Green Hydrogen’s Breakthrough: Electric Hydrogen Becomes the Sector’s First Unicorn
Investors have long been skeptical of green hydrogen, citing high production costs, expensive infrastructure builds, competition with batteries, and minimal government support. However, at least one company, Electric Hydrogen (EH2), has managed to convince investors that its technology is a worthwhile bet.
A New Era for Green Hydrogen?
EH2, a Massachusetts-based green hydrogen technology company, has recently become the first unicorn in the sector with a $380 million Series C raise. This significant investment brought EH2’s valuation up to $1 billion and marked the startup’s total funding at roughly $600 million, according to Crunchbase data.
The list of investors backing EH2 includes heavy hitters like Microsoft’s Climate Innovation Fund, United Airlines, BP, and Fortescue Metals. These industry giants see potential in EH2’s innovative approach to green hydrogen production.
A Breakthrough Technology
EH2’s engineers have designed and built all critical electrolyzer components in-house within the company’s Massachusetts lab. By increasing performance while decreasing costs, EH2 has made significant strides in making green hydrogen more competitive in today’s market.
According to a spokesperson for the company, the funds from the Series C raise will be used to expand production capacity of its electrolyzers. These devices use a process called electrolysis to split water (H2O) into its constituent elements, hydrogen (H2) and oxygen (O2). While electrolyzers are expensive and consume significant amounts of renewable energy to produce a small amount of hydrogen, EH2’s innovative technology has made them more efficient.
Leveraging the Inflation Reduction Act
EH2 is also poised to benefit from the Biden administration’s Inflation Reduction Act. The startup can leverage its performance gains to take advantage of incentives offered by the act, making green hydrogen production even more competitive in today’s market.
In parts of the country where renewables are cheap and tax credits outpace production costs, hydrogen could even be free for buyers. This shift towards green hydrogen has significant implications for industries that rely on long-distance transportation of energy.
A New Business Model
EH2’s business model differentiates it from other companies in the sector. Instead of selling hydrogen itself, EH2 sells cheaper electrolyzers to hydrogen producers. This approach is similar to how solar panel manufacturers sell panels to clean energy developers.
By focusing on electrolyzer sales, EH2 aims to make green hydrogen production more accessible and cost-effective for industries that rely on long-distance transportation of energy.
Building Out the Electrolyzer Factory
EH2 plans to rapidly build out its electrolyzer factory in Massachusetts with a launch planned for 2024. The startup aims to deliver and commission 100 megawatt electrolyzer systems, each capable of producing nearly 50 tons of green hydrogen per day at a low cost.
A Competitive Market by 2030
EH2 hopes to allow customers to produce hydrogen in states with plenty of renewable energy, like Texas, for about $1.50 per kilogram by 2030. This price point is roughly equivalent to the cost of producing hydrogen from natural gas.
Electric Hydrogen’s Rise to Prominence
Last month, EH2 was selected as a finalist for the prestigious Cleantech Open Accelerator program. The startup has also attracted significant attention from investors and industry experts alike with its innovative approach to green hydrogen production.
A New Era for Green Hydrogen?
EH2’s breakthrough technology and innovative business model have significant implications for industries that rely on long-distance transportation of energy. With the potential to make green hydrogen more competitive in today’s market, EH2 has become a leader in the sector and is poised to drive innovation forward.
As investors continue to take notice of EH2’s progress, it will be interesting to see how this startup’s innovative approach to green hydrogen production continues to shape the industry. With its commitment to making green hydrogen more accessible and cost-effective, EH2 is certainly one company to watch in the sector.