⚗️ Hydrogen Horizon: Unlocking Opportunities in the Clean H2 Economy (Part 1)
⚗️ Hydrogen Horizon: Unlocking Opportunities in the Clean H2 Economy (Part 1)
Exploring the Rise of Clean Hydrogen and Innovation at the Production Stage
Hey, Deepsense community! Welcome to the latest issue of Deepsense Insights, the newsletter that brings you the latest on science and technology investment opportunities.
In this issue, we're diving into the emerging clean hydrogen (H2) economy. Get ready to explore the current rise, the clean hydrogen value chain, and opportunities at the production stage. In the next issue, we will dive into storage and transportation, transformation, and end-use applications.
🌊 The Rise: What Sets This Wave Apart?
At the end of 2022, there were over 1,000 announcements of clean hydrogen (H2) projects by 2030. Together, these projects represent $320B in potential investment, 38 million tons per year of new H2 production, 230 GW of new electrolyzer capacity, and potential impact across a variety of use cases in industry, transportation, and power generation. It remains to be seen what fraction of these announced projects reach the implementation stage. For context, the world produced and consumed roughly 94 million tons of H2 in 2021. Over 99% of production was from fossil fuels, and most of the H2 was used for refining and chemical production.
The current wave of interest in H2 must be understood in the context of the broader energy transition and has three particular key features that differentiate it from previous attempts at government-led efforts at creating H2 economies.
(1) Clean: Whereas prior periods of investment activity (such as in the 1970s and 2000s) were primarily driven by energy security concerns and technology advances, this wave is motivated by the policy goal of decarbonization. Hence, investors in clean H2 must track carbon intensity (CI, kg CO 2,eq /kg H2) in addition to economics (i.e., $/kg H2) as carbon intensity has become the preferred figure of merit in determining eligibility for government subsidies. On the demand side, policy incentives have strengthened the market case for known applications and clean H2 use in sectors beyond what was considered in previous waves.
(2) Commercial lift-off: Policy incentives are also focused on creating a clean energy ecosystem. For example, the US has elected to focus on clean H2 hubs, using $8B authorized by the Infrastructure Investment and Jobs Act of 2021 (IIJA) to jump-start regional clusters.
(3) Speed and scale: Clean H2 is part of larger efforts to rapidly decarbonize the energy system at scale by the second half of the 21st century. The replacement of tens of trillions of capital infrastructure over a 20-40 year period is an undertaking of unprecedented scope and ambition. This ambition is what underlies the 1,000 announced projects that seek to collectively scale up clean H2 production and installed electrolyzer capacity by two orders of magnitude over the next 7 years.
The Clean Hydrogen Value Chain
As a brief recap, to understand the challenges and opportunities at each stage of the clean H2 value chain, we explore the main steps involved:
(1) Production (Upstream): Hydrogen production is achieved through various methods. To produce ‘green’ H2, electrolysis involves splitting water into hydrogen and oxygen using renewable energy sources. Depending on the political environment, equally low-emissions hydrogen produced from water electrolysis using electricity from nuclear power plants can either be included under the ‘green’ umbrella or in its own ‘pink’ category. For ‘blue’ H2, natural gas is split into hydrogen and CO2 and large fractions of the CO2 (typically targeting >90%) is captured and then either sequestered or used in some other process. Other mature approaches include biomass gasification and ongoing research is also exploring alternative production methods such as solar thermochemical and biological processes.
(2) Distribution (Midstream): Hydrogen storage and distribution poses unique challenges due to its low density and chemical reactivity. Various methods are employed including compressed gas storage, liquid hydrogen storage, and solid-state storage. For transportation approaches include tube trailers, liquid hydrogen transport and conversion into ammonia. For large-scale transmission of hydrogen, dedicated pipelines, either new or repurposed and partially upgraded existing natural gas pipelines, are typically envisioned.
(3) Use (Downstream): Finally, a very diverse set of applications are proposed for the future role of clean hydrogen. On the highest level, hydrogen can either be used to provide energy or as a process chemical. For energy, recombining it with oxygen to produce steam can produce both heat and electricity, with all the myriad use cases for these energy vectors. Hydrogen, today derived primarily from natural gas, already finds use as a process chemical, in the making of ammonia and fertilizers, to make methanol and in refineries for hydrocracking and desulphurization.
