Why credible hydrogen projects can struggle to reach bankability: lessons from the Flexens case
A strong project concept, a good industrial location and investor interest are not always enough to get a hydrogen project financed. The Flexens case shows how market timing, regulation and risk allocation across the value chain can determine whether a project reaches investment.
Flexens was a BalticSeaH2 partner and an early actor in Finland’s hydrogen economy. Flexens shared lessons from the company’s project development work, including the green ammonia project planned in Kokkola, Finland. The Kokkola production plant itself was not part of BalticSeaH2, but it provides a useful example of the financing and market barriers faced by large hydrogen derivative projects.
A credible project in a tightening market
The planned Kokkola facility was designed around 300 MW of electrolyser capacity and annual production of approximately 200,000 tonnes of green ammonia. The project benefited from an established industrial environment, port infrastructure and shared services in Kokkola Industrial Park.
It also attracted serious investor interest. In spring 2024, Flexens received three non-binding offers from reputable parties to finance the next development phase. The project itself was assessed positively, but the wider financing environment was changing. Investors reduced their exposure to hydrogen and prioritised projects where capital had already been committed. One by one, the offers were withdrawn, including the final one after a positive due diligence process.
Demand existed, but the timing shifted
The case also shows how strongly hydrogen investments depend on regulation-driven demand.
For green ammonia, one important demand pathway was shipping. However, during due diligence in summer 2024, the anchor off-taker postponed its expected schedule by more than three years after concluding that regulatory obligations could still be met with biofuels into the early 2030s. Fertilisers were also considered, but regulation-based demand in that market was expected to emerge even later.
The result was a timing problem: Flexens had entered the market after the peak of the hydrogen investment boom, but before demand had developed enough to support a bankable green ammonia project.
What would make projects more bankable?
The Flexens case points to a broader issue: bankability depends on the whole value chain, not only on project-level readiness. Electricity price, off-take, infrastructure, regulation and financing conditions all interact.
This also has implications for policy. Capital expenditure support can help individual projects, but it does not solve uncertainty across the value chain.
More attention is needed on:
- predictable demand creation through stable EU and national regulation
- risk-sharing instruments, guarantees, auctions and H2Global-type models
- hydrogen infrastructure and better route-to-market options
- clearer allocation of risk between producers, off-takers, financiers and the public sector
- functioning CO₂ markets and infrastructure for CCU-based value chains
For Finland, the long-term electricity price outlook remains especially important. Industrial sites, renewable electricity potential and access to biogenic CO₂ can all support hydrogen and e-fuel investments, but only if the wider market framework is predictable enough.
The wider lesson is simple: credible projects can still fail to reach investment if demand, regulation and risk allocation are not mature enough. For hydrogen projects now moving towards final investment decisions, these conditions may matter just as much as the technology itself.