SUNFIRE SOLID OXIDE ELECTROLYSER

Promoter – Financial Intermediary

SUNFIRE GMBH

Location

• Germany

Description

The project will finance research and development related to solid-oxide (SOEC) electrolysers and the required capital expenditures for its early production capacity.

Additionality and Impact

The Project fulfills the InvestEU objective of "Research, development and innovation", notably through projects that contribute to the objectives of Horizon Europe and research in the field of key enabling technologies (KETs) and their industrial applications.". It is also eligible under both the EIB's "Innovation, Digital and Human Capital" and "Climate Action" objectives respectively as it concerns the implementation of an innovative advanced manufacturing facility in the EU, creating significant long-term skilled employment, and it caters for the transition to the "hydrogen economy" which will be key to support the climate-neutral ambitions of the EU heavy industry. It is located in a Cohesion Region.

 

Sunfire is exposed to higher levels of risks associated to the nascent hydrogen supply chain, which is required to scale-up quickly in anticipation of regulation-driven future market demand, in order to timely contribute to the EU's climate objectives. The high failure rate of similar ventures in combination with its high financing needs, make for a risk proposal that is at the high end of the spectrum even for most commercial venture capital investors.

 

The equity-type venture debt that EIB provides is complementary to equity financing, as it (i) minimizes further dilution of existing shareholders; (ii) provides for longer tenors than usually associated to commercial venture debt; and (iii) is for an amount, thanks to the support of the InvestEU guarantee, that is meaningful, compared to Sunfire's liquidity needs. As the Company, over time, realizes its growth ambitions, the presence of the EIB provides for a signalling effect and may catalyse Sunfire's first access to commercial long-term debt markets.

 

The EIB's equity-type venture debt will feature performance-linked elements and effectively share in the upside of the venture. EIB will also share in the downside as the investment will be materially exposed to the risk of the Sunfire venture (including high technical, market and financial risks).

 

The EIB would not be able to provide such type of financing support during the period in which the EU guarantee can be used, or not to the same extent, without InvestEU.

Objectives

The aim is to contribute to develop EU-based hydrogen industry, for which it can be considered an enabler. The project caters for the transition to a hydrogen economy, thereby supporting the competitiveness and climate ambitions of the EU heavy industry. Due to its enabling character for the transition to a hydrogen economy, the project fully contributes to Climate Action (mitigation) objective. It meets the objectives of the Green Deal Industrial Plan proposed by the European Commission. The Project is located in a Cohesion Region, where it will create significant long-term skilled employment.

Sector(s)

• Industry - Manufacturing

Proposed EIB finance (Approximate amount)

EUR 100 million

Total cost (Approximate amount)

EUR 214 million

Environmental aspects

The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation. As an extension of existing industrial plants but within their physical boundaries, the project does not fall under the Environmental Impact Assessment (EIA) Directive 2011/92/EU (amended by Directive 2014/52/EU) and an EIA process is not required. Where and if applicable, the requirements of the EIA, Birds Directive 2009/147/EC and Habitats Directive 92/43/EEC (to be completed as relevant/applicable) and the requirements of social standards will be verified during appraisal. The Industrial Emissions Directive 2010/75/EU applies.

Procurement

The promoter has been assessed by the EIB as being a private company not being subject to EU rules on public procurement or concessions. However, if at the project appraisal, the EIB were to conclude that the promoter is subject to the EU public procurement legislation, such rules will have to be applied.

Status

Signed - 22/12/2023