February 21, 2022 • Paul Rodden • Season: 2022 • Episode: 92
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In episode 092, Plug Power announces a new acquisition. And a new initiative is announced from three big players for measuring carbon intensity at hydrogen facilities. All of this on today's hydrogen podcast.
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Plug Power announces a new acquisition. And a new initiative is announced from three big players for measuring carbon intensity at hydrogen facilities. All of 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.
Plug Power Inc, a leading provider of turnkey hydrogen solutions for the Global Green hydrogen economy. Today, Thursday, February 17, announced that it has signed a collaboration agreement with Atlas Copco Mafi-Trench Company LLC, the turbo expander technology center within the gas and process division of Atlas Copco and Fives a global leader in braised heat exchangers and cryogenic coal boxes to jointly develop hydrogen liquefaction plants, also known as hydrogen liquefiers. Liquefying hydrogen makes it easier to transport leading to significant cost savings and broader distribution coverage. The collaboration announcement closely follows plug powers acquisition last month of Joule Processing LLC, a process solution and engineered equipment provider with a strong track record of execution among the largest EPC which is engineering procurement and construction and oil and gas midstream companies.
The proven cryogenic process technology that Joule developed for the gas processing industry is directly applicable to hydrogen liquefaction and has the potential to reduce the cost of liquefied hydrogen by 25%. This acquisition will also represent a capital expenditure savings of approximately $200 million for plug power over the next four years by bringing hydrogen liquefaction capabilities in-house. Plug Power purchased Joule for a total consideration of up to $160 million worth 30 million upfront and 130 million of future earnouts based on meeting liquefier efficiency, third party sales and gross margin targets. Joule's liquefaction process is being deployed in plug power's green hydrogen plant, which is currently under development in Texas. In a quote from Andy Marsh, CEO of plug power, plug power manufactures the best electrolyzer solution in the world today, and we have the complete delivery network in place.
The liquefier system is key to offering hydrogen in liquid form, which is ideal because of its superior energy density versus gaseous hydrogen, lower transportation costs and potential for powering trains, ships and airplanes. Joule's capabilities complete this into in green hydrogen solution for plug power, making us the only company in the world with such comprehensive offerings. And in a quote from Ben Victor, former CEO of Joule processing and current vice president of hydrogen energy solutions for plug power. We are excited to join Plug Power family as a key addition to the total end to end solution for the green hydrogen economy. We are now positioned with a large platform to deploy our low energy hydrogen liquefaction solutions on a global scale for both our internal projects and sales to third parties.
Now through this long term cooperation, plug power, Atlas Copco gas and Process and Fives will address some of the biggest needs facing the liquid hydrogen production industry, such as improving the efficiency cost and lead time of hydrogen liquifiers. This new collaboration as the deep technical and manufacturing experience of Atlas Copco and Fives as key suppliers to enable plug power to successfully deliver hydrogen liquifiers into its growing fleet of green hydrogen production plants and also for sale to third parties looking to adopt highly efficient liquid hydrogen systems. The parties have already undertaken significant development efforts and plug power expects to commission hydrogen liquefier trains with 15 tonne per day and 30 tonne per day capacities starting in 2023. As the largest buyer of liquid hydrogen in the world. Plug Powers growing national network of hydrogen plants will supply 500 tons per day of liquid green hydrogen by 2025 and 1000 tons per day globally by 2028. Presenting a significant opportunity for the partners to drive scale and standardization and hydrogen liquifiers.
And in a quote from Sanjay Shrestha Chief Strategy Officer of Plug Power Atlas Copco gas and process and fives bring core expertise the complements plug powers capabilities and vision to be a total end to end solution for the green hydrogen economy. Liquefaction capabilities were the last major element we needed to complete our turnkey product suite for delivering green hydrogen plants globally. And so under this agreement, plug power will design manufacture, install, operate and maintain hydrogen liquifiers for its own use and for third parties. Atlas Copco gas and process will design and manufacture custom turbo expanders and compressors related to the hydrogen liquefaction plants. Fives will manufacture the braised aluminum heat exchangers and optimize their integration in cold boxes. In a quote from Robert Radimeczky, president of Atlas Copco and process. He says this collaboration is another step in our pledge at Atlas Copco gas and process to support decarbonisation and net zero emissions by 2050. To be able to supply a comprehensive solution and hydrogen liquefaction supports both our customers in the emerging new energy markets and the goal of climate protection. And lastly, in a quote from Frédéric Thrum, Deputy General Manager of fives and president of the Energy Division, he says as a technological leader in the cryogenics market for over 60 years, fives has been at the forefront of hydrogen for decades with over 45 references.
