DRAFT FOR DISCUSSION
Development of Business Cases for FCH Applications for Regions and Cities 2nd General Assembly Meeting
Brussels, 11 July 2017 2nd General Assembly Meeting, 11 July 2017 in Brussels Agenda
Topic Presenter Time A. Welcome coffee and registration - 09:30 – 10:00 B. General introduction, "State of the Union" FCH2 JU, RB 10:00 – 10:15
C. Results of the self-assessment survey of regions/cities RB 10:15 – 11:00
Coffee break 11:00 – 11:30 Draft D. Introduction to the funding/financing module (incl. case study) RB 11:30 – 12:30 Lunch break 12:30 – 13:30 E. Technology introduction forum – FCH "Mini-Fair" RB, FCH industry 13:30 – 14:45 Coffee break 14:45 – 15:00 F. Framework for the preliminary business case analyses RB 15:00 – 15:45 G. Conclusion and next steps FCH2 JU, RB 15:45 – 16:00 H. Networking drinks / get-together - from 16:00 on
Source: FC2 JU, Roland Berger 2
Draft A. Welcome and objectives for today
4 Today, we'd like to bring cities/regions and FCH industry together and lay the foundations for the preliminary business cases
Today's objectives
Updates … Presentation and
discussion of the self-
assessment results, Draft Connections … Interim conclusion of the Tech Intro and introduction Possibility to network to the Funding Database and get together
throughout the day H2
particularly the "mini- H2 fair" to interact with Progress …. industry Presentation and discussion of the framework to assess H 2 preliminary business
H2 cases
H2
Source: FCH2 JU, Roland Berger 5
Draft B. General introduction, "State of the Union"
6 80+ regions from 20+ countries now participate in the project – and the coalition keeps on growing Belgium Norway Sweden Germany > Flanders > Akershus > Gavleborg > Baden-Württemberg > North Rhine- > Pom West-Vlaanderen > Møre og Romsdal > Mariestad > Bremerhaven Westphalia > Oppland County Municipal > Hamburg > Northern Ruhr Iceland > Sogn og Fjordane Finland > HyCologne- area > Reykjavik > Kokkola Hydrogen Region > Heide region Rhineland > HYPOS (East United Kingdom Nether- > Kreis Steinfurt Germany) > Swindon and > London (Greater lands Denmark > Ilm-Kreis > Saxony-Anhalt Wiltshire London Authority) > Assen > Guldborsund > Aberdeen > Newcastle > Brabant > Lolland Czech Republic > Birmingham > Orkney Islands > Emmen > Skive > Trutnov > Cornwal > Oxfordshire > Groningen
> Dundeel > Manchester Estonia > Fife region > Tees Valley > Tallin Slovenia > Velenje
Draft > Leeds France Latvia > Auvergne Rhone-Alpes > Riga Croatia > Auxerre > Split > Bourgogne-Franche-Comté > Split-Dalmatia > Centre-Val de Loire County > Grenoble > Grand Dole Romania > La Roche sur Yon > Constanta > Normandie > Nouvelle-Aquitaine > Occitanie-Phyrenees Bulgaria > Orléans > Bulgarian Ports > Pays de la Loire > Sofia Spain > Aragon > Murcia Greece > Barcelona > Port of > Alimos > Heraklion > Cantabria Valencia > Agia Paraskevi> Western > Cartagena > Puertollano > Ierapetra Macedonia > Castilla – La > Valladolid > Kozani > Papagoou- Mancha Italy Austria > Milos Halargos Portugal > Lazio > Torino > Tirol > Vrilissia > Region of Crete > Torres Vedras > South Tyrol > Venice > Médio Tejo > Favignana > Toscana
Source: FCH2 JU – as of 04 July 2017 7 30+ industry players (and counting) are now part of the project as well
Current and prospective FCH industry participants
Draft FCH
Source: Roland Berger 8 9
The self-assessment survey has been completed, Tech Intro and funding/financing mapping are under way
Project status – What we have achieved so far
The coalition has been continuously growing to 80+ regions and cities from 20+ ✓ countries – now organized in 5 Working Groups
30+ industry partners (and counting) have been mobilized to support the coalition Draft ✓
✓ 70+ self-assessments have been completed by cities and regions from 19 countries
The Technology Introduction Dossiers are under way, 7 FCH applications ✓ have been discussed in the respective Working Groups already
The funding and financing tools database has been designed and is now being ✓ populated, among others with >50 instruments identified in the self-assessment survey
Source: Roland Berger 9 Moving forward, we will start the analysis of preliminary business cases of FCH applications
Detailed project approach: two phases and eleven modules
Phase 1: Preliminary business cases Phase 2: Detailed business cases, roadmaps
1 Regional "self- 2 Assessment of 3 Assessment of 7 Detailed 8 Concept 9 Roadmap 10 Engage- assessment" preliminary "fit" for regions/ business for maxi- and ment of survey as initial business cases cities (refined cases mizing implemen- local
Draft market (generic) market (specific) use of tation plan stake- screening screening) funding holders Technology introduction for 4 Ranking of regions/ cities applications For H2 valleys ("Tier 1 regions/cities")
For demonstration projects ("Tier 2")
5 Mapping funding/financing mechanisms 11 Dialog platform for technology development ("Tier 3")
6 Communication outreach/impact
Modules currently under way
Source: Roland Berger 10
Draft C. Results of the self- assessment survey of regions/cities
11 C The survey provides specific insights into the regions'/cities' current situation, ambitions and challenges for FCH deployment
Key findings of the self-assessment survey
Experience – 66% of the cities and regions have concrete plans or have already deployed FCH applications; the average experience level is equally distributed across Working Groups
Objectives – Regarding this project, 64% of participants indicated a strong and concrete interest
Draft towards deploying FCH applications, with 58% indicating strong interest in financing options
Challenges – Funding & financing (57%) as well as viable business cases (42%) were stated as major challenges for the successful deployment of FCH applications
Drivers – For 60-65%, the strongest drivers for pursuing FCH applications are industrial innov. & development and the creation of employment (slightly ahead of environmental reasons)
Financing – Almost half of the participants have no dedicated internal FCH-budget available, but the aggregated, averaged 5-year FCH-related project volume is expected to increase by 163% to EUR 5.6 m between 2017 and 2022
Source: Roland Berger 12
Draft
C.1 Introduction
13 C 1 Results of the self-assessment survey - Introduction The high participation in the self-assessment survey and the clear results underpin the pan-European interest in FCH deployment
Key facts about the survey
74 completed, 84 partially completed surveys1)…
…from 19 European countries… Draft
