Green hydrogen could help save planet This startup wants to make it cheap

Forbes has published an article saying that electric hydrogen will use massive plants powered by renewable energy to target a global hydrogen market worth more than $120 billion. Caliber.Az reprints the article.

In the arsenal of solutions to curb carbon emissions that are cooking the planet and warping weather patterns, none holds more promise than energy-rich green hydrogen — made from just water and electricity. But it’s much costlier than the fossil fuel-generated variety that accounts for nearly all of a global hydrogen market worth more than $120 billion.

Raffi Garabedian and David Eaglesham, who spent years working to make large-scale solar power affordable for utilities, see a massive opportunity to do the same with green hydrogen. If they’re right, Electric Hydrogen, a startup they launched in 2021, could be profitable within a few years and, more importantly, help attain an audacious goal: cleaning up dirty industries that make things like ammonia, chemicals, petroleum products and steel. They want to build behemoth green fuel refineries near plants that use it, powered with renewable energy.

It’s green hydrogen for “industrial decarbonization,” CEO Garabedian told Forbes. To do that, “you have to have a really cheap (hydrogen-generating) electrolyzer and you have to have cheap renewables. And if you’re not grid-tied, renewables in the right place are dirt cheap.”

Making lots of the stuff is also essential. So CTO Eaglesham, who founded the company, designed a system the size of a small factory with lower-cost electrolyzers that churn out up to 45 tons of green hydrogen a day — the energy equivalent of 45,000 gallons of gasoline. Electric Hydrogen plans to build them near industrial plants that use lots of the elemental fuel and, eventually, produce it for the same cost as dirty “grey” hydrogen made from natural gas that produces lots of CO2: as little as $1.50 a kilogram.

Founded just three years ago, the Natick, Massachusetts-based company has raised more than $600 million from investors including Bill Gates’ Breakthrough Energy Ventures, Energy Impact Partners, BP Ventures, Amazon and Honeywell. (Eaglesham developed the idea for Electric Hydrogen while he was entrepreneur-in-residence at Breakthrough.) It’s got a 10-megawatt facility in San Jose, California, that produces up to 4.5 tons of hydrogen a day — the energy equivalent of the gasoline an American driver uses over a decade — and intends to deliver its first commercial system late this year that’s 10 times larger.

Getting companies to swap fossil fuel-derived hydrogen for the green variety is a no-brainer for the climate: industrial applications account for nearly a quarter of US CO2 emissions. Garabedian and Eaglesham think they’re close to cracking the code for affordable green hydrogen, potentially a highly lucrative undertaking. Goldman Sachs estimates the global hydrogen market’s value may double to $250 billion by 2030, driven by the arrival of green hydrogen.

The US uses at least 10 million metric tons of hydrogen a year, virtually all made by steaming it out of natural gas. It’s a highly carbon-intensive process, generating at least 8 kilograms of CO2 for every kilogram of hydrogen produced, according to energy researcher RMI.

Shifting to greener forms “would be impactful and is a priority” said Doug Vine, director of energy analysis at the Center for Climate and Energy Solutions, an environmental policy think tank in Arlington, Virginia. The challenge will be finding vast new amounts of renewable power.

“The Energy Department estimates it would take 500 terawatts of electricity to produce 10 million metric tons of green hydrogen,” Vine said. “That’s nearly a 13 per cent increase in current US electricity production.”

Garabedian and Eaglesham, past CTOs for First Solar, aren’t troubled by that. “In the long-term, there’s going to be a lot of additionality,” said Garabedian. “Worrying about that in the short term is a red herring.”

On-Again, Off-again Game-Changer

Hydrogen has a long history as a potential clean energy game-changer, but run into technical challenges over the past two decades. It’s the universe’s most abundant element, but not cheap to make from carbon-free sources and costly to compress, store and move. So it’s best to use it close to the point of production. (A reason the retail price for hydrogen at fuel stations in California for hydrogen-powered cars is as much as $36 a kilogram.)

Electrolyzers that make hydrogen use expensive membranes, filtering devices made up of layers of high-tech plastic film coated with trace amounts of pricey materials like platinum and iridium. Their cost and complexity puts green hydrogen at a big price disadvantage to the steam methane reforming process heavy hydrogen users now rely on.

“We've started pretty large out of the gate, figuring out how to get big enough to go after something of the scale of a chemical plant.”