In this booming market in line with our ambition to decarbonize the industry. We are confident in our ability together with plug power and Atlas Copco to provide cutting edge cryogenic equipment for high performance hydrogen liquefaction plants. Okay, so this is an absolutely monster announcement from plug power. Now as we all know, compression of hydrogen is much more cost effective than liquefying it until we start talking really about the volume of hydrogen that plug power is making now if their numbers are right, and they can drive down the cost of liquefied hydrogen by 25% that really could transform the import export market for hydrogen.
And where I could really see this playing out is in the Australia to Japan trade route and with Plug Power expecting to save $200 million in the next four years plus, estimating 1000 tons per day globally of liquid hydrogen export their balance sheet could look very good before the next decade hits. Next and an article from upstream online. Naomi Klinge writes open hydrogen initiative calls for transparent accounts of emissions. GTI and ETL and s&p launched the initiative to provide tools for carbon intensity measurement and hydrogen facilities. The gas Technology Institute GTI, the National Energy Technology Laboratory and ETL and s&p global Platts have launched the open hydrogen initiative to make the environmental impacts of hydrogen production more transparent. The company said there is a high degree of variability in hydrogen production when it comes to carbon intensity, even within the same colors of production. They advocate for precise measurements at each facility for a more accurate comparison of the environmental impacts of hydrogen. The world is rapidly preparing for an aggressive decarbonisation, and having access to precise carbon intensity measurements is no longer nice to have but required this according to Paula Gant, Senior Vice President of Strategy and Innovation at GTI.
She continues by saying with hydrogen applications increasing, more sophisticated measurement solutions are needed to assess the carbon intensity impacts of using this energy source. A current system to determine the quality of hydrogen was based on the color wheel gray, blue, pink, green, and others. But stakeholders have conflicting views on what production method is the best. Blue hydrogen, for example, is thought by some as a quick way to cleanly scale up hydrogen production by using carbon capture on gray hydrogen. But a controversial study by researchers at Cornell and Stanford University's claims that blue hydrogen is barely cleaner than grey and actually worse for the environment than natural gas. Certain types of green hydrogen production, on the other hand, are viewed by some as carbon free process, although there are concerns that the market will fail to scale up to meet demand.
In a quote from Brian Anderson, Director at an ETL the potential for hydrogen to play a significant role as the global energy system transitions to a lower carbon intensity as vast as hydrogen generation and use scales up the market needs to adopt a consistent approach to the assessment of hydrogens greenhouse gas footprint that is agnostic to the different production technologies, modes of transportation and end use sectors. OHI plans to create objective credible, peer reviewed transparent and open source tools to assess asset level carbon intensity that can be accurately compared to other production facilities, drawing from Stanford's oil production greenhouse gas emissions estimator model, which has become the standard to measure carbon intensity in the oil sector. This initiative will convene stakeholders from all sectors of the hydrogen market to develop a measurement model.
Okay, in my two cents on the open hydrogen initiative, it's about time. I love this news. Now, if all technologies can adopt this hydrogen initiative and start measuring their carbon intensity, we can finally start putting real numbers in the carbon equation and finally start to get a better picture of what is clean and what isn't. Now, I do have several connections over at GTI and s&p and I can tell you firsthand that their hearts and minds are in the right place when it comes to the hydrogen infrastructure and its development, and so I really can't wait for this initiative to be launched.
Alright, that's it for me everyone. If you have any questions, comments or concerns about today's episode, come and visit me at thehydrogenpodcast.com. Or you can always email me at firstname.lastname@example.org. I would really love to hear from you. And as always, take care. Stay safe. I'll talk to you later.
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