comprising ca. 23% of European population…
…covering ca. 14% of European surface…
…with >94% of the participants indicating a moderate to strong interest in future deployment of FCH applications2) Countries with regions/cities that participated in the survey
1) All answered questions were included 2) Question: "How interested is your region/city in actively pursuing the future deployment of FCH applications?" (n=71), 94,37% of the participants set either 3, 4 or 5 points on a 5-point Likert Scale
Source: FCH2 JU, Roland Berger 14 C 1 Results of the self-assessment survey - Introduction Survey participants state a strong interest in pursuing concrete FCH projects and exploring FCH financing options
Reasons for participating in the project1)
Totally disagree (1) Totally agree (5) Other reasons Ø 4.5 (selection): Develop/pursue specific FCH 26% 64% projects for my region/city "Communicate internally and Ø 4.4 increase buy-in across Better understand financing options 30% 58% departments within municipality"
Draft for deploying FCH applications Ø 4.2 Contacts with other regions/cities 16% 28% 51% "Develop approaches to public acceptability" Ø 4.0 Contacts with the FCH industry 16% 34% 41% "Specify funding needs to be Ø 4.0 considered for future policies" Get to know & understand 11% 16% 33% 39% FCH technologies Ø 3.9 "Overview of Pro`s and Con`s of Define and create a H2 23% 20% 44% H2 compared to other energy valley and/or ecosystem carriers"
Totally disagree (1) 2 3 4 Totally agree (5) 1) Question: "Please evaluate the following reasons for participating in this project" (n=74-76)
Source: FCH2 JU, Roland Berger 15
Draft C.2 Current set-up and starting point of regions/cities
16 C 2 Results of the self-assessment survey - Current set-up More than 80% of the regions & cities report ambitious quantitative targets for reduction of local emissions
Emission reduction within regions and cities
Question: "Does your political agenda Question: "Is there a concrete Concrete targets include reduction of local emissions quantitative target for reducing (selection)1) like GHG, pollutants and fine dust?" local emissions?" (n=69)
(n=77) "100% electricity generation from
renewables by 2050, 50% zero emission public transport by 2030,
Draft I don’t know No I don’t know 100% by 2050" 8% 3% No 10% 7%
"40% reduction in CO2 emissions by 2020 compared to 2005"
90% 83% "Replace petrol share in energy mix for mobility to 40% by 2050" Yes Yes
"Reduce CO2 emissions to 4t p.p. by 2020, less than 1.5t by 2050"
1) Question: "Please specify one or more concrete targets."
Source: FCH2 JU, Roland Berger 17 C 2 Results of the self-assessment survey - Current set-up The strongest drivers for pursuing FCH applications are industrial innovation & development as well as additional employment
Reasons for pursuing FCH applications1)
Totally disagree (1) Totally agree (5) Other reasons Foster industrial innovation (selection): 13% 21% 64% Ø 4.4 & development Create additional employment 25% 62% Ø 4.4 opportunities "Boost scientific research and innovation" Reduce local emissions of GHG, Ø 4.4
Draft 10% 25% 60% especially CO2 Improve the image of 14% 25% 57% Ø 4.3 "Unlock grid constraints and the region/city make better use of renewable Reduce primary energy consumption Ø 4.1 10% 13% 23% 49% generation" & promote energy efficiency Reduce emissions of pollutants 25% 26% 45% Ø 4.0 & fine dust particles "Usage of excess renewable energy" Increase "smart city" activities 18% 30% 42% Ø 4.0 Increase the usage of 27% 25% 38% Ø 3.9 local hydrogen supply "Increase smart, sustainable living using resources at hand" Reduce local emissions of noise 33% 25% 24% Ø 3.5
Totally disagree (1) 2 3 4 Totally agree (5) 1) Question: "What are your region's/city's main reasons for pursuing FCH applications? How relevant and important are typical drivers for FCH technologies to you, also compared to one another?" (n=76-77) Source: FCH2 JU, Roland Berger 18 C 2 Results of the self-assessment survey - Current set-up ~50% of participants say FCH applications are part of their political agenda, with 32% having a dedicated FCH strategy in place
FCH applications as part of the political agenda
I don’t know I don’t know Question: "Does Yes Question: "Does your political agenda 8% your region/city have 6% explicitly include the a dedicated strategy Yes promotion of FCH 49% in place to promote 32%
applications?" (n=76) 43% FCH applications?" 61%
No (n=77) No Draft
Exemplary elements of promoting FCH applications: Exemplary strategies: "Deploy at least 300 FCEV in the region by end of 2018" "Swindon Hydrogen Roadmap"
"Develop a pilot project for hydrogen production in 2017" "Hydrogen Strategy for Oslo and Akershus (2014-2025)"
"Establish FCH demo infrastructure" "Hydrogen Masterplan in Aragon (2016-2020)"
"Attract further partners of hydrogen technology to region" "Vendée Hydrogène"
"Test hydrogen storage solutions associated to renewable energy "Roadmap for the Realisation of a Wind Hydrogen Economy in the sources" Lower Elbe Region"
Source: FCH2 JU, Roland Berger 19 C 2 Results of the self-assessment survey - Current set-up Internally, less than half of participants have an designated FCH unit or manager; externally, most partnerships are with industry
Internal capacities External partnerships and cooperation's Question: "How many staff in your team are Question: "Which institutions are active within my region/city?" working on FCH-related activities" (n=70) 44
25 25
Draft 10 69 5 regions/ cities: 0-5 Others FCH industry Public-private Public FCH I don`t 1 association FCH alliance agency know people region: 6-10 Question: "My region/city has already partnered up with…" 33 31
21 20 18 18 …40% of the regions/cities 6 have a designated FCH activities unit or manager1) FCH National Regional International None Others I don’t industry ass. ass. ass. know
1) Question: "Is there a designated FCH activities unit or manager within your regional or municipal authority?" (n=75)
Source: FCH2 JU, Roland Berger 20 C 2 Results of the self-assessment survey - Current set-up
~50% of participants have access to H2, with renewable electricity being the most relevant source – "Grey" H2 still important Origins and sources of hydrogen supply for regions and cities
Origins of hydrogen supply Sources of hydrogen supply if produced within region/city Question: "Is hydrogen already supplied in Question: "What is your source for hydrogen supply today and your region/city today?" (n=76) where do you see it in the future?" (n=77)
