UK-based development start-up has inked an agreement which it claims could set the stage for a £25bn ($33.1bn) bond raise to fund a 12GW green hydrogen project in Mozambique.
Jearrard Energy Resources (JER) today (April 15) said it signed a Memorandum of Understanding (MOU) with Australian and Luxembourg climate financiers Carbon Capital Corporation (CCC) and Green Bond Corporation (GBC) to begin financing the development.
The mega project, planned for the Inhambane region, intends to use only solar energy to power 12GW of electrolysis to produce over 4,000 tonnes of “cost-competitive” green hydrogen per day. Water is planned to be sourced from a desalination plant and connected to the electrolysis facility through pipes.
The project’s output is intended to be exported via long-distance pipelines to Europe and Asia-Pacific – with JER planning to establish gas terminals.
H2 View understands the company plans to build out the development in 25MW phases, with first hydrogen production expected in 2028.
JER, which launched in 2021, has told H2 View that it has already undertaken feasibility and engineering studies for the project. The theory behind the development is to overcome the high per kilogramme green hydrogen cost concerns by delivering production at scale.
The company also claims to have been granted rights of use for around 10,000 hectares of land from Mozambique’s government.
It remains unclear whether JER has commissioned any projects to date.
In today’s cautious investment climate, announcements of this scale have become increasingly rare, with developers and financiers favouring smaller, staged projects that can more easily secure offtake and government backing.
However, with the CCC-GBC MOU now in place, JER says it can offer early investors a “first-mover advantage” in the project, “setting the stage for a potential £25bn bond raise” to fund it.
CCC describes itself as a “leader” in carbon financing and facilitates “large-scale carbon projects” globally by applying “stackable value methodologies that allow projects to generate multiple environmental and social co-benefits.” CCC provides no publicly available details on past projects it has supported.
GBC says it works with clients to gain capital from international debt and equity capital markets for projects that “work towards decarbonising local, national, regional and global economies.” Based on the company’s website, the largest individual raise it has supported for a project is $2bn.
“We now have a clear roadmap to finance and execute one of the largest green hydrogen projects on the planet,” said JER CEO, Marcus Allington.
Editor’s analysis: project appears out of sync with green hydrogen realities
Projects of this scale are becoming increasingly irregular in green hydrogen – particularly in the current landscape marked by investor scrutiny.
JER’s 12GW project would outsize the world’s current largest green hydrogen development NEOM more than five-fold.
The 2.2GW NEOM project reached a $8.4bn financial close through an equally unconventional structure.
$6.1bn in non-recourse financing was provided by 23 local, regional and international banks and institutions. Furthermore, the financing structure was certified by S&P Global as adhering to green loan principles, making it one of the largest project financings under the green loan framework.
And one of the biggest irregularities in the deal is Air Product’s role as the sole 30-year offtaker of the plant.
If it succeeds, the Mozambique project could be a shot in the arm for hydrogen globally, but just how a project development newcomer like JER – even with the support of two financiers – can make the economics of such a development stack up remains notably unclear.
Furthermore, while Mozambique’s vast solar potential makes it an attractive candidate for renewables, the country’s limited grid infrastructure and recent political unrest may pose challenges for project execution.
