October 11, • Paul Rodden • Season: 2021 • Episode: 54
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In episode 054, Bloom Energy announces commercial availability of hydrogen powered fuel cells, Seeking Alphas take on the hydrogen economy, And So Cal gas are among the first in the nation to test hydrogen blending in real world infrastructure and appliances in closed loop system. All this on today's hydrogen podcast.
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Bloom Energy announces commercial availability of hydrogen powered fuel cells, Seeking Alphas take on the hydrogen economy, And So Cal gas are among the first in the nation to test hydrogen blending in real world infrastructure and appliances in closed loop system. 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 podcasts.
Okay, so big news from Bloom Energy as they announced commercial availability of hydrogen powered fuel cells. On a press release on September 29. Bloom Energy announced the commercial availability of its hydrogen energy servers 100% hydrogen powered fuel cells to deliver on site 20/47 0 carbon electricity, all in a simple, modular and flexible design orders are now being accepted with commercial shipments expected in 2022. Dozens of countries across the globe have committed to net zero emission goals by 2050. And more than 30 countries have hydrogen specific strategies that are being activated. Hydrogen is well suited for an array of applications including transportation, and unlocks a zero emissions future for hard to decarbonize Heavy Industries.
Electricity production is the second largest contributor to greenhouse gas emissions in the United States, with 62% of electricity produced through the combustion of hydrocarbons. Hydrogen technologies, like hydrogen powered fuel cells significantly reduce the environmental impacts associated with electricity production and eliminate greenhouse gas emissions. And so as the hydrogen economy grows, the need for hydrogen for energy storage and power generation will accelerate. For power generation as production of hydrogen becomes ubiquitous bloom energies hydrogen energy servers will be another option in moving to net zero emissions. In a quote from Deia Bayoumi Vice President of Product Management for Bloom Energy states Bloom Energy has a complimentary suite of solutions and a strong partner ecosystem, supporting both ends of the hydrogen economy, clean hydrogen production and efficient hydrogen utilization.
With these offerings and collaborative solutions. Our technology can be applied for today's needs, and in the future as hydrogen economy becomes more robust. Renewable energy sources such as solar and wind are critical to clean generation. However, these sources are also inherently intermittent with periods of excess energy production that generate more electricity than transmission lines can carry. Curtailment is therefore needed to balance generation with consumption. by pairing renewables with a bloom electrolyzer curtailment can be avoided. Hydrogen can be produced at scale compressed and stored for long duration during periods of excess renewable production. The addition of hydrogen powered fuel cells allows the stored hydrogen to be converted into 20/47 0 carbon electricity that can be used when energy is needed. This also enables for islanded, or remote communities with renewable resources to self generate fuel for reliable electricity without needing to import fuel to their local community.
According to Venkat Venkataraman, Executive Vice President and CTO of bloom energy, our technology is distinctively suited to help hydrogen adopters thrive in the hydrogen economy. Bloom energy's hydrogen powered fuel cells are built on the company's solid oxide platform that has higher efficiencies compared to other fuel cell technologies, generating more electricity from less hydrogen and provides reliable power helping organizations reach to meet their zero carbon objectives. Bloom Energy solid oxide platform is positioned to address both realities of today's energy, infrastructure and aspirations for the future of the energy ecosystem. Bloom energy micro grid demonstrates the needed modular and redundant power is possible today and provide a cleaner replacement to backup diesel generators. Looking ahead the fuel flexibility of Bloom Energy servers enables an accelerated transition to the hydrogen economy with the use of natural gas, bio gas hydrogen or a blending of these fuels. Bloom energies hydrogen energy servers have undergone testing as part of a pilot project with SK ecoplant in Ulsan, South Korea for the last five months with successful results. Throughout operation the hydrogen powered fuel cells provide a 20/47 0 carbon electricity at efficiency levels exceeding expectations.