73 Draft
No supply 45%
37 36 26 21 18 16 9 Domestic 33% 5 5 production Renewable Biogas Conventional Industrial Others (incl. "I electricity reforming technologies1) by-product don`t know") Import 9% & electrolysis Both 9% I don’t know 4% Supply sources today Prospective supply sources in the future 1) Steam-methane reforming (SMR), chloralkaline electrolysis Source: FCH2 JU, Roland Berger 21 C 2 Results of the self-assessment survey - Current set-up
Most of the participants have no H2 infrastructure in place yet, but the majority states plans to further develop infrastructure and supply
Hydrogen infrastructure today and tomorrow
Infrastructure in place Question: "What hydrogen infrastructure does your Future infrastructure region/city have in place?" (n=76) 34 of the regions/cities have plans to
…70% further develop hydrogen supply or hydrogen Draft infrastructure within their region until 20221). 27
18 Exemplary initiatives: 16 "BIG HIT – Hydrogen Refuelling Station by 2017 for fleet of vans" 9 "DIMES – Distributed Integrated Multi Use Energy System for 3 urban developments"
None Refueling Storage Pipelines Others I don’t "ENRgHy Project, Vhyctor – co-produced hydrogen transported stations facilities know under high pressure and refuelling stations" 1) Question: "Does your region/city currently have any plans to develop further hydrogen supply or hydrogen infrastructure until 2022?" (n=74)
Source: FCH2 JU, Roland Berger 22
Draft C.3 Experience with FCH applications within regions/cities
23 C 3 Results of the self-assessment survey - Experience ~60% of participants have not deployed FCH applications yet – The average experience level is equally distributed across WGs Experience with deployment of FCH applications
General Experience Averaged experience level per Working Group Question: "What is the experience of your region/city regarding No experience Numerous (1) applications deployed the deployment of FCH applications?" (n=76) (5) WG1: 24
23 Heavy duty 2,6
transport Draft ∑=27 WG2: Light and medium 2,6 15 duty transport
WG3: Maritime and 2,6 7 aviation transport 5 WG4: 2 2,5 Stationary
No Concrete One One Numerous I don’t experience plans application deployed applications know WG5: deployed and further deployed Energy-to- 2,4 plans hydrogen 1) Averaged value on a 5-point Likert scale (n=74)
Source: FCH2 JU, Roland Berger 24 C 3 Results of the self-assessment survey - Experience Buses, cars and energy storage accumulated the highest interest while a number of applications were hardly mentioned
Number of participants ranking FCH applications among their top-6 applications1)
Heavy-duty trucks 15 WG1: 43 Gen-sets 5 Buses (coaches) 9 Back-up power 6 Buses (urban buses) 45 Off-grid power 10 Railway 16 Cars 31 Residential use 12
Delivery vans 17 Commercial buildings 6
Refuse garbage trucks 15 Industrial use cases 10 Draft Sweepers 4 District heating 7 Construction equipment 3 Biogas in fuel cells 7 Material handling 15 WG4: 40 Hydrogen in Refinery 3 Bikes 9 WG2: 52 Scooters 7 Grid services 7 Boats 15 Energy storage 37 Ships 8 Demand management 4 Ferries 10 Frequency response 1 Aircrafts 1 Port operations 15 Injection of H2 into gas grid 11 Airport ground ops 5 WG3: 29 Biogas to hydrogen 6 WG5: 52
10 10 Priority 1 Priority 2 Priority 3 Priority 4 Priority 5 Priority 6 XX Nr. of regions/cities per Working Group 1) Question: "Please rank up to six FCH applications according to their potential for future deployment in your region/city" (n=69) Source: FCH2 JU, Roland Berger 25 C 3 Results of the self-assessment survey - Experience Funding/financing as well as business cases are the most acute challenges to the successful deployment of FCH applications
Hurdles and challenges posing obstacles for FCH deployment1)
Totally disagree (1) Totally agree (5) Other reasons (selection): Lack of funding/financing 17% 18% 57% Ø 4.2
Insufficient viability of the 24% 23% 42% Ø 4.0 "Lack of skilled local people"
business case
Draft Insufficient technological 19% 29% 32% 14% Ø 3.3 readiness/performance "Missing public awareness" Lack of political backing 14% 24% 27% 18% 17% Ø 3.0 & buy-in Complexity of permitting & 11% 24% 31% 20% 14% Ø 3.0 "Lack of time" authorization procedures
Regulatory barriers 31% 31% 11% 17% Ø 2.9 "Insufficient coordination between Lack of industry stakeholder different initiatives" 22% 18% 33% 19% 7% Ø 2.7 support Lack of hydrogen "Large area with small population 27% 20% 29% 10% 14% Ø 2.6 supply density"
Totally disagree (1) 2 3 4 Totally agree (5) 1) Question: "Within your region/city, which hurdles and challenges currently pose obstacles to the deployment of FCH applications?" (n=70-72)
Source: FCH2 JU, Roland Berger 26
Draft C.4 Regulatory framework in regions/cities
27 C 4 Results of the self-assessment survey - Regulation Beside emission-regulation, there is other considerable regulation both favouring and hindering FCH application roll-out
Regulation concerning emissions and deployment of FCH applications Regulation in place on emission Regulatory barriers favouring the deployment of FCH reduction (selection) applications
Question: "In your region/city, what Question: "Are there any regulations I don’t know 11% regulatory measures are in place to help in place favouring the deployment of Yes
reduce local emissions?" FCH applications (directly or 35%
indirectly)?" (n=71) Draft "Low emission zones in cities" 54% No "Periodic driving ban of diesel cars" Regulatory barriers in place hindering deployment of FCH applications "Energy efficiency programme for council buildings" Question: "Are there any regulatory I don’t know barriers in place hindering the Yes 21% deployment of FCH applications in 32% "Establishment of bus lines" your region/city?" (n=72)
"Procurement of emission free buses 47% only" No
Source: FCH2 JU, Roland Berger 28
Draft C.5 Financing of FCH related activities in regions/cities
29 C 5 Results of the self-assessment survey - Financing 46% of participants have no internal FCH budget available yet, but the averaged 5-year project spent is projected to more than double
Internal budgets for deploying FCH applications of regions and cities Current situation Track-record and future ambitions Question: "Does your region/city have Question: "What total project volumes did your region/city spent on the internal budgets available for deployment of FCH applications over the last five years (2012-2017, n=69), how implementing FCH application much is envisaged over next five years (indicative, 2017-2022, n=68) [EUR]?"
