Green finance and the economic feasibility of hydrogen projects

This paper studies the economic and financial feasibility analysis of hydrogen energy projects in China to identify appropriate green financing solutions for them. Cost-benefit and sensitivity analysis approaches were carried out for the three hydrogen projects in Guangdong province (two cases) and...

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Bibliographic Details
Published in:International journal of hydrogen energy 2022-07, Vol.47 (58), p.24511-24522
Main Authors: Taghizadeh-Hesary, Farhad, Li, Yanfei, Rasoulinezhad, Ehsan, Mortha, Aline, Long, Yan, Lan, Yu, Zhang, Zhehao, Li, Nan, Zhao, Xunwen, Wang, Yao
Format: Article
Language:English
Subjects:
de-risking tools
Economic feasibility
Green finance
Hydrogen project
Sensitivity analysis
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Summary:This paper studies the economic and financial feasibility analysis of hydrogen energy projects in China to identify appropriate green financing solutions for them. Cost-benefit and sensitivity analysis approaches were carried out for the three hydrogen projects in Guangdong province (two cases) and Jiang Xi province (one case). The hydrogen projects are more sensitive to borrowing interest rates and income tax rates, amongst other financing costs. The main reasons are the capital-intensive nature of green energy projects and the role of tax in the rate of return of green projects in the long term. The optimal weight of bank loans for the studied hydrogen projects in China was calculated at nearly 56%, meaning the weight of green bonds is approximately 44%. In other words, diversifying financing channels instead of just relying on bank loans is recommended to reduce the financing risk and capital cost. As a major policy implication, we recommended various de-risking tools, such as the green credit guarantee corporation, to attract private investments in hydrogen projects. •Green Financing solutions can enhance the feasibility of hydrogen projects.•Hydrogen projects' feasibility is highly sensitive to borrowing interest rates and income tax rates.•We calculated the optimal financing of 3 hydrogen projects in China using bank loans and green bonds.•Diversifying channels of financing instead of just relying on bank loans is recommended.•De-risking tools, such as the green credit guarantee corporation, attract private investments in hydrogen projects.
ISSN:0360-3199
1879-3487
DOI:10.1016/j.ijhydene.2022.01.111