It is on the topic of likely future end uses of clean hydrogen that we find most disagreement among stakeholders and experts. Many have relentlessly been touting the vital and major future role of hydrogen in a number of applications across transport, heating and industry. Others have been deriding nearly all new applications of hydrogen as examples of “hopium” – nothing but industry lobbying and the fantasies of the thermodynamically illiterate. The truth, unsurprisingly, likely lies somewhere in between these two extremes. We will dive into our view on this topic in Part 2 of Hydrogen Horizon.
⚡️ The Spark of Clean Production: Electrolysis
One key technology and present-day bottleneck of the clean H2 production technology chain is electrolysers. Electrolysers play a crucial role in producing green hydrogen by utilizing clean electricity to power the electrolysis process, splitting water into hydrogen and oxygen. Currently, electrolyzer technologies align along four general technical approaches.
Alkaline (AL) and polymer electrolyte membrane (PEM) are commercially mature, although demand in announced projects far exceed present-day production and delivery capacity even for these types of systems. There are about two dozen mature vendors, both industrial major incumbents and more specialized companies, vying for these markets today.
High-temperature Solid Oxide Electrolysis Cells (SOEC), which offer higher electrical efficiency, are also approaching commercial maturity, with vendors such as Topsoe, Bloom Energy, Sunfire and CERES expanding their production capabilities and already deploying megawatt scale prototypes. Many others have ambitious plans in the same space, including Elcogen, Kerionics, Dynelectro, Convion, and Fuel Cell Energy.
Anion exchange membrane (AEM), another more novel class of electrolyzer technology, is championed by the likes of Enapter, H2 Core Systems, Ionomr, Versogen and Hydrolite. Entirely new types of concepts are also approaching the pilot stage, such as Advanced Ionics, H2Pro and Supercritical Solutions.
Cost reductions and larger scale delivery capacity is the primary goal of innovation across the electrolyzer ecosystem, but there are also needs to improve the ramping capability and increase durability and limit degradation over time. Many approaches also require R&D to reduce the use of critical materials such as iridium in PEM systems.
💸 Development focus
Established companies within more mature technology categories (AL; PEM) are primarily attempting to reduce cost and increase delivery capability through larger-scale manufacturing with ‘giga factories’ (NEL, ITM Power, Siemens, ThyssenKrupp Nucera, PERIC and others) while also attempting to increase the process pressure of their technologies to avoid gas compression costs post-production. The prospects of any radical improvements to electrical efficiency of fresh AL or PEM stacks are likely slim due to physical limits but addressing the continuous reduction of performance through cell degradation is a fertile area for R&D. Vendors of less mature technology categories are focused on prototyping the first larger-scale systems and proving out the lifetime of the components to establish credibility.
🪫 Intermittency
Interest in using dedicated intermittent renewable power (wind and solar PV) to power electrolysis requires that electric power be stored, otherwise managed, or that electrolyzer systems ramp their production in response to electricity availability. An extreme example of this is integrating electrolysis in individual offshore wind turbines. Currently, PEM systems offer the most flexibility in operation output. Still, there are efforts to improve flexibility across the various technologies and to develop integrated electrolyzer systems optimized for intermittent energy production.
⚒️ Critical materials
The projected growth rate of electrolyzer capacity presents a challenge for raw materials supply ranging from nickel (Alkaline; SOEC) to titanium and platinum group metals (PEM). There are efforts to develop alternatives including new iridium-free catalysts for PEM systems (e.g., H2U) and AEM systems that utilize more abundant materials.
👀 Outlook
In the next issue of Deepsense Insights, we'll delve deeper into hydrogen storage and transportation covering approaches to reduce cost, increase energy efficiency, leverage existing infrastructure, and minimize hydrogen leakage. Further, we will highlight end-use applications and dive into H2’s likely role in decarbonisation efforts.
⛹️ Players in Clean Hydrogen Production
Monolith 🇺🇸
Uses methane pyrolysis to create clean hydrogen and high-value carbon black.
