German green hydrogen project developer HH2E has filed for insolvency after losing support from its majority owner, Foresight Group, following a failure to secure finance for its 1GW Lubmin project.
HH2E had originally started out with a “franchise” model for development, where different investors could buy into special purpose vehicles for each individual project.
However, it had agreed to restructure into a more traditional project developer and keep all developments under the same company and investors, after the investment company Foresight bought a 55% stake in the firm.
Foresight had invested €22.3m into HH2E in total, which had been used to secure orders for equipment and develop the sites for Lubmin and a second project, Thierbach.
However, this was not enough to bring the first 100MW phase of Lubmin — scheduled to begin construction in late 2023 prior to Foresight’s takeover — to a final investment decision without external capital.
As such, HH2E had in August started to work with French bank BNP Paribas to organise a debt package from multiple lenders, while a separate equity fundraising round was being arranged by the Canadian Imperial Bank of Commerce — both of which were expected to conclude in the final quarter of 2024.
While HH2E was rumoured to be in talks with Norwegian oil and gas giant Equinor for €200m in equity investment and had already signed a construction contract in August, the entire funding round appears to have fallen through.
“Due to the nascency of the green hydrogen sector and challenging current global funding environment, the process has not led to a financing partner being secured within the required timeframe and at the required scale, and there is now material uncertainty over whether adequate funding will be achieved,” Foresight said in a press statement.
The investor had considered providing extra capital to HH2E. “However, the Board does not believe that it is appropriate to do so at this time, reflecting the Company's approach to portfolio construction, risk and capital allocation in the context of the current market environment.”
As such, HH2E is now required under German law to file for insolvency, although as a shareholder, Foresight cannot expect to recover any of the funding it has invested in the company.
The project developer has, however, announced that it has applied to enter “self-administation”, ie, restructuring in order to pay back external creditors without bringing in an external company to manage this process, while seeking a new investor.
“We remain committed to maintaining continuity and stability in our operations as we work toward a long-term solution,” said Alexander Voigt, HH2E CEO. “I am convinced we will soon find a strategic partner who shares our passion for green energy and can support [HH2E’s] vision.”
