Improve integrated public funding and risk-sharing models Governments and the private sector could work together to scale funding mechanisms such as targeted grants, co-investment opportunities and low-cost financing options. These financial tools, while broadly applicable to various technologies, can mitigate investment risks and enable the adoption of electrified solutions with narrow project margins. In some cases, export credit agencies or multilateral development banks could play a role by providing additional financial support and risk mitigation. Challenges addressed Clean power availability and price Limited financing support Risk aversion for new technologies Examples –Public funding of green steel development:6 Svenskt Stål AB, Luossavaara-Kiirunavaara Aktiebolag and Vattenfall created a joint venture to develop fossil-free steelmaking using hydrogen (HYBRIT). The project has received over €250 million in funding from the Swedish Energy Agency and the EU Innovation Fund. It is a model that could be replicated in other locations and for other technologies. –Energy savings insurance and standardized investment models:7 The Basel Agency for Sustainable Energy (BASE) co-developed a new financial model with the Inter-American Development Bank (IDB) for electrification and efficiency. This includes rolling out an energy savings insurance programme, which enables companies to guarantee minimum project rates of return. This has been tested in Italy, Portugal and Spain with expansion to Croatia, Greece and Slovakia ongoing.Advance the development of regional certified financial models for electrification investment Standardized financial models and contracting templates tailored to electrification projects enable consistent assessment of return on investment by financiers, governments and developers, thereby accelerating time to final investment decisions. These tools include reference assumptions (e.g. energy prices, carbon costs, available grid capacity, supply chain risk) certified by governments and financial institutions. Challenges addressed Clean power availability and price Limited financing support Risk aversion for new technologies Examples –Scotland’s Low-Carbon Infrastructure Transition Programme (LCITP):8 Scotland’s LCITP offers financial support for projects that contribute to low-carbon transition. The program includes templates for developing an investment-grade proposal, including calculation recommendations and baseline assumptions for estimating carbon impact. –European Hydrogen Observatory – Levelized Cost of Hydrogen Calculator:9 The calculator offers a tool for assessing the cost of hydrogen production across 27 EU countries, Norway and the UK. By using default or user-specified values for various electricity sources (wholesale, PV, onshore wind, offshore wind), the tool provides insights into the economic feasibility of hydrogen projects by considering regional energy prices and technologies. Industrial Electrification: Strategies and Policies for Europe 6

Industrial Electrification 2024