deployment projects?" (n=72) 46
Draft I don’t know Total project volume spent on deployment of 72% 10% FCH applications 2012-2017 Yes 44% 23 2017-2022 Yes 46% 10 13 No 8 6 7 6 9 2 4 3 Question: "What is the aggregated 0 - 250,000 >250,000 - 1m >1m - 2m >2m - 5m >5m - 10m >10m - 50m volume of your internal, FCH- related budgets per year [EUR]?" Averaged total project volume on [2017-2022, (n=31) deployment of FCH applications EUR]
11 13 6 [2012-2017, 2.13 m 0 1 EUR] + 163% 5.6 m 0 - >250,000 >1m - >2m - >5m - 250,000 - 1m 2m 5m 10m
Source: FCH2 JU, Roland Berger 30 C 5 Results of the self-assessment survey - Financing There is a large variety of funding instruments that regions consider relevant, with most experience on country specific instruments
External, non budgetary funding sources
Number of funding/financing Question: "What is your current status of tapping this source of financing?" sources named in the survey 31 38 15 19
6 9
Not contacted Contacted Applied Rejected Approved Other Draft 57 Question: "What is the geographic focus?" 25 17 14 28% 1 No Global Region-specific EU-specific Country-specific … 44% Question: "What FCH applications are eligible?" of the regions/cities have a "Hydrogen vehicles & refuelling stations" designated person, unit or agency in "Development and implementation of environmentally friendly technology" charge of identifying FCH-related funding sources1). "Hydrogen production and use, hydrogen transport, etc."
1) Question: "Do you have a designated person, unit or agency in charge of identifying FCH-related funding sources?" (n=72)
Source: FCH2 JU, Roland Berger 31
Draft
C.6 Smart specialisation
32 C 6 Results of the self-assessment survey – Smart Specialisation ~35% of participants are registered on the S3 Platform, with some calling for a stronger interaction between FCH and S3 initiatives
Smart Specialisation Strategy (S3)
Are you a registered member of the What activities has your region/ What role do you envisage for FCH EU's S3 platform?2) city realised so far (exemplary)? applications in the context of S3 (exemplary)?
> "Participation in the S3 Chem program, > "A pivoting role for boosting the develop-
which promotes innovation in chemical ment of local economies based on related areas" scientific research, innovation and Draft entrepreneurship" 34.7% > "Chymène project: generation of Yes hydrogen compressors for refuelling > "Funding for projects related to the stations which are intended for hydrogen domain" hydrogen mobility" > "Implementation of new activities 37.5% > "LAVOISIER, a technological research targeted at the promotion of new No program" technological solutions"
> "Establishment of an on-line > "Creation of an industrial network to 27.8% environmental platform for the implement innovative tech-projects" I don’t know submission of proposals, ideas and observations by citizens and bodies"
1) Question: "Is your region/city currently a registered member of the Smart Specialisation Strategy (S3) platform?" (n=72)
Source: FCH2 JU, Roland Berger 33
Draft C.7 Survey and project feedback
34 C 7 Results of the self-assessment survey - Feedback Participants provided a large variety of comments on the survey and overall project – Food for further discussions on project steering
Feedback of participants regarding the survey and the project
Question: "How did you like the survey?" Question: "Any further comments about the project?" (selection)
"I believe it is comprehensive without feeling "(…) politicians have agreed on the "(… ) poor air quality is gaining overwhelming" hydrogen strategy and its ambitions. increasing importance, delivery We now see that questions are raised vans is a very interesting segment.
