Case Studies

GREEN HYDROGEN CLIENT

 

Client Description: Green Hydrogen Client (GHC), using its proprietary technology, produces green hydrogen from various types of waste.  Through its mass production of green hydrogen, the company’s mission is to decarbonize the world by solving two crucial global crises: climate change and waste pollution.

Situation: Edge GreenTech enhances bankability of green hydrogen technology and commercial facility through insurance structure containing bespoke Performance Policy and a basket of specialty coverages.

Hurdles:  Due to inherent technology risk, lenders could suffer significant losses if the technology does not perform as expected; therefore, lenders were reluctant to find client’s project

  • Hurdle 1: Inherent technology risk - As is the case with any venture involving new technology, lenders were initially reluctant to fund GHC’s project.  Based on uncertainty surrounding inherent technology risks, lenders were wary to provide financial support.

  • Hurdle 2: Standard project risk - In addition to the inherent risks surrounding their breakthrough technology, GHC also faced standard project risks that accompany many first-time commercial projects.  Although the technology had been validated by several global institutions, in addition to having been demonstrated at a full-scale test site for seven years, concern around production capacity still existed.

Solutions: 

  • Solution 1: Bespoke Insurance Policy - Backed by an S&P AA-rated insurance company, Edge GreenTech facilitated the structuring of a bespoke Performance Insurance policy, with a total value of $80M, that mitigated project risks stemming from the green hydrogen technology.  By partnering in the risk assessment process, Edge identified potential risks and recommended a Performance Insurance solution that would effectively mitigate them.  GCH was thrilled with the coverage because it served as a financial backstop that would ease the concerns of potential investors.

  • Solution 2: Basket of traditional and specialty coverages - In addition to structuring the Performance Insurance policy, Edge GreenTech evaluated the entire GHC project from a commercial-risk standpoint.  Relying on its insurance expertise, EGT not only placed standard P&C coverages necessary for the project, but also arranged a basket of specialty coverages which further mitigated project risk in several key areas.

Results:

  • Result 1: Insured projected revenues - By structuring an insurance policy that transferred technology risk from the lender to the insurance company, EGT effectively guaranteed projected revenues, which, in turn, protected GHC’s debt obligations to its investors and lenders

  •  Result 2: Guaranteed production levels - As a result of the additional specialty insurance coverages EGT placed, the project was further risk mitigated from a commercial standpoint.  By placing coverages for technical, production, and facility risks, EGT helped guarantee the project’s minimum output.  In this instance, Edge GreenTech provided support for the company to proceed confidently without having to worry about the fallout of potential production failures.

  • Result 3: Enhanced bankability - Through the combination of results #1 and #2, the third result, enhanced bankability and attractiveness to investors, was achieved.  By guaranteeing projected revenues and minimum output levels, the coverages structured by Edge GreenTech provided the project with a needed level of predictability that appealed to investors.  Said guarantees risk mitigated GHC’s project and allowed them to approach the market, confident that they would secure required capital.