Founded: 2012
Disclosed amount raised to date: $620MM
Last disclosed round: Series D, July 2022
Disclosed investors: Azimuth Energy Partners, BlackRock, Cornell Capital, Decarbonization Partners, Imperative Ventures, Kiewit, Mitsubishi Heavy Industries, NextEra Energy, Perry Creek Capital, SK Group, Temasek Holdings, TPG, and Warburg Pincus
Ohmium 🇺🇸
Designs, manufactures and deploys modular, scalable proton exchange membrane (PEM) electrolyzer systems.
Founded: 2019
Disclosed amount raised to date: $320MM
Last disclosed round: Series C, April 2023
Disclosed investors: Baruch Future Ventures, Climate Capital, Energy Transition Ventures, Fenice Investment Group, HNVR Technology Investment Management, and TPG
Sunfire 🇩🇪
Develops industrial electrolyzers based on alkaline and solid oxide technologies to convert renewable electrical energy into hydrogen and syngas.
Founded: 2010
Disclosed amount raised to date: $294MM
Last disclosed round: Series D, June 2022
Disclosed investors: Aster Capital, Bilfinger, Blue Earth Capital, Carbon Direct Capital Management, Copenhagen Infrastructure Partners, HydrogenOne Capital Growth, Idinvest Partners, Inven Capital, KfW Group, Lightrock, Neste, Planet First Partners, SMS Group, Paul Wurth, The Climate Pledge, TotalEnergies Ventures, and Vidia Ventures
Electric Hydrogen 🇺🇸
Develops a high throughput electrolyzer technology.
Founded: 2020
Disclosed amount raised to date: $230MM
Last disclosed round: Series B, May 2022
Disclosed investors: Amazon, Breakthrough Energy, Capricorn Investment Group, Cosan, Energy Impact Partners, Equinor Ventures, Fifth Wall, Honeywell Ventures, Mitsubishi Heavy Industries, Prelude Ventures, Rio Tinto, S2G Ventures, Terra Talent, and The Climate Pledge
H2Pro 🇮🇱
Develops E-TAC an electrolysis process where hydrogen and oxygen are generated separately in different steps - an Electrochemical (E) step and a Thermally-Activated Chemical (TAC) step.
Founded: 2018
Disclosed amount raised to date: $105MM
Last disclosed round: Series B, January 2022
Disclosed investors: ArcelorMittal, Bazan Oil Refineries, Breakthrough Energy, Companhia Siderurgica Nacional, Contrarian Ventures, Doral Energy Tech Ventures, Horizons Ventures, Hyundai CRADLE, iAngels, IN Venture, MissionBlue Capital Partners, New Fortress Energy, OurCrowd, Temasek Holdings, TPY Capital, Wind Ventures, Yara Growth Ventures, and several Angel Investors (including Bill Gates and Ka-Shing Li)
C-Zero 🇺🇸
Develops a technology to convert natural gas into hydrogen and solid carbon.
Founded: 2020
Disclosed amount raised to date: $44MM
Last disclosed round: Early Stage VC, December 2021
Disclosed investors: AP Ventures, Arpa-E, Breakthrough Energy, ENGIE New Ventures, Eni Next, Mitsubishi Heavy Industries, SK Gas, and Trafigura Group
HiiROC 🇬🇧
Develops E-TAC an electrolysis process where hydrogen and oxygen are generated separately in different steps - an Electrochemical (E) step and a Thermally-Activated Chemical (TAC) step.
Founded: 2019
Disclosed amount raised to date: $38MM
Last disclosed round: Series B, November 2021
Disclosed investors: AEI HorizonX, CEMEX Ventures, Centrica, HydrogenOne Capital Growth, Hyundai, Kia Corporation, Melrose Industries, Shell GameChanger, TSP Ventures, VNG, and Wintershall Dea
Hystar 🇳🇴
Develops polymer electrolyte membrane electrolyzers designed for large-scale green hydrogen production.
Founded: 2020
Disclosed amount raised to date: $34MM
Last disclosed round: Series B, January 2023
Disclosed investors: AP Ventures, Finindus, Firda, Hillhouse Investment group, Mitsubishi, Nippon Steel Trading, SINTEF Venture, and Trustbridge Partners
Ionomr 🇨🇦
Designs and manufactures ion exchange membranes and coatings for energy storage, and clean energy generation applications including fuel cells, batteries, and electrolysis for hydrogen production.