"Would be nice to be able to jump between mainly of two reasons: 1) BEVs are Several cities will introduce zero questions by clicking on the page number" getting a higher range resulting in a emission zones, and this is a Draft discussion whether FCE passenger perfect segment for hydrogen and "I consider it adequate to this initial stage" vehicles are a suitable application. fuel cells. The project should help 2) The lack of vehicles is becoming an identify the market and business "Maybe we can dig a bit deeper about the increasing problem. Some million XX1) models so that the manufacturers technologies we intend to set?" have been invested in infrastructure, will provide such vehicles" and still only some XX1) FCEVs are on "Could you add the notion of duration and ready the road. We need more models and a "From our point of view this self deadline" higher volume of vehicles available. Car manufacturers limiting their assessment is a good approach "Some points do not fit very well to our situation" production and deploying vehicles only to analyse the regional funding activities and topics. The objective "Really good application but missed things like H in selected countries are resulting in and 2 should be to align the available boilers" increasing impatience which may hinder the development. I hope the funding sources (EU, national "It was good. Most difficulties regarding the financial project in some way can help on this and regional)" questions" situation" 1) Answers have been anonymized … Source: FCH2 JU, Roland Berger 35
Draft D. Introduction to the funding/financing module
36 We'd like to address three financing-related topics today: basic financing concepts, database structure, case study
Three financing-related topics for today
Principle concepts for Database for FCH A first case study: FCH in
1 financing FCH projects 2 financing solutions 3 Bolzano, Italy
Draft
> Brief description of each > Short overview of the > Presentation of an FCH archetype database structure for financing case study from > Requirements regarding FCH financing South Tyrol, Italy by commercial viability mechanisms Fabio da Col (Institute for > Presentation of two Innovative Technologies > Requirements regarding Bolzano) experience levels particular financing instruments
Source: Roland Berger 37 1 Principle concepts for financing FCH projects In financing innovation technologies the main challenge is overcoming the "valley of death" before commercialisation
Core issues in innovation financing and financing FCH applications (1/2)
Uncertainty Clarity on markets and Investment in large production efficiency scale production Estimated
profit
Draft
Valley of death
Risk Cost Investment in pilot production Laboratory Pilot production Concept Initial market Market expansion prototyping and and Invention Validation introduction incubation demonstration
Technology Readiness Level (TRL)
Source: Multi KETS, Roland Berger 38 1 Principle concepts for financing FCH projects Hence, public (financing) institutions step in by providing grants ("non-repayable funding") and/or repayable financing
Core issues in innovation financing and financing FCH applications (2/2) > Financing new technologies is difficult – Developing and testing new technologies requires investments that will not generate enough revenues in the beginning (i.e. products are not yet "commercial") > The phase between pilot production and commercialisation is called "valley of death", as some
prototypes may not successfully advance to the next stage
Draft > Allocating money to bringing a prototype to a commercial stage bears high risks, hence typical (private) financing institutions will typically hesitate to debt-finance such investments – this applies to most FCH applications > Hence, public (financing) institutions step in by providing grants ("non-repayable funding") and/or repayable financing, provided there is a strategic (political) interest in the technology and a prospect of commercialisation > Both kinds of public financing (non-repayable and repayable) for FCH applications are available from various EU, national and regional sources > Accessing non-repayable funding mostly requires following a specific application process, meeting specific criteria of eligibility and co-financing of some sort – combining funds is possible if double financing rules are respected
Source: Roland Berger 39 1 Principle concepts for financing FCH projects The European financial landscape relies on manifold instruments and interposed institutions
Simplified overview of European funding institutions and intermediaries – SCHEMATIC
e.g. Horizon 2020 grants for R&D
e.g. JESSICA 2 Fund of Financial inter- funds loans for increased mediaries, e.g. nat. Draft energy efficiency promotional banks
Regions & cities e.g. InnovFin SME Financial inter- guarantees for funding mediaries, e.g. innovative SMEs private funds
Financial inter- mediaries, e.g. nat. e.g. KfW 433 subsidies … promotional banks for FC mCHP in DE (EU Member) States
Programme examples Source: Roland Berger 40 1 Principle concepts for financing FCH projects 3 kinds of basic financing models – main focus will be on public financing, but also consider PPP structures and private financing
Archetypes of financing technology innovation (projects) – SIMPLIFIED
Public Public-private (PPP) Private
Brief description > Public grants (EU, national., > Combination of public and > Financing from private regional), budget financing, private finance, e.g. intermediaries, i.e. comm. bank comprehensive subsidies and (development) bank loans and loans, other debt finance, tax incentives – with co-financing government grants/subsidies mezzanine, (private) equity
Draft from project promoters > Non-repayable finance > Partially repayable finance > Repayable finance
Project bankability/ > Low > Medium > High commercial viability > Pilot & prototype phase of new > Bridgeable gap to viable > Typically available for technologies; typically business case, thus revenue applications that are comm. unbridgeable gap to purely support, CAPEX relief developed with a defined commercially funded and viable mechanisms, etc. use/business case (TRL1 8-9) business cases FCH examples > FCH transport project in South > FCH (and other) buses and > Amazon procurement of Plug (selection) Tyrol / Bolzano, Italy (today's infrastructure in Riga, Latvia Power FCH Forklifts case study) > KfW 433 for FC mCHP in DE Technology readiness, commercial viability 1) Technological Readiness Level
Source: Roland Berger 41 2 Financing database Project Module 5 will thus provide a comprehensive database on available sources of financing for FCH projects
Scope of project Module 5 "mapping funding/financing mechanisms"
Objectives Approach & methodology
> Map and assess currently available > Research and collect financing/funding
grant funding sources for hydrogen and instruments and vehicles
fuel cells, esp. on EU and national level > Consolidate and systematically describe Draft > Create comprehensive listing and funding programmes in a dossier dossier of available and relevant public > Highlight programmes suitable for large scale funding sources demonstration or with potential to act as > Analyse and present potential private "game changers" – produce funding options for nearly commercially recommendations on specific ready projects programmes for regions for Phase 2