So big news now from Bloom Energy that they have a viable commercial fuel cell option for electricity generation. And something to keep in mind with this is that it is color neutral. It doesn't matter where the hydrogen comes from. This is a fuel cell system, which can provide reliable, clean electricity when needed at all times. So excellent work to bloom energy for getting a commercially available fuel cell electricity generator to market. Next, Aaron Goldberg from Seeking Alpha continues his assessment of the hydrogen economy. In this article Goldberg states finding investable companies in the hydrogen space is challenging, especially in the world of PEM technology. Ballard power is typical of the space founded in Burnaby, Canada in 1979. Ballard rose to the crest of ESG, investing in peak at $42.38 in February of this year, before deflating to the mid to high teens. They have 184 page investor presentation chock full of wins and the heavy duty transport space including bus, train trucking, and marine applications across California, Europe and China. It's a dizzying display of success that gets you excited to buy the stock. But then you peek under the hood and realize they aren't making money.
They have 1.2 billion in cash on the books from dilutive equity sales. The number of shares outstanding have ballooned to 297 million from 186 at the start of 2019. All they have no long term debt. They have revenue of 42 million in the first half of 2021, and operating losses of 36 million. One wonders whether they're selling hydrogen or hope fueled equity. He continues to say that the investment thesis for Ballard power and other hydrogen hopefuls wrestes the falling prices for PEM technology and growing scale. He continues by covering the cost of electrolysis falling. He says the price of producing and delivering hydrogen will fall over time. For example, there are three areas where the cost of hydrogen needs to fall for transport. The retail price of hydrogen at the pump will naturally fall as we build scale and infrastructure. The second is the transportation storage costs which as we've discussed in a previous article will not be easily tackled. But governments and companies are setting ambitious goals and promising to see the industry. The third is the cost of producing hydrogen through electrolysis.
The current cost of polymer electrolyte membrane PEM fuel cells is running about $900 per kilogram of produce hydrogen with an efficiency range of 50 to 60%. Most industrial scale PEM applications producing hydrogen today are coming online with an efficiency rating of about 56 to 60%, producing hydrogen at roughly 60 kilowatts per kilogram. The current manufactured cost of hydrogen using today's PEM technology, and an industrial cost of electricity of about 6.6 dollars per kilowatt hour with 58% efficiency is $4.70 per kilogram nearly five times the cost of SMR process, which cost about $1 per kilogram. Now these are the manufactured costs of hydrogen. Due to the lack of scale, the delivered retail cost of hydrogen is substantially higher, and in the state of California is currently running about $16 per kilogram at the pump. He concludes this piece by saying this under various scenarios. NREL projects the hydrogen will grow by two to four times its current production level of 10 million metric tons per year.
In June, the DOE announced the first energy Earth shot called simply the hydrogen shot, which seeks to reduce the cost of clean hydrogen by 80% to $1 per kilogram in one decade, is an all hands on deck to develop the technology to reduce the barriers to develop clean energy through the hydrogen pathway. Government laboratories have about 10 years of research before the best ideas will be launched. energy markets will migrate toward the least cost by design. Given the renewable electricity prices are the lion's share of the cost for green hydrogen, producing renewable energy or nuclear energy at a penny or less becomes one clear approach. Whether we reach that goal remains to be seen. Energy is the bedrock of our economy. And either we accept the enormous cost of cleaner energy, which will find its way into everything we consume, or we innovate and grow our way towards cheaper renewable energy. falling short of those goals would see net zero committed government's reaching into their coffers to fill the void. So a very interesting article and great insights from Aaron Goldberg. And while I did take issue with some of his points in the first article he did on the hydrogen economy, his overall take on the industry seems very well laid out and that ultimately, the cost for hydrogen is directly related to the feedstock price.
So in terms of green, the feedstock price is the cost to generate electricity. And with blue and turquoise is the cost of methane. Either way, investments in infrastructure and economies of scale will both help drive down Both the cost of hydrogen and its endpoint price to the consumer. And lastly, So Cal gas is among the first in the nation to test hydrogen blending in real world infrastructure and appliances in a closed loop system. In a press release on September 30, SoCal Gas announced that it is blending hydrogen to fuel a household system and appliances at its engineering analysis center and centralized training facility. As part of the testing technicians are measuring the performance of common household appliances like stoves, wall heaters, and forced air furnaces when they are fueled with a blend of hydrogen and natural gas. This is the next step in moving out of a lab toward a future blending in the natural gas grid with an emphasis on safety and training. So Cal gas is among the first utilities in the nation to test the effects of a hydrogen blend on natural gas infrastructure and equipment in a controlled field environment.
