Structuring offtake currency risk management into a green hydrogen financing model, not after it

Namibia's green hydrogen pipeline is being financed and offtaken almost entirely in hard currency — dollars and euros — while the projects themselves are built, staffed and operated locally, with a cost base largely in Namibian dollars. That currency mismatch is structural, not incidental, and it belongs in the financing conversation from day one, not as a risk management exercise bolted on once the deal is signed.

Why offtake currency can't be an afterthought

Offtake agreements are usually negotiated early, often before a project's full capital structure and cost profile are finalised. That ordering matters: if currency risk management is treated as something to structure after the offtake terms are locked in, the project sponsor is left managing a mismatch it had no say in shaping, rather than one it designed around from the outset.

Matching revenue currency to cost currency from financial close

The more resilient approach treats offtake currency as a financing model input, not a separate hedging exercise. That means looking at the project's projected cost base — construction, local labour, ongoing operations — alongside the offtake currency at the same time the financing structure is being negotiated, so hedging instruments, tenor, and hedge ratios can be sized against the actual mismatch rather than a generic forward strip applied after the fact.

What lenders and sponsors both want to see

Project lenders scrutinise currency risk management as part of their own credit assessment, and a project that can show currency exposure was structured into the financing model — not simply insured against after the fact — is a materially easier credit story to tell. Sponsors get the same benefit from the other side: a financing structure that already accounts for the currency mismatch is less likely to need renegotiation if market conditions shift between financial close and first production.

The practical takeaway

Currency structure is a financing decision, not a treasury afterthought, for a project with this kind of structural mismatch. The earlier it's part of the conversation with sponsors and lenders, the fewer surprises there are for either side once the project is operating.