Expected results and deliverables Comprehensive database on available sources of funding/financing to navigate the funding/financing landscape and identify suitable sources of financing, presentation of results regarding their suitability
Source: Roland Berger 42 2 Financing database The database covers information on 5 different thematic categories and enables the identification of funding instruments
Database structure
Financing Database
Programme General Funding detail Programme Experiences with
related information and and application eligibility the programme
information context of progr. procedure Draft > Final entity > Name of major > Policy-related > Financial > FCH example providing overarching project instrument projects funding programme requirements offered through > Region/Cities > Name of entity- > Start year of > Eligible programme with experience specific major applications > Min./Max. level using this programme overarching > Recipients of of funding per instrument > Regional focus programme funding project > Website URL area > End year of > Beneficiary- > Application > Total financing major related process volume overarching prerequisites > Approval entity programme > Brief description > Eligibility and > Application time of programme pre-financing > Where to apply criteria
Source: Roland Berger 43 2 Financing database There are many grants available for a variety of applications, geographies, priorities, etc. – CEF as EU example
Exemplary illustration of an EU-level grant: Connecting Europe Facility (CEF)
Programme Outline Specifications
CEF: key EU funding instrument to promote growth, jobs and competitiveness through targeted 12 hydrogen refuelling stations (HRS) in Benelux
infrastructure investment at European level (1 in Luxemburg, 5 in Belgium and 6 in the Netherlands)
across 3 Core Network Corridors and 120 Fuel Cell Draft CEF Transport: funding instrument to realise Electric Vehicles European transport infrastructure policy; it aims at supporting investments in building new transport infrastructure in Europe or rehabilitating and > Public grant (non-repayable) upgrading the existing one > Recommended CEF funding: EUR 3.4 m
CEF Transport MAP General call > Priority on innovation and deployment of alternative fuels
H2Benelux: accelerate the market > Covers studies with pilot deployment on urban development of hydrogen as a fuel for nodes and works road transport
Source: European Commission, Roland Berger 44 2 Financing database National governments set-up own grant and subsidy programmes as well – KfW 433 as national example
Exemplary illustration of a national subsidy: KfW funding scheme 433 (Germany)
Programme Outline Specifications
Bundesministerium für Wirtschaft und Energy For private owners of personally-used or rented single- (BMWi, Federal Ministry of Economic Affairs and
or multiple family homes as well as apartment buildings Energy): broad policy objectives – "reinvigorate the in Germany Draft social market economy, stay innovative in the long term and strengthen the social fabric"
> Subsidy of up to 40% of eligible product costs Kreditanstalt für Wiederaufbau (KfW): national German promotional bank > Fixed amount of EUR 5,700 and performance- based EUR 450 per 100 Wel – i.e. EUR 10,200 subsidy for a 2 kWel FC mCHP system Subsidy 433: Energy efficient constructing > Covers installation of stationary fuel cell systems and renovation – fuel cells support with electric capacity of min Pel=0.25 kWel to Pel=5.0 kWel into new or existing residential buildings
Source: European Commission, Roland Berger 45 3 Case Study Institute for Innovation Technologies Bolzano – South Tyrol, Italy
Fabio Da Col
Draft
46 3 Case Study H2 South Tyrol
Refill Units
FC-Busses Stationary Plants
Draft
Private Vehicles Information
R&D Political Strategies
Education Concepts & Contracts
47 3 Case Study IIT SOUTH TYROL – Project 2011 - 2017
Local ERDF
Coordination:
IIT / local government
Draft 2. BUSSES 1. INFRASTRUCTURE 3. CARS
> H2 production FCH JU FCH JU > H2 storage > HRS Local innovation
Coordination: Coordination: STA (local bus operator) IIT
HyFIVE EU CHIC Data and information H2 Busses: 5 vehicles exchange HyFIVE S.T. H2 Cars: 10 vehicles
48 3 Case Study Financing structure
Total project volume approx. EUR 20 m Key lessons learned
> 1 project, different parts, different partners Local FCH JU CHIC ERDF > Funding can be optimised through a combination of
20% different instruments
30% > Resource limitations in the consortium have to be taken Draft FCH JU into account from the beginning HyFIVE 4% > Tasks and risks can be distributed quickly in comparatively small regions with institutions of 4% Local manageable size; this helps swift project development innovation > Motivated regional partners help to keep the project active and progressing > Sharing of data and information is a key element to a successful demonstration / deployment project 43% > Involvement of the local government is critically important Self-financing in order to reach an overall strong commitment for the project
49 3 Case Study Next alike projects
FCH JU CEF / TEN-T Local Innovation
Coordination: Coordination: SASA, local bus operator JIVE + Mehrlin IIT
Data and information exchange Draft JIVE Mehrlin H2 busses: 12 vehicles HRS
FCH JU Local Innovation
Coordination: Coordination: 2 local waste operators Garbage trucks IIT
H2 garbage trucks: Data and information exchange HRS in the city of 2 vehicles Merano
50 3 Case Study
Thank you very much for your attention
and let‘s keep in touch
Draft
Fabio Da Col [email protected]
51
Draft E. Technology introduction forum – an FCH "Mini-Fair"
52 We follow a systematic, iterative approach for preparing and discussing the Technology Introduction Dossiers
Modus Operandi for Technology Introduction Dossiers
June 28th: discussion and agreement of the Technology Introduction Dossier Template Since July 5th and over the following weeks: preparation and
distribution of the first Draft Dossiers per Working Group
Draft
to be validated with FCH industry FCH with validated be to
– From the Conference Call on July 5th onwards: discussion of Technology Introduction Dossiers, Q&A sessions with industry representatives – trains, cars, bikes, back-up systems, ferries, micro-CHPs and Preliminary draft draft Preliminary hydrogen-into-gas-grid have already been discussed once (see example of micro-CHPs on the next slides) In parallel: continuous incorporation of feedback, subsequent re-distribution within Working Groups; distribution of final package to all project participants
Source: Roland Berger 53 Example for a Technology Introduction Dossier – FC mCHPs Residential fuel cell CHPs provide heat and electricity to 1/2-family dwellings, using natural gas a fuel and thus existing infrastructure
Fuel cells for residential use (fuel cell micro-CHPs) 1/4
Brief description: fuel cell micro combined Use cases: Cities/regions can promote FC industry heat and power units (FC mCHPs) use natural gas mCHPs in 1/2-family dwellings, SMEs or other
FCH as fuel to generate electricity and heat through a residential developments (e.g. in municipal fuel cell stack (reforming natural gas on site to housing developments, office complexes) to hydrogen of differing purity). Combined with an lower carbon emissions, improve efficiency and auxiliary boiler, they can replace entire residential facilitate smart grid development. Using natural
heating systems or they can supply base-load gas, they typically build on existing fuel infra.