This effort utilizes the same engineering and technology that will be used to blend into the natural gas grid in the future. The use of hydrogen either blended with natural gas or delivered via a dedicated pipeline is one important component of so Cal's strategy to achieve net zero emissions and its operations and the energy it delivers by 2045. Preliminary results of the testing that began earlier this summer show that the household natural gas appliances are compatible with up to 20% hydrogen blending. These initial findings are consistent with previous international research and lab testing. This effort provides key operational and safety experience, including testing for pipeline leaks that will enable So Cal gas to implement larger scale hydrogen blending demonstrations. SoCal Gas continues to test the impacts of blending hydrogen with natural gas on pipelines and appliances. Furthermore, separate National Renewable Energy Laboratory NREL analysis and several international industry studies have indicated the potential to blend hydrogen into existing distribution pipelines serving end use customers.
In a quote from Neil Navin, Vice President of clean energy innovations for silica gas said in a net zero emissions California, Clean Fuels like hydrogen will play an essential role in supporting the reliable electric grid and eliminating emissions from hard to electrify sectors of the economy like transportation and industry. And in making the transition to clean energy economy affordable. The European hydrogen backbone initiative is a great example of how cooperation can accelerate these goals. There are some 23 nations that are working to repurpose 70% of their existing natural gas infrastructure to carry clean hydrogen to a cluster of demand centers across the European Union. And according to Assembly member Bill Quirk, investing in tests that aim to demonstrate the potential of hydrogen is key to identifying solutions that can help us address our current climate crisis. So Cal gases commitment to decarbonize innovations help advance the energy transition. Now several analyses including the Los Angeles renewable energy study by the Los Angeles Department of Water and Power and NREL, highlight the need in 2045 for renewably, produced and storable fuels to maintain reliability in the power sector.
In addition, many experts agree that Clean Fuels like hydrogen will be essential for decarbonizing hard to electrify sectors of the economy, like industry and heavy duty trucking. SoCal Gas is actively engaged in more than 10 pilot projects related to hydrogen, including a partnership with Netherlands based HYet hydrogen on technology that could transform hydrogen distribution and enable the rapid expansion of hydrogen fueling stations for fuel cell electric vehicles. The technology would allow hydrogen to be easily and affordably transported via the natural gas pipeline system, then extracted and compressed fueling stations that provide hydrogen fuel cell EVs. In addition later this year, so Cal gas will break ground and its award winning h2 hydrogen home, the first project of its kind in the US. The h2 hydrogen home aims to show how carbon free gas made from renewable electricity can be used in pure form or as a blend to fuel clean energy systems of the future. When the home is built in the city of Downey.
It'll be the first fully integrated demonstration project with solar panels a battery and electrolyzer to convert solar energy to hydrogen and a fuel cell to supply electricity for the home in June of 2021, SoCal gas and its h2 hydrogen home are named one of the fast company's world changing ideas in the North American category. The word honors products, concepts, companies, policies, and designs that are pursuing innovation for the good of society and the planet early this year in support of California's climate goals, So Cal gas became the largest gas distribution utility in North America to set a net zero emissions target. That includes scopes One, two and three greenhouse gas emissions, so called gases Aspire 2045 strategy aligns with the recommendations of the Paris Climate Agreement and reflects the company's focus on supporting California with a resilient gas grid through the energy transition to support a carbon neutral economy.
So this is big news to come out of So Cal gas. And right on the heels of the news that England has done the exact same thing just at a slightly larger scale. And what this further proves is that our existing natural gas pipeline infrastructure is good enough to transport at least up to 20% hydrogen in the lines. But not only that, can be used in standard appliances, and to anyone interested in hydrogen who also has natural gas appliances. That's nothing short of a dream come true.
Alright, that's it for me, everyone. If you have any questions, comments or concerns about today's episode, come and visit me on my website at thehydrogenpodcast.com, and let me know 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 to very much. Appreciate it. Have a great day.