finance: technology expertise which understands real business outcomes; a breadth of financing solutions which can meet the organisation’s exact needs; and smooth, sophisticated processes which make the use of smart finance seamless and easy.

Conclusion

The drive for sustainable, decarbonising technologies remains strong despite economic and geopolitical pressures. While investment in electrification is growing in popularity in many industries, it is likely that a hybrid approach, combining electric with hydrogen, will be the most cost effective green strategy. This investment will be difficult for the public purse to bear alone, as a result, the role of specialist financiers is becoming more important for reaching sustainable goals, as they can help make the acquisition of the necessary technology more affordable, efficient and cash-flow friendly. https://new.siemens. com/uk/en/products/financing.html