electricity with add. heat supply Draft
to be validated with validated be to Fuel cell for residential use (ranges reflect industry portfolio, selection of companies)
– Key components Fuel cell stacks, system module, inverter, heat exchanger, auxiliary condensing boiler, combined storage tank
Fuel cell technologies Proton Exchange Membrane (PEMFC), Solid Oxide (SOFC) Fuel Natural gas (generally also biogas or other methane)
Preliminary draft draft Preliminary Combined efficiency 85-90%/104% (PEM), 80-95% (SOFC)
Output 1-5 kWel (PEM), 0.8-2.5 kWel (SOFC) Approximate capital cost EUR 10,000-35,0001 Original equipment manufacturers Viessmann, SolidPower, Elcore, Bosch, SenerTec Fuel cell suppliers Sunfire, SolidPower, Hexis, Panasonic, Elcore Typical customers Private home owners, municipal housing providers, residential real estate developers, utilities Competing technologies Heating systems (e.g. boilers, heat pumps), power grid 1) Please refer to the next slide for three examples
Source: Roland Berger 54 Example for a Technology Introduction Dossier – FC mCHPs Fuel cell mCHPs are one of the most mature FC technologies with several European products commercially available
Fuel cells for residential use (fuel cell micro-CHPs) 2/4
Overall technological readiness: Large scale field tests completed across Europe and esp. in * Germany; fuel cell CHP systems of advanced generations from various OEMs now commercially TRL 1 2 3 4 5 6 7 8 9 available, other OEMs have announced to follow in the near term (EU catching up to East-Asian markets) Idea Tech. formulation Prototype Fully commercial
Demonstration projects / deployment examples (selection)
Project Country Start Scope Project volume
Draft PACE 2016 Horizon 2020 funded project to help European mCHP sector take the next step EUR 90 m
to mass market commercialization with ~2,650 units by 4 mCHP OEMs
to be validated with FCH industry FCH with validated be to
– European wide field trials for residential fuel 2011 Europe's largest demonstration project with ~1,000 residential fuel cell micro EUR 52 m cell micro-CHP (ene.field) CHP installations across 11 countries to demonstrate market potential and push commercialization Callux field test 2008 Field test of ~500 fuel cell powered heating units for residential use for a period EUR 75 m of 7 years demonstrating commercial feasibility and long lifetime of application
Preliminary draft draft Preliminary Products / systems available (selection) Name OEM Product features Country Since Approx. cost1
BlueGEN SolidPower 1.5 kWel / 0.6 kWth SOFC mCHP with efficiency of up to 60%el and combined 85% 2012 for distributed base-load electricity supply with waste heat for warm-water supply EUR 10,000 – 25,000 (possibly Vitovalor 300-P Viessmann FC mCHP as full heating system (incl. aux. boiler) with 0.75 kWel / 1kWth, heat- 2014 add. installation driven operations, PEM FC from Panasonic with combined efficiency of up to 90% cost), strongly dep. on local sourcing Elcore 2400 Elcore 305 Wel / 700 Wth PEM FC mCHP for base-load electricity supply with waste heat 2014 cond. and use case for warm-water supply with combined efficiency of up to 104%
*) Technology Readiness Level ≤ 5 6-7 8-9 1) Indicative range – not considering specific use case context, local sourcing conditions (esp. installation cost), subsidies Source: Roland Berger, FCH2 JU, FC mCHP OEMs, Thermondo 55 Example for a Technology Introduction Dossier – FC mCHPs Fuel cells in residential homes significantly reduce local emissions of CO2 and pollutants while building on existing infrastructure
Fuel cells for residential use (fuel cell micro-CHPs) 3/4
Use case characteristics Benefit potential for regions and cities
industry
Stakeholders > FC mCHP OEMs, FC technology providers Environmental > Low emissions of pollutants and greenhouse gases (esp. FCH involved > Wholesalers and installers CO2) – reduction of >30% of CO2 in representative German 1/2-family home, reduction of primary energy consumption > Utilities, gas and electricity grid DSOs > Low noise pollution due to almost silent operation
> Private consumers, real estate owners
Draft Demand and > Heat and electricity demand of 1/2 family dwellings Social > Promotion of distributed energy systems, lowering social cost
to be validated with validated be to of electricity grid expansion esp. by DSOs (e.g. local
user profile or small commercial buildings – > 2 basic operating models: heat-driven FC mCHPs combination of FC mCHPs and heat pumps) follow heat-load profile of building and produce > Enabler for more RES in power mix with complementary role electricity in the process, add-on mCHPs provide of distributed CHP base load electricity with waste heat for warm water Deployment > Connection to natural gas grid for fuel supply and Economic > With reduction of product cost due to volume uptake and
requirements electricity grid (for feed-in of surplus electricity) learning effects, TCO-competitiveness with other high-end Preliminary draft draft Preliminary > Typically availability of local installation, service and heating solutions in reach (esp. in near term thanks to subsidy maintenance force programs) – esp. in markets with high spark spreads for consumers (difference of gas and electricity prices)
Key other > Emerging trend of partial self-sufficient energy Other > Creation of micro-CHP networks throughout regions and aspects supply in households / "self-reliance" communities to help balancing grid needs – smart grid potential
Source: Roland Berger 56 Example for a Technology Introduction Dossier – FC mCHPs Pressure to reduce cost for a fully convincing economic value proposition is a key issue – as is business model innovation
Fuel cells for residential use (fuel cell micro-CHPs) 4/4
industry
Hot topics / critical issues / key challenges: Further recommended reading:
FCH > Need to reduce high product cost and CAPEX for > "Advancing Europe's energy systems: consumers (currently still higher capital and maintenance Stationary fuel cells in distributed generation": cost than for conventional heating units), obstacle in
http://www.fch.europa.eu/studies residential market (even as TCO-competitiveness with other
Draft premium systems comes within reach) > ene.field project report: to be validated with validated be to
http://www.fch.europa.eu/sites/default/files/project_r – > Technical standardization as lever for cost reduction esults_and_deliverables/D3%206%20Grid%20conn (inhomogeneity of installation procedures in different ections%20%20issues%20and%20status.pdf countries posing barrier for market expansion) > Sustaining and improving technical performance (esp.