Founded: 2015
Disclosed amount raised to date: $21MM
Last disclosed round: Series A, December 2021
Disclosed investors: Chevron Technology Ventures, Creative Destruction Labs, Finindus, GCxN, Lyra Growth Partners, New Ventures BC, NGIF Capital, Pallasite Ventures, Pyfera Growth Capital, Shell Ventures, Sustainable Development Technology Canada, and VentureLabs
Qairos Energies 🇫🇷
Uses agricultural biomass to produce methane and hydrogen.
Founded: 2019
Disclosed amount raised to date: $21MM
Last disclosed round: Series A, January 2021
Disclosed investors: Bpifrance
Hydrogen Mem-Tech 🇳🇴
Develops palladium membranes designed for capturing CO2 and hydrogen separation.
Founded: 2017
Disclosed amount raised to date: $19MM
Last disclosed round: Later Stage VC, May 2022
Disclosed investors: AP Ventures, Aramco Ventures, Shell Ventures, SINTEF Venture, and Yara Growth Ventures
Versogen 🇺🇸
Develops electrolyzer technology for water and renewable energy to produce green hydrogen at scale.
Founded: 2017
Disclosed amount raised to date: $16MM
Last disclosed round: Later Stage VC, June 2022
Disclosed investors: BIRD Foundation, Doosan, DSC Investment, GCxN, Plug & Play, TechEnergy Ventures, Thai Oil Plc, The Chemours, and TOP Ventures
Aurora Hydrogen 🇨🇦
Develops a technology that uses efficient microwave energy to heat natural gas in the absence of oxygen and water (pyrolysis) to produce hydrogen and solid carbon while avoiding the generation of CO2.
Founded: 2021
Disclosed amount raised to date: $11MM
Last disclosed round: Series A, July 2022
Disclosed investors: Chevron Technology Ventures, EIC Rose Rock, Energy Innovation Capital, George Kaiser Family Foundation, Plug & Play, Shell Ventures, Sustainable Development Technology Canada, The Williams Companies, and Williams New Energy Ventures
Ergosup 🇫🇷
Develops an innovative process for producing high pressure hydrogen on site for refueling hydrogen fuel vehicles.
Founded: 2012
Disclosed amount raised to date: $11MM
Last disclosed round: Growth, July 2020
Disclosed investors: Air Liquide Venture Capital, AP Ventures, Arkéa Capital, Bpifrance, Demeter Partners, FFWD Normandie, GO Capital, Kouros Investment, and Normandie Participations
H2U Technologies 🇺🇸
Develops a proprietary electrocatalyst discovery process for electrolyser.
Founded: 2020
Disclosed amount raised to date: $11MM
Last disclosed round: Series A, March 2022
Disclosed investors: Capella Partners, Dolby Family Ventures, FreeFlow (Pasadena), Hess, HiJoJo Partners, Jericho Energy Ventures, Motus Ventures, VoLo Earth Ventures, and Yes VC
HPNow 🇩🇰
Develops a purification and disinfection device designed to develop a clean method of generating hydrogen peroxide.
Founded: 2015
Disclosed amount raised to date: $9MM
Last disclosed round: Series B, November 2020
Disclosed investors: AP Ventures, EIT Climate-KIC, Evonik Venture Capital, and Innovationsfonden
Oort Energy 🇬🇧
Develops hydrogen electrolyzers that use innovative technologies to significantly reduce the cost of green hydrogen.
Founded: 2021
Disclosed amount raised to date: $7MM
Last disclosed round: Series A, June 2023
Disclosed investors: Energy Revolution Ventures, Prosemino, and Trirec
Advanced Ionics 🇺🇸
Designs, builds and exploits green hydrogen production sites, which have the particularity of being directly connected to the various available renewable energy sources.
Founded: 2017
Disclosed amount raised to date: $5MM
Last disclosed round: Seed, April 2022
Disclosed investors: Aster Capital, Clean Energy Ventures, Repsol Foundation, Southwest Angel Network, and WERCBench Labs
DiviGas 🇸🇬
Develops hollow-fiber polymer separation membranes.