David Eaglesham, Electric Hydrogen CTO & founder

To change that, Electric Hydrogen created a standardized hydrogen plant design that combines high-powered electrolyzers with gas separation tanks, power, thermal management and water treatment systems. The membranes its electrolyzers use are sourced from high-volume manufacturers that make them for things like chemical processes and water filtration, a cheaper option than creating an entirely new design, Garabedian said. Eaglesham said the company has also developed a unique method to get more hydrogen per electrolyzer than competitors such as Plug and Accelera, lowering the overall cost. Doing that at a large scale is also essential.

“We've started pretty large out of the gate, figuring out how to get big enough to go after something of the scale of a chemical plant. Chemical plants are monstrously big,” Eaglesham said. “We tried to wrap our heads around how to design an electrolyzer that looks like a chemical plant.”

45V Furor

Electric Hydrogen’s focus on leveraging renewable power sources also aligns with proposed rules for the Treasury Department’s new “45V” hydrogen production credit that provides up to $3 per kilogram of clean hydrogen. The guidelines aren’t final, but a proposal released in December 2023 prioritizes using renewable energy at all times, rather than fossil fuel-generated power from the grid.

Many companies developing green hydrogen systems reacted angrily to the proposal, arguing they are too strict for a nascent industry. “The vast majority of our members are displeased” with the guidance as written, Frank Wolak, president and CEO of the Fuel Cell and Hydrogen Energy Association, told Forbes. Plug Power, a leading US maker of electrolyzers, Accelera, the cleantech arm of diesel engine giant Cummins, and US Chamber of Commerce were similarly vexed.

“You should not have incentives that propagate the life of coal to make clean hydrogen. That's just silly on every level.”

Professor Michael Webber, University of Texas

Electric Hydrogen was one of the few companies that appeared untroubled by the potential 45V rules. Energy expert Michael Webber, a professor at the University of Texas at Austin, also guidelines “get it about right.”

“You should not have incentives that propagate the life of coal to make clean hydrogen. That's just silly on every level,” said Webber, who’s also CTO for cleantech investor Energy Impact Partners, which is backing Electric Hydrogen. A final version of the guidelines is expected this year. “I think it'll be up to the Electric Hydrogens of the world and others to say ‘we can meet these rules.’”

100-Megawatt Plant

Electric Hydrogen’s first customer is billionaire Wes Edens’ New Fortress Energy, which wants to start using Electric Hydrogen’s technology late this year in Beaumont, Texas. New Fortress intends to sell green hydrogen made there to Dutch ammonia producer OCI Global. (Electric Hydrogen is providing the design and technical expertise, but New Fortress and other future customers will build and operate the facilities.)

That plant, powered by 100 megawatts of electricity and capable of making up to 45 tons of fuel daily, will likely be the largest green hydrogen facility in the US when it opens. New Fortress declined to share additional details, including how much it’s paying Electric Hydrogen.

More plant projects are coming, but Garabedian declined to provide details.

Currently, the biggest green hydrogen system in the US is a facility in Georgia that Plug Power recently opened. It’s capable of producing 15 tons of green hydrogen a day, in liquid form, powered mainly by a new nuclear plant. As a result, the installation should qualify for the full $3/kg federal credit, CEO Andy Marsh told Forbes.

“I don't think anybody else is going to have anything like it for two years here in the United States,” he said.

“My goal is to make the 45V credit irrelevant.”

Raffi Garabedian, Electric Hydrogen CEO

Garabedian aims to prove him wrong with a plant that could be producing three times as much hydrogen daily by next year. He also expects it to cost about half as much to build as the $150 million needed for a similar size one using technology from European conglomerates, such as Siemens or ThyssenKrupp. On that basis, if Electric Hydrogen’s 100-megawatt system costs about $75 million, it’s even cheaper than building one with less efficient electrolyzers from China for about $85 million to generate 45 tons of hydrogen a day.

The company doesn’t expect to be able to produce hydrogen that’s as cheap as the fossil fuel-derived version with its very first plant but aims to do so by 2030. That’s why the federal tax credit will be impactful for a few years, Garabedian said. But like in the solar industry, companies won’t survive if they’re overly reliant on credits that eventually go away.

The price of “solar power, year over year over the last 20 years, it's this incredibly steep curve and it's just relentlessly going down,” Garabedian said. “My goal is to make the 45V credit irrelevant. I want to get as quickly as possible to the point where legislators can look at it and say, ‘That was useful, but we don't have to do it anymore.’”