Preliminary draft draft Preliminary durability and system lifetime, but also electrical efficiency)
> Defining innovative business models, esp. financing solutions and sales channels ("go-to-market") Key contacts in the coalition: > Regulatory and policy-support circumstances (demand for TBC FC mCHP systems currently supported by subsidies) > Public acceptance (lack of public awareness or acceptance of fuel cell powered micro-CHP)
Source: Roland Berger 57 In the next 60+ minutes, we invite you to explore some FCH applications in a dialogue with industry representatives
FCH Industry "Mini-Fair" for regions/cities
The layout The main idea > The "Mini-Fair" offers the opportunity to explore various
FCH applications Draft > FCH transport and energy applications (stationary and Energy Transport energy-to-hydrogen) (Stationary & Energy-to-hydrogen) > Industry representatives will be present to answer specific questions related to their products and the underlying technologies in general
"Mini-Fair" booths Industry representatives City/region representatives
Source: FCH2 JU, Roland Berger 58 Today, 19 industry representatives from 16 companies are present to participate in the "Mini-fair"
Participants in the "Mini-fair"
Energy Transport
> Air Liquide Advanced Business > Alstom
> AREVA Energy Storage > Atawey
> Asahi Kasei Europe > Daimler Buses EvoBus Draft > Cockerill Maintenance et Ingénierie > Hydrogenics > Hydrogenics > ITM Power > ITM Power > Naval group > Nedstack > Nedstack > SOLIDpower > PersEE > Sunfire > Symbiofcell > Toyota
Source: Roland Berger 59
Draft F. Framework for the preliminary business case analyses
60 The analysis of prel. business cases is the most crucial module in Phase 1 – Key ingredient to subsequent application ranking
Module 2: Assessment of preliminary business cases
Objectives Approach & methodology
> Provide a preliminary business case analysis 1. Agreement on analytical framework of all FCH applications under consideration 2. Definition of business case components: generic use case (incl. infrastructure > Evaluate applications according to key criteria e.g. technology readiness, basic requirements), FCH application, benchmark Draft economics, environmental impact, etc. in application, exogenous assumptions order to – generally – evaluate their commercial 3. Preliminary performance analysis and otherwise attractiveness for European (technical/operational, economic, regions and cities environmental) – dep. on techn. readiness > Basis for ranking and decision making 4. Establishment of a joint view on analysis regarding potential further focus in phase 2 results (incl. willingness to pay, requirements) ("Detailed Business Cases") … iterative, separate processes in Working Groups, results to be presented at 3rd GAM
Expected results and deliverables > Evaluation of all applications on all key analysis factors based on joint evaluation framework > Documentation of evaluation results in a standardized evaluation summary for all applications
Source: Roland Berger 61 62
Each preliminary business case analysis consists of application inputs, a generic use case and general performance dimensions
Prel. business case components and flow of analysis – SCHEMATIC Exogenous assumptions, e.g. energy/fuel cost
FCH application Basic performance
> Technical features (e.g. 1 "generic" use case Draft output, efficiency, lifetime, Technical / fuelling requirements) and general readiness operational > Est. CAPEX / system cost > Est. OPEX (e.g. maintenance) Economic … plus 1 conventional application as … consisting of typical deployment Environmental benchmark requirements of European regions and cities
Source: FCH2 JU, Roland Berger 62 63
We will address each FCH application based on its TRL and rely on existing data where possible – Clear distinction from Phase 2
Key considerations on scoping, sources and results
Scoping Sources Results
> In each WG, start with > Existing FCH2 JU > Basic understanding of
more mature (TRL) and initiatives, studies and operational, comm., Draft most demanded data, e.g. on stationary environmental applications (as per fuel cells and storage attractiveness of FCH
survey) business models applications
> Adjustment of analytical > Other publicly available > Key additional framework for early- data (studies, reports, analytical dimensions stage FCH applications articles, etc.) for detailed business (e.g. with TRL 5 or > Bilateral interviews with cases in Phase 2: lower) – focus on FCH industry players sensitivities, regional
business case (on demand) use cases, future
Sound data basisdata Sound Phase 2 for Foundation definition, rather than focus Appropriate projections full analysis
Source: FCH2 JU, Roland Berger 63
Draft G. Conclusion and next steps
64
Next steps
Draft Next activities: > Incorporation of GAM feedback from dial-in participants > Distribution of updated GAM presentation to the coalition > Invitation and presentations for next Working Group Conf. Calls > Inclusion of further industry participants as well as additional regions and cities > Continuation of populating funding/financing tools database Upcoming events: > Next Working Group Conf. Calls: Wednesday, 19 July 2017 > 3rd General Assembly Meeting: 13 September 2017 in Brussels
Source: Roland Berger 65 Please do not hesitate to get in touch with us
The Roland Berger Project Team
Yvonne Markus Felix Anja Prof. Dr.-Ing. Ruf Kaufmann Heieck Benz Detlef Stolten
Principal Senior Consultant Consultant Analyst Senior Advisor
Düsseldorf Hamburg Frankfurt Berlin Jülich
Draft
yvonne.ruf markus.kaufmann felix.heieck anja.benz [email protected] @rolandberger.com @rolandberger.com @rolandberger.com @rolandberger.com
+49 160 7446334 +49 160 7442144 +49 160 7443505 +49 160 7448006 +49 170 4569203
Source: Roland Berger 66