Exclusive Interview: “Proving out smaller scale pilot projects might bridge the finance gap”

Exclusive interview with Mardé van Wyk, a venture partner at Advanced Pioneer Ventures. At the upcoming Africa’s Green Economy Summit in Cape Town from 22–24 February, she is part of the expert panel discussion in the session on “Developing a hydrogen economy.”

Tell us more about yourself and your organization?. Thanks for the opportunity to participate. My name is Mardé van Wyk, I'm a venture partner at a firm called Advanced Pioneer Ventures. We’re a leading venture capital firm based out of the UK, specifically investing in hydrogen technologies with a global mandate and with some underpin, specifically looking at stimulating PGM (platinum group metals) demand through our investment strategy. So, metal use as an underlying theme to our overarching hydrogen global venture capital theme.

So your specific focus is on hydrogen technologies in projects. Are there any specific exciting projects that you're involved in at the moment that you want to share? We've got a portfolio in excess of 24 companies based globally across the hydrogen value chain. We specifically look at upstream, midstream and downstream opportunities across the project cycle. And as such, we've got positions in various companies.

We find the midstream opportunities extremely exciting, and we specifically have got exposure to a company called Hydrogenous, out of Germany, and they specifically offer a technology which enables the transport in liquid form of hydrogen. And it's got technologies focused on the hydrogenation and dehydrogenation of hydrogen at point of production and at point of use, which really unlocks a lot of the constraint within the midstream and a part of the value chain that is kind of experienced.

Therefore we feel like exposures like that and investments like that within our portfolio really do unlock quite a bit of the constraint within the hydrogen economy and therefore unlock a lot of potential within the hydrogen economy, which in our view would then drive uptake over the longer term on a global basis. So, we really excited about that technology and many others within a vast portfolio of diversified assets that we've invested in globally.

You mentioned opportunities. What is your vision for hydrogen in developing a greener economy on the continent?

Our focus is quite broad in terms of looking at the hydrogen value chain and we would really like to see a lot of momentum in Africa relative to global norms. We see a lot of support from a regulatory perspective globally and a lot of governments and playing a big role and stimulating investment and momentum and cadence within the development of technology that further enables hydrogen and bringing down the cost curve.

So, we're looking to see a lot more of that in the context of Africa and African economies. And we're hoping that that will come along. We've seen, specifically in South Africa, a lot of progress in that regard with the hydrogen roadmaps and involvement from the likes of the DTIC and a lot of research being invested and gone into hydrogen. A lot of the South African DFIs are now also playing a big role in adopting specific strategies around hydrogen.

So we're seeing the momentum and we're seeing the opportunity, there really is a lot to do. It does come with some hurdles in terms of constraints, in terms of water quality and for projects specifically being a constraint across Africa.

Not that it can't be solved, but we do see that as a specific hurdle that will have to be dealt with in terms of projects. And I think our approach specifically because we're investing in the technologies themselves, we're seeing that a lot of the technologies that we could possibly invest in and that could solve a lot of the constraints and assist in bringing down the cost curves of a lot of the projects.

Therefore, over the longer term, as these technologies are proven out and proving out the key role that Africa can play, given its access to ample kind of renewable energy, and therefore, green energy that enables green hydrogen ultimately, and actually really become a big global exporter of green hydrogen for use in various applications across the globe.

Do you see finance as a challenge in developing this?

I think the key constraint in terms of the finance angle is that there is a lot of early stage investment required. And in the African context, there's not a lot of early stage investment capital available necessarily at the scale that hydrogen specifically requires for projects. So there is a big reliance on governments and DFIs to play a significant role in bridging that finance gap, because the projects wouldn't have been de-risked enough for the likes of the banks to step into that position and once again, the size of the project makes a big difference.

We tend to think that possibly a route to consider is going smaller to begin with in terms of the size of the pilots, proving out the pilots on a smaller scale, which we think would then catalyse more finance into the projects themselves in in terms of bridging the finance gap, but, ultimately we think the finance will come.

We think the opportunity is there and we think that it's a matter of all the players in the finance ecosystem playing together and ensuring that, as the research shows, we capitalise on this opportunity where hydrogen is a key component of driving net zero.

And to the extent that that is part of their strategy as a financial institution, they have to be playing their role and in terms of enabling hydrogen as part of that solution.

Therefore, we think that there will be a lot more finance forthcoming in in future and we're seeing big international funds being raised especially on the kind of infrastructure project finance side of things. So we're hoping that global finance will be made available for projects.

But the African economies need to really look at the regulatory environment and support of those projects to enable the finance to actually flow ultimately to those projects. And so, we're hoping to be part of those conversations and we continue to be part of those conversations where relevant, and as those progress, we are hoping it moves quicker than what it tends to do. But we think that that will definitely unlock a lot of the finance.

At the upcoming Africa’s Green Economy Summit in Cape Town, you are part of a session on developing a hydrogen economy. What will be your message at the event?

I think that the message is that the focus can't be on one single thing alone. I think that our approach is that, there are various components to this ecosystem that need to make it work. Finances are but a component of it, regulation is but a component of it and that's also not just focused on one part of the value chain.

So, not necessarily production only or midstream only or demand only. We think that all things need to get some level of attention and we think that a regulatory enabling environment needs to be creative for all verticals of the value chain across those two components.

We think that there's definitely opportunity to invest in all three of those verticals. And as a result, we think there's financing that can be provided to all three of those.

So for us, really looking at and focusing our strategy or leveraging our strategy to focus on production, storage and distribution, decarbonisation of shipping and aviation, green steel chemicals and various others.

We really think that there are a lot of opportunities that Africa can leverage on, in various components of those across these three verticals, and to the extent that we can all collaborate and we might just get it done.