July 08, 2021 • Paul Rodden • Season: 2021 • Episode: 27
Welcome to The Hydrogen Podcast!
In episode 027, US natural gas companies putting hydrogen to the test. Plug power is making its way back into the news. Baker Hughes and Samsung Engineering are teaming up on CCUS. And a new startup in Australia aims to cut the cost of green hydrogen by a factor of three. All this on today’s hydrogen podcast.
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US natural gas companies putting hydrogen to the test. Plug power is making its way back into the news. Baker Hughes and Samsung Engineering are teaming up on CCUS. And a new startup in Australia aims to cut the cost of green hydrogen by a factor of three. All this on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen. And this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
Okay, so what are us natural gas companies doing to test hydrogen in their pipelines? Well, in a July 1 article from Reuters, at least two dozen energy firms in the US including Dominion, and Sempra has started producing hydrogen or testing its viability and natural gas pipes to take advantage of existing infrastructure as the world prioritizes lower carbon fuels. The bulk of these tests are in hydrogen blending into natural gas distribution pipelines. Enbridge, for example, is blending 2% of hydrogen into its natural gas distribution system in Ontario. And they’ve also just received approval to do the same thing in Quebec. According to Pete Sheffield Enbridges chief Sustainability Officer, we are looking to understand the potential either with the existing system or as we’re continuing to modernize the gas pipeline system to ensure that new construction is hydrogen ready, and Sempra’s SoCal Gas utility, which supplies gas to 22 million customers is working on pilot programs to test the fuel and its pipelines, and see how a blend with natural gas affects the company’s pipes, as well as appliances and other equipment.
The first project would blend hydrogen and mostly residential area that SoCal Gas can isolate from the rest of its distribution system. This according to Jawaad Maleek, the chief environmental officer, Dominion is slightly more aggressive testing a 5% hydrogen blend in a training facility in Utah. They’re also looking to do something similar in North Carolina, in a recently proposed pilot project. And it’s also interesting what this means for gas turbine power generators. According to Jeff Goldmeer, GE’s emergent technologies director for decarbonisation, almost every gas turbine used to produce power converting fuels containing five to 10% of hydrogen that would cut carbon dioxide emissions from natural gas from the power sector, which has been one of the fastest growing sources of demand for gas.
And now plug power stock gets a new buy rating this according to Barrons.com. Joseph Spak an analyst at RBC on Wednesday, launched coverage of plug power with a buy rating. In early trading on Wednesday, plug power stock was up point 4% at 34.21. In a day, where the s&p 500 and Dow Jones were both flat. In his analyst remarks Spak said hydrogen is increasingly viewed as a key pillar of decarbonisation strategies worldwide. With a lot of investment and government support. We believe a multi decade hydrogen transition can occur. And that’s good news for plug power. But the stock reflects a lot of good news already, the company trades about 18 times Spaks estimated annual sales. Again, according to Spak, the market has looked to plug as a proxy for hydrogen economic growth, but the growth is significant, which helps justify the valuation. Now his $42 price target is based in part on a discounted cash flow model, which redex cash flows far into the future as well as a 35 times multiple on the EBITDA of 537 million he projects for 2025 and 2021 plug is projected to have a negative EBITDA and about 85 million in EBITDA for 2022. Now this is not the first time that plug power has been the darling of Wall Street, and recently their stock value has taken a hit. But as the hydrogen market ramps up plug power is well positioned to be a leader in the industry.
Okay, now a team up between Baker Hughes and Samsung as they work together in the CCUS in a hydrogen space. According to upstream online, Baker Hughes and Samsung are linking up on low to zero carbon projects involving carbon capture, utilization and storage and hydrogen technologies. Now as part of this collaboration, the companies are going to identify joint BD opportunities for energy and industrial consumers to help reduce their emissions. Now the two companies will initially focus on projects with key South Korean customers both at home and abroad, while also considering expanding to other customers or regions.
