Anchored by one of the largest proposed projects so far in the US, Virginia-based AES is launching a green hydrogen platform where it expects to generate approximately $500m of EBITDA by 2030.
The earnings projection includes an assumption of 1,200 metric tons per day of green hydrogen along with the related renewables and tax attributes, executives said in an investor day presentation.
Reaching 1,200 MT/D of production will require $20bn of total capital needs including hydrogen plants and renewables, with equity contributions from AES expected to be 5%, or $1bn, of the capex after debt and partner equity. The presentation notes that 100 MT/D of green hydrogen requires roughly $2bn of capital for hydrogen plants and renewables.
In other words, AES plans to invest $1bn in a business that will generate $500m of EBITDA by 2030, which at, say, a 10x EV multiple, would represent a 5x return on equity. Meanwhile, AES investments in tech platforms like Fluence and Uplight have led to 8x returns on equity to date, according to the presentation.
AES and Air Products have announced a partnership to build a Texas green hydrogen project – so far the largest in the country – with $4bn of capital requirements supporting 1.4 GW of wind and solar capacity along with 200 MT/D of green hydrogen production.
The renewables supporting the Texas electrolyzer project are designed similarly to a portfolio developed for data centers, Chris Shelton, SVP and chief product officer, said during the presentation.
“We’re developing the capability to time-match and dispatch these together – there’s ongoing innovation here – to deliver that hourly matching,” Shelton said. “That results in a very high expectation that we will receive the full $3 / kg incentive for this project,” he said, referring to the emissions-tiered incentive program outlined in the Inflation Reduction Act.
AES is targeting hydrogen growth in the US, Chile, and Brazil, and has 800 MT/D of green hydrogen projects in active development, within an identified opportunity set of 3,200 MT/D.
