Clean hydrogen developer backed by Hydrogenone brings in dirty oil money funding

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OPEC+ agreed a deal on Sunday that to extend a critical portion of its oil supply cuts well into 2025. It has been cutting oil supply since late 2022.

Elcogen, an Estonian-based hydrogen fuel developer, has received a new round of funding from American oil company Baker Hughes.

Founded in 2001, Elcogen works towards the development and scaling of its ‘solid oxide’ hydrogen technology.

The firm said these funds will be used to expand Elcogen’s manufacturing capacity as it continues to build a new factory facility in the Estonian capital, Tallinn, with a manufacturing capacity of up to 360 megawatts.

Elcogen is also the second-largest holding of investment trust Hydrogenone Capital Growth, making up 18.4 per cent of its portfolio.

The trust bills itself as the “first London-listed fund investing in clean hydrogen for a positive environmental impact”.

It currently sits on one of the largest discounts in the investment trust universe, at 56 per cent, and has seen its stock price fall 58.2 per cent since it launched in July 2021.

Hydrogenone anchored Elcogen’s first equity round in 2022, investing 24m euros (£20.6m), with South Korean manufacturer HD Hyundai adding 45m euros (£38.6m) last year.

Baker Hughes is one of the world’s largest oil field services companies, producing products for oil drilling and similar activities.

With today’s announcement from Baker Hughes, the total equity raised by Elcogen has now reached around 100m euros (£85m).

In addition, Elcogen has accessed project grants from the European Commission, including an ‘Important Project of Common European Interest’ grant totalling more than 24m euros (£20.6m) and a proposed debt issue of 15m euros (£12.9m).

Enn Õunpuu, CEO of Elcogen, said: “There is a huge amount of pressure for heavy industries to decarbonise and meet net-zero targets.

“We are very pleased that Baker Hughes has invested in Elcogen, recognising the role our proprietary solid oxide technology has in supporting the energy transition.”

JJ Traynor, managing partner of Hydrogenone Capital, added: “This investment marks another important milestone for Hydrogenone’s second largest portfolio investment.

“Baker Hughes is a leading energy technology company, and is a further important strategic investor in Elcogen, alongside HD Hyundai. This is another powerful endorsement of Elcogen’s technology and capabilities in solid oxide supply chains.”