Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established?

Last week (04/06), PwC published a survey of 36 active players in the Power-to-X market, highlighting the critical role of financing. While 50% of respondents expect to reach FID within two years, industry experts deem this timeline unrealistic under current conditions with lacking infrastructure, uncertain regulatory frameworks, and complex value chain management.

Potential demand and potential supply for of greener alternatives like green hydrogen, ammonia, and methanol are strong, with both sides eager to transition from conventional fuels. Denmark, with its favorable geography and expertise in renewable energy, is well-positioned for this transition. However, the shift requires a complex transformation of the energy sector, necessitating a robust regulatory framework and transparent business practices to attract investors and unlock Power-to-X’s potential.

The business case development is further complicated by the complex nature of the energy market where the fundamentals shift according to the energy transition highly impacting the feasibility of Power-to-X.

Investors require solid business plans with “Proof-of-Concept,” long-term agreements such as PPAs, and trusted management to ensure stable operations. Power-to-X’s success hinges on the supply of renewable power, determining the hydrogen’s “greenness”, production profile, and cost of operation.
Denmark’s energy mix supports high capture rates especially with PV, as seen with European Energy’s plant in Kassø, though operational hours are a trade-off. Additionally, electrolysers require a substantial water supply, restricting potential plant locations.

Fact Box:

  • Water Requirement: A plant producing 1000 Tonnes per Annum (TPA) of hydrogen requires 9 L of ultra-pure water per kg of hydrogen, and 1.5 L of groundwater per 1 L of ultra-pure water, amounting to 13,500 m3 of groundwater annually, equal to the average groundwater consumption in 300 private persons.
    • Conclusion: Water is not an issue 
  • Transport Challenges: Considering a 10 MW Power-to-X plant with a mix of solar and wind ensuring 5000 full-load hours (57%), and a 67% efficient electrolyzer, it would produce approximately 1000 TPA of hydrogen. Transporting this hydrogen in 500 kg tube-trailers would require 2000 trucks annually.
    • Conclusion: Transport is an issue (Hydrogen pipeline etc. is key)


Hydrogen, the smallest molecule, needs significant compression or space for transport. Without a pipeline to Germany, large-scale hydrogen transport from Denmark is infeasible. Without clear plans and timelines to establish the needed infrastructure, the risk of transportation risk is a crucial decisive factor.

Electrolyzer technology for large-scale operations is still emerging, indicated by low TLR (Technological Readiness Level), increasing OEM risk. Different technologies have varying operational patterns, influencing their role in ancillary services, a potential revenue stream.

The fundamentals of for Power-to-X in Denmark are visible but not well-established. Acknowledging the uncertainties prevalent reveals a sector with high potential and high risk. Technology is nothing without capital and capital is nothing without technology.
Ensuring long-term financing entails a need for long-term certainty for investors, significantly enhancing the need for concluding long-term agreements with suppliers and off-takers.

Investor Perspective

Investors view Power-to-X investments with caution due to inherent uncertainties. Early developments need strong leadership and reputable partners to attract investment and enhance local impact. Leveraging the local economy is crucial; utilizing residual heat from hydrogen production for district heating or fostering new investments can strengthen the business case and reputation.
Identifying additional value components that can be exploited enables revenue stacking through ancillary services, district heating, flexible optimization against the spot market and PPA which is fundamental in establishing sound business cases.

The “First-mover” advantage is not evident in gaining finance, as investors prefer a proven track record. Current OEM supplies offer a two-year efficiency guarantee, presenting a significant risk for the business case with potential vulnerabilities in long-term agreements. Projects are expected to operate for 10-15+ years, making PPAs crucial for cost mitigation and alignment with EU RFNBO production requirements. HPAs (Hydrogen Purchase Agreements) are needed to ensure stable offtake with foreseeable revenue streams and strong partnerships to build a solid business case.

The development of Power-to-X is complex. Project developers need financing to deploy their projects, and financiers need deployed projects to assess risks and attractiveness. Both sides share excitement and vision but are interlocked in their positions.

Bridging the Gap

Our New Energy seeks to be the missing link between project developers and investors, aligning expectations and realizations to ensure feasible and healthy business case development. ONE can assist in navigating through regulatory framework, identifying components for revenue stacking, applications for public tenders, and feasibility studies.
With our extensive knowledge and proven track record in transactions through PPAs, we offer insights and expertise from business case development to transaction completion.

Feel free to reach out for more information and support in your Power-to-X ventures.

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