H2 Green Steel has raised about $4.6 billion of debt to build a steel plant in northern Sweden that runs on hydrogen instead of coal. In European hydrogen finance, that is not just large. It is in a category of its own. Yet a big share of the risk in the senior loans does not sit with the banks that lent them.
Key takeaways
- H2 Green Steel, which Leap now lists under the name Stegra, announced on 22 January 2024 that it had secured $4.576 billion of project debt for its green steel plant in Boden, Sweden, made up of about $3.92 billion of senior debt and a junior debt facility of about $653 million.
- The H2 Green Steel debt is part of a financing package of about $7 billion for the Boden plant, which also includes $2.28 billion of equity raised since 2021 and a $272.4 million grant from the EU Innovation Fund.
- Part of H2 Green Steel's senior debt is covered by a green credit guarantee from Riksgalden, the Swedish National Debt Office, and by export credit cover from Euler Hermes, each for $1.3 billion.
- More than 20 lenders joined the H2 Green Steel senior debt, including Svensk Exportkredit, the European Investment Bank, the Nordic Investment Bank, BNP Paribas, ING, KfW IPEX-Bank, Societe Generale and UniCredit, while the junior debt consortium was led by AIP Management.
- The Boden plant is designed to produce 2.1 million tonnes of direct reduced iron a year using hydrogen from 700 MW of alkaline electrolysers supplied by thyssenkrupp nucera, cutting CO2 emissions by up to 95 percent compared with traditional steelmaking.
How much of the senior debt is guaranteed?
About two thirds of it. The two covers total $2.6 billion against senior debt of about $3.92 billion.
A guarantee of this kind means that if the borrower fails to repay, the guarantor pays the covered lenders instead. Riksgalden, the Swedish National Debt Office, provides a green credit guarantee. Euler Hermes provides export credit cover, the kind of protection typically attached to loans that finance equipment exported from the country behind the cover. Each covers $1.3 billion.
For the banks, this changes the question they have to answer. They are not only asking whether a first-of-its-kind steel plant will work. For the covered portion, they are asking whether the guarantors will pay. That is a much easier credit to lend against, and it is how a project with no operating history can attract more than 20 lenders.
The public sector also appears directly as a lender. The European Investment Bank and the Nordic Investment Bank, backed by the EU's InvestEU programme, are providing $342 million and $58.8 million respectively. Add the EU Innovation Fund grant, and public money touches the Boden plant at almost every layer of its capital structure.
Why does a steel plant need a hydrogen financing structure?
Because the hydrogen is the part that is new. Direct reduced iron, or DRI, is iron made by stripping oxygen from iron ore with a reducing gas rather than by melting it with coke in a blast furnace. Conventional DRI plants use natural gas. Boden replaces that with hydrogen made by electrolysis, using renewable electricity.
That is why Boden sits in the hydrogen sector in Leap even though its product is steel. The 700 MW of electrolysers from thyssenkrupp nucera are what make it green, and they are also what makes it hard to finance. Midrex Technologies and Paul Wurth, part of SMS Group, were selected to supply the steelmaking technology. Leap describes Boden as the world's first commercial plant making DRI entirely with hydrogen. The electrolyser maker itself had gone to equity markets the previous year: thyssenkrupp nucera's IPO raised less than its original target.
It also explains why a per-MW figure would mislead. Dividing $4.576 billion by 700 MW gives about $6.5 million per MW of electrolyser. The debt funds an entire steelworks, not just the hydrogen unit, so that number mixes the two and says nothing useful about hydrogen costs.
How is the $7 billion package split between debt and equity?
Debt carries about 64 percent of it. The $4.576 billion of project debt sits on top of $2.28 billion of equity and the $272.4 million grant.
The equity came in stages. About $93.7 million was raised in May 2021, about $283.3 million in October 2022 and about $1.96 billion in September 2023. The largest equity round came four months before the debt, which is the usual order: lenders want to see a substantial equity cushion committed before they sign. The junior debt, led by AIP Management, sits between the senior lenders and the shareholders, taking more risk than the guaranteed senior loans for a higher return.
The structure looks like large Nordic industrial financings rather than typical hydrogen deals. A comparable case is Northvolt's $5 billion debt raise for its Swedish battery factory, announced the same month, which also drew heavily on public lenders.
Enerdatics records eight debt financings for hydrogen in Europe announced across 2023 and 2024. The largest is a $25.3 billion KfW loan to the German government for the national hydrogen core network, a pipeline grid rather than a production asset. Set that aside and H2 Green Steel's $4.576 billion is about 20 times the next largest, HH2E's roughly $222 million bank loan for a green hydrogen plant in Germany in August 2024. Sunfire's $108.5 million from the EIB comes third. Debt is also the exception in this market: of the 63 European hydrogen financings Enerdatics records in the period, more than half are government grants.
What does the deal signal for green hydrogen in Europe?
It signals that large-scale hydrogen gets financed when it is attached to a buyer with a product, not when it is sold as hydrogen. Boden's lenders are ultimately backing a steel business. Most hydrogen projects in Europe have no equivalent anchor, which helps explain why they rely on grants rather than loans.
It also signals how much public support it takes to get a first-of-a-kind plant to financial close. A national debt office guarantee, export credit cover, two public development banks backed by an EU programme and an EU grant all sit inside one package. That is a template other projects can study, but not one that can easily be repeated at scale.
The test now is delivery. Construction started in 2022 and Leap records the plant as expected to be operational by December 2025. Lenders have priced the risk of a new process. Whether it was priced correctly will depend on how the first commercial hydrogen DRI plant performs once it runs.
Frequently asked questions
How much debt did H2 Green Steel raise for Boden? H2 Green Steel raised $4.576 billion of project debt, made up of about $3.92 billion of senior debt and about $653 million of junior debt.
Who guaranteed H2 Green Steel's senior debt? Riksgalden, the Swedish National Debt Office, provided a green credit guarantee and Euler Hermes provided export credit cover, each for $1.3 billion of the senior debt.
What will the H2 Green Steel plant in Boden produce? The Boden plant is designed to produce 2.1 million tonnes of direct reduced iron a year using green hydrogen from 700 MW of electrolysers, which is then used to make green steel.
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