Founded: 2019
Disclosed amount raised to date: $5MM
Last disclosed round: Seed, November 2021
Disclosed investors: Amasia, Climate Capital, Energy Revolution Ventures, Entrepreneur First, Hax, Mann+Hummel, Plug & Play, SOSV, Volta Energy Technologies and several Angel Investors (including Albert Wenger)
Dynelectro 🇩🇰
Develops a control unit for high-temperature electrolysis.
Founded: 2018
Disclosed amount raised to date: $5MM
Last disclosed round: Seed, June 2023
Disclosed investors: Innovationsnetværket Smart Energy, PreSeed Ventures, and VSquared Ventures
Plantery Technologies 🇨🇦
Produces hydrogen while taking carbon directly out of the air and storing it permanently in ocean chemistry.
Founded: 2019
Disclosed amount raised to date: $4MM
Last disclosed round: Seed, March 2022
Disclosed investors: Apollo Projects, Capital Angel Network, Cycle Momentum, Invest Nova Scotia, Nucleation Capital, Plug & Play, and Sustainable Development Technology Canada
Supercritical Solutions 🇬🇧
Develops the world's first high pressure, ultra-efficient electrolyser
Founded: 2020
Disclosed amount raised to date: $4MM
Last disclosed round: Seed, January 2022
Disclosed investors: Anglo American, Capella Partners, Deep Science Ventures, Jericho Energy Ventures, Lowercarbon Capital, New Energy Technology, and OZ Minerals
QD-Sol 🇮🇱
Develops quantum nanotechnology designed to generate green hydrogen. They utilize panels by using sunlight as a renewable source of energy to perform artificial photosynthesis splitting water into green hydrogen which acts as an efficient photocatalysis.
Founded: 2021
Disclosed amount raised to date: $3MM
Last disclosed round: Seed, February 2022
Disclosed investors: Several Angel Investors (including Ashton Kutcher, Evan Neumann, F. Thaddeus Arroyo, and Mila Kunis)
Hymeth 🇩🇰
Develops an electromagnetic alkaline electrolyser for sustainable hydrogen, oxygen and synthetic natural gas production from electricity and water.
Founded: 2016
Disclosed amount raised to date: $2MM
Last disclosed round: Seed, October 2021
Disclosed investors: Antler, EIT InnoEnergy, Sustainable Energy Angels, and VF Venture
Naco Technologies 🇱🇻
Develops nano-coatings and materials for hydrogen production and usage.
Founded: 2009
Disclosed amount raised to date: $2MM
Last disclosed round: Seed, March 2022
Disclosed investors: Beamline, Buildit, New Energy Technology, Sunly, and The Untitled Ventures
Power to Hydrogen (P2H2) 🇺🇸
Develops an advanced reversible fuel cell technology and low-cost AEM electrolyzers designed to convert renewable electricity and water into high-pressure hydrogen and oxygen, and when needed back to power.
Founded: 2019
Disclosed amount raised to date: $2MM
Last disclosed round: Seed, August 2021
Disclosed investors: Free Electrons, NASA, Shell GameChanger, and Third Derivative
CENmat 🇩🇪
Develops a vertically integrated water electrolyser.
Founded: 2019
Disclosed amount raised to date: Undisclosed
Last disclosed round: N/A
Disclosed investors: N/A
Mebius 🇸🇮
Develops components, modules and assemblies for high and low-temperature PEM fuel cells.
Founded: 2008
Disclosed amount raised to date: Undisclosed
Last disclosed round: N/A
Disclosed investors: N/A
OMC H2 🇺🇸
Uses thermochemistry (heat) and a patent-pending active material to split water into hydrogen and oxygen at high pressures.
Founded: 2021
Disclosed amount raised to date: Undisclosed
Last disclosed round: N/A
Disclosed investors: N/A
Rouge H2 🇦🇹
Focuses on the development of hydrogen production, solid state storage and OSOD™ (On-Site On-Demand) systems.
Founded: 2015
Disclosed amount raised to date: Undisclosed
Last disclosed round: N/A
Disclosed investors: N/A
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That's a wrap for this edition of Deepsense Insights. Stay tuned for our next issue of Deepsense Insights, where we'll continue to explore the clean H2 sector covering storage and transportation as well as end use applications. 🌌