Hydrogen purchase agreements

A hydrogen purchase agreement (HPA) is a legally binding contract between a supplier of hydrogen fuel and a customer, outlining the terms and conditions for the purchase and delivery of hydrogen fuel. The agreement typically includes details such as the price, delivery schedule and quality standards for the hydrogen fuel, as well as any warranties or guarantees provided by the supplier (Hernández Vidal, 2023). The operator may produce the electricity itself with a renewable energy plant or procure electricity from a third party by entering into a corporate PPA. A HPA needs to ensure that the hydrogen is certified as green hydrogen, and needs to ensure a predictable revenue stream. That means the HPA will need to provide a long-term offtake commitment (10-15 years). A HPA scheme involves the standardisation of such contracts both at the local and international level, facilitating the trade of hydrogen and increasing transparency in the process (Reinecke et al., 2022).

Having a HPA scheme in place is important because it provides long-term certainty on the acquisition of hydrogen. It is crucial to obtain financing at an early stage and decisive for bankability in the longer run. Such a scheme can facilitate the ramp-up of green hydrogen and its derivatives.