According to Rod Christie Baker Hughes executive VP of turbo machinery and process solutions in order to meet the Paris Climate accords by 2050. energy solutions that utilize hydrogen and CCUS to decarbonize operations are critical. The technologies that Baker Hughes is bringing to the table include compression, their Nova LT gas turbines, plus flexible pipes for transportation. They can also bring reservoir studies, well construction services, condition monitoring solutions, and auxiliary solutions such as carbon dioxide compression and liquefaction for CCUS projects. Samsung on the other hand, is planning to provide its engineering procurement and construction expertise for low carbon solutions for projects across refineries, petrochemical plants, and industrial and environmental facilities, including for water treatment and air pollution prevention applications.
And according to Hyeok Yoon Moon, Senior VP and head of solution business division, we are excited to partner with a leading technology provider like Baker Hughes, to deliver advanced technologies for CCUS and hydrogen to our customers. We are positioning ourselves as a green solution provider, we will continue to invest in technology and develop new projects for pursuing carbon neutrality. And for me, this is a great matchup between two amazing companies. Baker Hughes and Samsung both have excellent reputations in their own fields. And I would love to see more joint ventures like this going forward in the future. And lastly, startup Hydrogen Systems Australia says this new technology could change the way the world creates hydrogen and an article from rechargenews.com on Australian startups as it’s invented a new super efficient type of electrolyzer that uses plasma to reduce the cost of green hydrogen by a factor of three. Hydrogen systems Australia based out of Melbourne says that today’s PEM which is the proton electron membrane electrolyzers, produce hydrogen at a level is cost of about five to $7 a kilogram, but their new plasma electrolyzers would produce hydrogen for roughly $2 a kilogram by 2024.
That’s based on the power price of $35 per megawatt, when operating for 12 hours a day, and could go even lower after that, depending on the cost of electricity per hour. Now a big part of the cost savings comes into the fact that they’re using a plasma electrolyzer, which itself cost 90% less than PEM machines at current prices. Now, the rest of that cost savings comes in from improved efficiencies. And some of the to keep in mind that traditional PEM electrolyzers use very expensive materials. And so if this company has found a way to undercut that cost substantially, that would be a significant decrease in price for green hydrogen. And while HSA is keeping the details of their technology, very secretive, their executive director Brian Power is told recharge that it works by using some kind of electrical power inside the plasma chamber at certain frequencies that elicit favorable responses from the hydrogen and oxygen atoms in water. This is a process that he says requires much less power than standard PEM or alkaline electrolyzers.
So essentially, whatever it is that this frequency is in frequency does does all the work whereas usually electrolyzers has to use electricity to do all the work. Now something interesting is that this company HSA has no intentions of building the kind of gigawatt scale electrolyzers that market leaders such as Nel and ITM Power are currently constructing. Instead, it wants to license its technologies to existing electrolyzer makers, who can then build multi megawatt versions of the machines in their Giga factories. HSA, on the other hand, will produce smaller electrolyzers capable of about 150 kilowatts of electricity, which is far smaller than the five megawatt machines currently on the market. These can be used to create off grid base load renewable energy systems.
The company is already in talks with some of the larger manufacturers to license out their technology. Those include Plug Power, Cummins owned Hydrogenics and Nel. HSA, which has so far been funded by individuals and the company founders is now seeking to raise a seven and a half million dollar fundraiser to help pay for ongoing testing and new production facilities. Now I’ve said for a while that green hydrogen can only compete with the hydrocarbon sourced hydrogen, if technology makes vast leaps forward, this could be one of those vast leaps. Now HSA believes that their technology will be finalized by Christmas and ready to go into production by 2024. And I will definitely be paying attention to see if they meet those targets.
Okay, that’s it for me everyone. If you have any questions or comments about today’s episode, come and visit me at my website at thehydrogenpodcast.com and leave a note. I would really love to hear from you. And as always, take care. Stay safe. I’ll talk to you later.
Hey, this is Paul. I hope you liked this podcast. If you did want to hear more, I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.